We know that bookkeeping can be a tedious process and making mistakes can create havoc when balancing the books. Time spent trying to find errors is time lost developing your business and producing results for your customers. If you take the time to make sure your books are up to date and correct, you can save yourself and your tax preparer from a headache down the road. Bookkeeping does not have to be a traumatic experience. You just need to be aware of some common pitfalls. Here are the five most common bookkeeping errors we see and how to avoid them!

  • Not keeping your books up to date – It takes a lot of work to run a company and we understand time is limited. That doesn’t mean that you should let your ledger entries start backing up. If you set an appointment or reminder to update your records on a weekly or at most, on an every-other-week basis, you will have a clearer understanding of your financial picture. Regular updates will also help you avoid forgetting an item or the specifics of an expense.
  • Failing to perform periodic account reconciliation – This goes hand in hand with the previous point. If you have your information up to date, you can ensure that your money is where it should be. This allows you to keep an eye on the pulse of your finances. We recommend reconciling your ledger at least once a month along with more thorough quarterly and annual reports.
  • Not keeping business and personal records separated – This may seem to be a simple enough concept but you would be amazed at how easy it is to incorrectly categorize a personal expense as a business expense. Accuracy in your entries will help keep the eyes of the IRS off you and preclude an audit. Incorrectly assigning an expense could cost you a large amount of time, money, and the possibility of large fines.
  • Failing to backup your data – In today’s technological age keeping records electronically is not only good business sense but also a way to ensure that you have access to that information for years to come. That security could be in jeopardy, however, if you are not keeping a backup of your information. A few ways you can keep an electronic copy of your records are to back up your data on your computer, a USB thumb-drive (which can then be stored in a fireproof safe), and possibly online through a secure service such as QuickBooks Online Backup. The cost of a backup is small when compared to the peace of mind you will have to know your data is safe!
  • Communication – The world of business finance can be daunting. It is important to know that you are not alone and that you have someone you can reach out to when you have a question. Not asking for help from a professional is a mistake that can come back to haunt you months or even years down the road.

If you have any questions please do not hesitate to contact us. Remember, the sooner you establish good habits in these areas, the easier it will be to keep them that way!