Year-end bookkeeping mistakes can have a negative impact on your business. Small mistakes may be easy to ignore, but they can snowball into bigger problems. The good news is that there are many things you can do to avoid the biggest mistakes. You can also take steps to prevent them from happening in the first place.
Prevention Tips
If you’re not already doing so, it’s time to start taking a more proactive approach to your business’s bookkeeping. This can help prevent common errors and save you valuable time. To do this, it’s important to understand the basics of bookkeeping and the importance of proper tax treatment.
Avoid doing it yourself.
Many small business owners try to keep track of their finances themselves. These tasks are crucial to keeping a business afloat, but they can be a pain. Using a bookkeeping service (like ours) can make the process easier.
Put a budget in place.
Also, putting a budget in place can help you create a more realistic balance between the past and present.
Submit expenses for reimbursement.
Another big mistake that small businesses make is not submitting their expenses for reimbursement in a timely manner—delays can cause valuable expenses to be missed. By submitting expenses, you can ensure that your expenses are reimbursed, and you can improve the accuracy of your books.
Use a second set of eyes.
Similarly, if you aren’t sure what the best bookkeeping practice is, having a second set of eyes on your books can be a real benefit, especially if you aren’t the most technical person in the business. Your bookkeeper should be able to identify mistakes and help you avoid them. It’s also a good idea to let your accountant review your financial statements on a quarterly basis.
Transaction tracking is important.
Keeping track of the number of transactions that occur in your business is important. For example, if you have a staff member who handles your payroll, it’s essential that you know their pay rate, and the amounts they earn and spend. Additionally, you’ll want to be sure that you post payments against open invoices. Not doing so could result in late-filling or unnecessary delays.
Plan for bookkeeping each month.
While most people will not do all of their bookkeeping in a single day, it’s a good idea to plan for a few minutes each week to handle the bookkeeping. Doing so will not only make the process less stressful but will also prevent you from making the most common bookkeeping mistakes.
Avoid overestimating.
One of the most important things to do is to be sure that you’re not overestimating the amount of money you made or lost. For instance, failing to deduct any expenses for personal use can put you at risk of overpaying your taxes. Likewise, overstating your revenue can cause a down year. In order to avoid this from happening, it’s a good idea to reevaluate your expense categories on a regular basis.
Check your bank statements.
Finally, it’s a good idea to check your bank statements on a regular basis. Missing or delayed statements can be costly and time-consuming.
There are a lot of bookkeeping mistakes a business owner can make. Avoid the headaches and potential pitfalls by working with an experienced team like ours. Give us a call today. We’d love to work with you.