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Running a business is not for the weak. It takes a lot to establish a working business, and being your own boss comes with many responsibilities. Whatever happens to your organization is in your hands. One thing about businesses that almost all entrepreneurs dislike is bookkeeping. Your finances are the most important part of your business, but managing them can be hard.
Regardless of whether you do your own bookkeeping or have a professional hired for the job, it is important that you know what is wrong and right. Some bookkeeping mistakes can be corrected; others can have poor consequences and hinder your success. If your accountant is not doing their job right, visit an accounting firm Naperville, IL, and consult with experts there.
Bookkeeper mistakes that can ruin your business
- Failing to add bookkeeping to your business plan.
Your business plan may contain your goals, strategies, changes you want to make in the future, etc. However, bookkeeping is unlikely to be a part of your business plan. This is a big mistake. Your financial planning and bookkeeping lays the foundation for your business’s future success.
Make sure you keep in check with every financial deliverable and do not keep bookkeeping to be done at the last minute. Staying on top of bookkeeping lets you know your company’s financial health status.
- Losing or ignoring receipts with small transactions.
You may not keep receipts of transactions under a certain threshold, but keeping track of your expenses is still important. If your bookkeeper ignores small transactions, expenses, or payments, you will throw away a bigger aggregate later. Remember that you should keep some receipts stored even though you do not need to. If you get audited, answering questions will be much easier.
- Mixing business and personal accounts.
Mixing business with your personal accounts is a surefire way to confuse your records and make mistakes on tax returns. You must keep your personal and business transactions and expenses separate. Otherwise, it becomes incredibly difficult during tax season– not to mention sometimes impossible– to figure out which personal and business-related expenses. This can lead to missing tax deductions or accidentally entering a personal expense on your tax returns, leading to errors and fines.
- Forgetting to reconcile books every month.
Reconciling books is one of the most important bookkeeping tasks when owning a business. The process of reconciling ensures that no unauthorized transactions have been made, and thus, fraud can be avoided. Incorrect entries can lead to bigger problems later.
