We know how important it is to keep correct financial records to maintain the health of your business. Small business owners often see bookkeeping as an unfortunate task that takes up way too much time. Many business owners do not keep their finances up to date. However, despite how tedious it may be, bookkeeping and accurate record-keeping help you manage and expand your business. Here are common mistakes to avoid:
Poor recordkeeping often happens for businesses. Losing receipts and forgetting about expenses may seem inconsequential, but it adds up. Keep accurate financial records, and keep every receipt. Consider photographing your receipts and saving them in a cloud service. Use a filing system to store your bank records as well. Don’t forget to read them too. That way, in the case of a future IRS audit, you save yourself some stress and time.
You must categorize your income and expenses properly. Improperly categorized items can impact financial documentation and tax treatment. Keeping income and expenses in proper categories ensures profitability measurement and result in tax savings as well. It’s another reason you should log every receipt because it helps you categorize properly.
Whether its supplies, transportation, hotel costs, or anything else for your business, it’s essential to track reimbursable expenses. Often time business owners neglect to keep track of these expenses and pay out of pocket. Unfortunately, as time goes on, you may forget to track these and end up losing money. Not only that, but you also lose out on taxable deductions.
It happens to everyone. You delete a file. A receipt gets deleted, or suddenly, you can’t find an item you are certain you saved. One important thing to do for your business is keeping a backup copy of your bank statements and receipts. If you’ve started the habit of photographing receipts, do what you can to create a second digital copy or even a paper file that you seal and store at the end of the year. Backing up your data can help you stay on top of your recordkeeping and save you on stress in the long run.
In addition to the mistakes noted above, one of the worst mistakes is not addressing them at all. Our bookkeeping services including correcting said issues, bringing you books current, and providing you timely, accurate financials moving forward – schedule a consultation with Jack Trent & Co today!