Does your mind go blank when you start looking at your business bank account? You aren’t alone.
An estimated 60% of small business owners feel like they don’t have enough experience with accounting. The good news is that bookkeeping for small business owners doesn’t have to be hard. Keep reading to learn five small business bookkeeping mistakes that you can’t afford to make.
1. Poor Recordkeeping
A lot of people believe they can just wing their finances. They take one look at their bank account and base all their decisions on the money in the bank. Doing this is a recipe for disaster.
You need to keep proper records if you want to make reliable business decisions. Keep track of every transaction and hold on to every receipt. The more insight you have into your income and expenses, the better decisions you can make.
If you need help, invest in a small business bookkeeping app. These products will track everything for you automatically, so you don’t have to do the work yourself.
2. Missing Quarterly Taxes
If you don’t have business experience, you’re probably used to filing your taxes once per year. Your regular employer handles all the hard work of taking out what you owe to the government. Things are different when you run things yourself.
Businesses are required to pay their taxes quarterly. You do this by estimating your profit for each quarter and paying an amount based on that. If you fail to do this, you can face penalties at the end of the year.
3. Mixing Personal and Business Transactions
Starting a business is an exciting time. You might be tempted to speed things up by handling your business finances with your personal bank account. While this might work short-term, it will cause problems in the future.
You need to separate your personal and business transactions for tax-time. If you co-mingle your finances, you’re going to spend more time than necessary classifying your transactions. You also have more to prove when you want to take deductions from business expenses.
4. Skipping Backups
It only takes one disaster for all your hard work to go out of the window. If you store all your data in one place, you have no protection for when this happens.
A backup will protect you in these situations. Sign up for a cloud provider that will automatically backup your financial documents. If you suffer from data loss, you can recover your files with a few clicks on a website.
5. Not Getting an Expert Opinion
There is a lot to bookkeeping that ordinary people might not understand. You can’t just throw all your transactions into a spreadsheet and call it a day. You have regulations to follow and paperwork to file.
If you want to get things right, it pays to hire a bookkeeper to take a second look. They will examine your finances to find issues, so you don’t face problems in the future.
You Can’t Afford to Get Small Business Bookkeeping Wrong
Small businesses have a hard enough time staying afloat when they don’t have money issues. It’s much worse when you can’t trust the numbers in your books. Make sure to avoid the small business bookkeeping mistakes above so you can keep your business above water.
If you want more small business tips that will help you grow your company, head back to our blog. Our latest posts cover the latest tips and tricks that will help you get more business.