Lack of experience coupled with proper knowledge of how accounting functions go, small business owners commonly commit errors in their early years. You may not be able to dedicate resources to learning how to become an expert accountant. But you can avoid some mistakes in bookkeeping that negatively impact your company’s finances.
Let us take a slightly deeper look into the commonly occurring errors in bookkeeping by small business owners.
Taking Lion’s Share of the Work:
It’s definitely important that you manage your money properly. It isn’t advisable, however, that you do it all by yourself, especially if you don’t have an in-depth grasp of accounting functions and business tax law. Delegate bookkeeping away to an expert in accounting, like a reliable company offering outsourced bookkeeping services. This will free you up to work on your business and you’ll see fewer errors and your money losses will go down.
Cheap Isn’t Always The Best:
Business experts may suggest you spend frugally; however, too much thriftiness isn’t always good. Spending money on getting services of the expert bookkeeping outsourcing service provider is a wise idea. Being careful with proper research and planning involved in spending will take you a long way. For instance, getting office decor will surely make work environment feel comfortable to work in, but don’t go all in. Gauge your options, wait for a sale on a high price item with decent quality and then make a move. You’ll be better off in the long run than if you bought cheap furniture.
Inefficiency in Keeping Records of Small Transactions:
Little drops of water make the mighty ocean. Similarly, each small transaction eventually adds up to huge costs, and every receipt lost of said small transaction ends up landing you into trouble when you have to show proof of the expenses you claim.
Not Taking Advantage of Possible Vendor Relationships:
There is always a vendor that each business owner frequents for supplies. It would be a smart move to get into good terms with said vendor. You can squeeze in more cash flow for yourself if you can work up a deal and get discounts or longer terms of payment.
Not Logging Major Purchases as Assets:
Spending $400 on buying A4 paper, pens, printer ink, and other items can be written off as ‘office supplies’. However, spending the same $400 on something like a xerox machine should be logged as an asset as it can be used for a long time. Depreciate it over its predicted lifespan.
Not Keeping Physical Copies of Records
In the modern world where everything is handled electronically, we have wonderful features such as Cloud storage and Internet Banking. They’re are pretty safe, and eliminating ‘paper’ from your business is a nice eco-friendly idea, but you best be careful. Many banks don’t allow you to access your records online for longer than a few months, so you might not have all your records in physical form if you wait till it’s tax season to print the records.
Inaccuracy in Reporting Payroll and Sales Tax
The IRS will not be happy if you mess up in this department. If they find any discrepancy in the amount of tax owed by your company, you’ll be fined heavily. Delegate this task to a reliable tax preparation company that’ll make fewer errors, or else you best be checking your returns twice or thrice before handing them in.
Delegating Bookkeeping Blindly
Delegating Bookkeeping away to an outsourced bookkeeping service provider is definitely a wise choice. What isn’t a wise choice, however, is to do so without a proper system of checks and balances. There have been plenty of cases where small business had delegated the responsibility of company books to someone they trusted, only to find out years later that they were getting ripped off. If only they had checked in place to keep an eye on said person, they would have avoided much of the losses.
If you’re read this article, you’re now aware of the mistakes that many small business owners make. This is the first step in ensuring none of this happens to you. If you strategize well, you’ll be in the safe and you won’t have to incur losses. Good luck in your business endeavours!
Should you be looking for someone to clean up your books, contact us at Cogneesol today! We are an ISO 9001:2008 certified company offering reliable and affordable bookkeeping outsourcing services to businesses worldwide. Call at +1 646-688-2821 to know more about our offerings.