Bookkeeping. It can be tedious. It can be, for many small business owners, rather challenging. But it also happens to be critically important—one of the most important functions in the life of any small business.
What makes this work hard is that it is essentially a matter of repetition: You need to work to ensure that you are being precise and accurate even with tasks that you do repeatedly, such as logging invoices. Consistency is key, and human error is the enemy.
There are several particular errors to watch out for and to seek to avoid. No one is ever going to be perfect in their accounting practices, but being aware of these specific problems, and doing your best to avoid them, can go a long way toward ensuring proficient accounting practices in your small business.
- Not saving receipts. It is remarkable how many small business owners fail to save receipts for their business purchases. Know that many of the things you purchase for the company will be deductible and that the IRS requires receipt confirmation for many of them. It’s best to just get into the habit of saving receipts and placing them all in a folder somewhere in your office—simple enough.
- Incorrectly categorizing employees. Do you have consultants? Freelancers? Contractors? Part-time employees? The way you categorize your workers will have major ramifications for your business finances. Make sure you are consistent and accurate in categorizing your employees!
- Not reconciling the books. Do you reconcile your books with the bank statement at the end of each month? It’s easy enough to grow slack in this process, but don’t! This is a vitally important way to ensure your books are accurate and organized.
- Not backing things up. You don’t want to keep all your accounting files in a single, unprotected computer folder. You want to have some sort of electronic backup, as well—and a paper one, to boot. Note that the completely paperless office is essentially a myth! You need receipts and other documents to back up your financial statements.
- Being lax about petty cash. Do you have a system in which petty cash slips are filled out any time petty cash is used? If not, then your approach to it may be too nonchalant. Time to tighten up!
- Thinking you can do it on your own. While you do not want to become overly reliant on small business accounting software and apps, these tools do exist for a reason—and smartly implementing them can ultimately make your job much easier.
BizXpert is pleased to offer a full array of small business solutions—not least our free, automated invoicing app. Contact us to learn more about it, or create a free account!