Common Accounting Mistakes Small Business Owners Make (And How to Avoid Them) by Marily Smith4/3/2017 Out of all of the aspects that it takes to run a small business, for many people, bookkeeping is the most tedious. Fortunately, hiring a bookkeeper can greatly help you to be able to spend more time making money and less time doing the math.
Whether you choose to hire a bookkeeper or not, no small business owner can be completely hands-off regarding the accounting. Here are four of the common mistakes small business owners make and how you can overcome them in order to make your business—and your life—run more smoothly. 1. Not Getting Paid The main goal of your business should be to make a profit, and this obviously requires getting paid for the work you do. According to Quickbooks and Due.com, 16 percent of invoices don’t get paid. How can you reduce this figure in your business? One solution is to find a way to improve the automation of receiving payments from customers. If you can receive payment immediately after services are performed or goods are delivered then you can completely eliminate the concern of late payments. If that is not a good fit for your business, make sure you are sending invoices as soon as possible and that you have a system set up for reminders about past due invoices. 2. Co-Mingling Business and Personal Accounts It is important to keep business and personal expenses completely separate. Be careful to not use business accounts to make personal purchases and vice versa. If you do make a mistake, be sure to transfer the money to cover it and follow up with your bookkeeper so it can be recorded correctly. Keeping your accounts separate is pretty simple to do, but will save you loads of time when doing things like recording expenses, determining profits, and filing your taxes. 3. Poor Communication with Your Accountant or Bookkeeper Hopefully you realize the advantages to having someone do your accounting. A good bookkeeper or accountant can free you up to focus on the things your business does best. A bookkeeper can save you lots of time and should be able to significantly improve the financial reporting for your company. However, once you hire a bookkeeper, he or she is going to need open communication from you in order to correctly categorize expenses, handle payroll, and follow through with payments. 4. Disorganization It is easy for a busy business owner to let organization slide. Eventually, though, a lack of organization is definitely going to come back to bite you. A few of the important things to have in check are: storing receipts and other documents, responding to emails, and scheduling and invoicing clients. Each of these elements needs a system for organizing and planning. Once a system is in place and you are consistent in using it, a lot of stress and other problems will be alleviated. Quickbooks has made looking for digital organization solutions easy by providing apps.com--an online database for software applications approved by Quickbooks ProAdvisors. These apps are made to integrate seamlessly with your QBO accounting software and provide solutions for each part of your work flow. With all of the time you spend working in your business, it is important that you allocate some of your efforts to consistently working on your business. Just an hour or two each week making improvements such as those listed above will save you time and increase productivity and profitability for your business.
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Tax season is in full-swing, and it's a great time to re-evaluate your bookkeeping habits. Let's talk about receipts. According to the IRS, bank statements alone are not enough documentation to support expenses you claim on your taxes. Were you good about keeping receipts for your business expenses in 2015? Where are these receipts stored? How would you fare in case of an audit?
With QuickBooks Online and other cloud technology, you can stay on top of your receipts throughout the year. QBO links to your bank and credit card accounts to automatically retrieve each transaction. With this technology and a phone, you can take a picture of your receipts right when you make a purchase and attach the file to each transaction directly in the QBO bank feed. Go ahead and toss the physical receipt - the IRS recognizes electronic receipts as well as paper receipts. If you don't have time to upload the receipt right away, use the Google Drive Scan widget for Android or Upload Cam for your IPhone to sync receipts directly to a Google Drive folder. Then when you get around to your bookkeeping, electronic copies of all your receipts are stored in one place for easy uploading. If you rarely get around to your bookkeeping, share the Drive folder with us, and we'll do the rest! Receipt delivery without the shoebox. It's a little late for New Year's Resolutions, but it's still a great time to decide to stay on top of your bookkeeping in 2016. If you are like the many business owners who simply don't have the time or desire, give us a call. We offer very reasonable pricing for one-time clean-up as well as monthly bookkeeping maintenance. |
AuthorSavanna Rucker, Owner ArchivesCategories |