As an entrepreneur, you know the importance of good financial management. It’s just that dealing with all those numbers can be so daunting. Nonetheless, you sense that not keeping track of those digits can, or has, cost you. Don’t let it get you down. Below are 5 common bookkeeping mistakes and some simple tips to avoid them.
Mixing business with personal
Oftentimes, entrepreneurs put both business and personal expenses on one credit card, telling themselves that they’ll divide it all up later. Of course, when it comes time to divide they’re left pondering their statements. This “un-mixing” of expenses not only requires extra hours of bookkeeping each month, but it makes your entire financial portrait just plain hazy.
This bookkeeping mistake is possibly the easiest to fix simply by using a separate credit card and bank account for your business. Once you have established your separate account, you have to be disciplined.
Not tracking reimbursable expenses
Many business owners use a random method to collect receipts, generating a full half of their expenses while on the go. Collecting receipts is extremely important for the professional who wants to understand company spending patterns or claim deductions at tax time.
You can make tax preparation easy by using an expense-tracking app like Expensify or BizXpense Tracker. Such apps can record mileage, billable hours and more and then generate reports. Many of them also easily sync with your business’s bank account and accounting software.
Not using technology
Some entrepreneurs still rely on basic spreadsheet tools, but these can leave the door open and you vulnerable to human error. Brrr! The mortgage loan agency Fannie Mae once discovered a $1.1 billion error on their Excel spreadsheet, something they called an “honest mistake.”
There’s help for such mistakes. Software like QuickBooks or Xero offer you benefits that manual methods don’t. These track invoicing, link to your credit card and bank account, organize expenses, and generate financial reports.
Not keeping accounts updated
Most business owners don’t relish sitting down during the week with “the books.” That’s why many of them say bookkeeping is their most dreaded task. However, keeping up with this ritual, aided by the tips in this article, is as important as ever.
Doing it all yourself
The thrifty entrepreneur might try to cut costs by doing their own bookkeeping. However, using professional help, even if it’s on a part-time basis, can actually save you a considerable amount of time and money overall. Contact us at C2 Accounting & Business Support, LLC to learn how we can make life easier for you.
So, use these tips and get back up to speed with your bookkeeping. With this responsibility out of the way, you can spend your time and energy where they’re most valuable.