Bookkeeping is a fundamental part of your small business; unfortunately, mistakes are inevitable and happen to the best of us. So how do you save yourself from becoming a bookkeeping disaster? Read on to learn Liu & Associate’s three most common bookkeeping mistakes, and how to avoid falling victim to them yourself.
1. Forgetting to Track Small, Reimbursable Expenses
Many small business owners will pay for business expenses with their personal credit card, and then forget to submit the expenses to the company for reimbursement. All transactions, no matter now small and insignificant they may seem, need to be tracked properly. By staying on top of small transactions, it becomes easier to manage the bigger ones.
How to Avoid This Mistake?
Get a process in place from the very beginning. While it may seem unnecessary when your company is only one or two people, it’ll set the groundwork for when your company grows and the number of transactions increases.
2. Not Properly Classifying Employees
There are different rules and regulations come tax time for employees and non-employees. Many small business owners aren’t sure whether a consultant, contractor or freelancer are considered an employee or not. Misreporting employees results in reporting your business to the CRA inaccurately, and can cause you grief during an audit.
How to Avoid This Mistake?
Reach out to an accountant or advisor to learn what tax implications there are for each type of employee and non-employee, so you can accurately classify your workers.
3. Falling Behind on Entries & Reconciliation
One of the most fundamental aspects of bookkeeping is reconciling the books and bank statements each month. Reconciliation is a simple process – simply compare your books with your bank statement and make sure there are no discrepancies! If expenses aren’t being tracked, you’ll start to notice your books aren’t balancing, which means your reports are not up to date. Without current information, it’s next to impossible to make informed business decisions.
How to Avoid This Mistake?
Set aside a block of time each week to reconcile your accounts. If you catch mistakes the same month they were made, it makes correcting them a lot easier because they are likely to be more fresh in your mind.
Looking for Bookkeeping Help?
The easiest way to avoid making any bookkeeping mistakes is to let a professional handle your accounts! Liu & Associates offers flexible and comprehensive small business bookkeeping services that will make your business accounting a breeze. If you’d like to learn more about our small business accounting solutions, give our team a call today!