Bookkeeping is an important part of running a business. There are many common mistakes that can be made that can be the downfall of your company, but you need to know them so that you don't make them.
Here are some examples: Missing inventory counts and not recording expenses can lead to financial disaster for small businesses. Not using QuickBooks or another accounting software could also hurt your bottom line as it will take much more time than necessary to do all the bookkeeping tasks manually. And finally, keeping poor records on cash flow may cause companies to miss opportunities for growth because they're out of touch with how their money is spent each month. QuickBooks Bookkeping Services helps you in manage all the your business financial needs and that help you in avoid Common Bookkeeping Mistakes.
Common Bookkeeping Mistakes for business:
#1.Lack of Business Plan
Many business owners don't realize that a written plan is an essential element of any successful company. A good business plan has to address five key areas:
1) the market,
2) the management team,
3) financial projections,
4) marketing strategy
5) operations.
It also needs to be updated periodically in order to reflect current events and changes in the economy. The lack of a written business plan for your company could lead you down the wrong path or leave you unprepared for when things are not going well as it can help steer you away from potential mistakes and show where there may be opportunities available waiting to be capitalized on.
#2. Poor Organization Skills
If you are the owner of a small business, it's likely that you spend most of your time doing two things: managing employees and handling day to day tasks. If this sounds like you, then chances are that there is one thing on top of your list that never seems to get done - bookkeeping. Fortunately for those who have poor organization skills, or no patience for numbers, there is a simple solution. In this post I'll outline some ways in which outsourcing your accounting can help you manage your time more efficiently so you can focus more on what matters most- running the company!
#3. Not Having a Budget
One of the most important aspects of maintaining a successful business is having a budget. Without one, it's almost impossible to keep track of where your money is going and how much you have left. There are so many great tools out there that make budgeting easier than ever before, but if you're not using them then your business might be in trouble.
#4.Failing to Classify Employees
An issue that can be difficult for small business owners is recognizing the difference between who is an employee and who is an independent contractor. Employees are generally classified as workers who are paid a salary, hourly wage or benefits, and receive some type of work-related training. Independent contractors do not have any of these factors. This can lead to confusion about how to classify individuals in your company which could lead to you being fined by the IRS for misclassification if they feel that it's too much like employment status. It's important to get this right because there are legal ramifications either way so it's worth taking the time to figure it out before you make a misstep!
#5.Forgetting Sales Tax
A bookkeeper's worst nightmare is forgetting to apply sales tax to a sale. Sales tax varies depending on the state in which you live, so it is important to know how much you need to charge for your customers and then how much money needs to go where at the end of the year. For example, if someone sells a product worth $200 in California and does not include sales tax in their price, they will owe $38.00 when filing taxes at the end of the year. There are many different types of services that can help with this process - from accounting firms who specialize in small businesses all the way up to large companies like Intuit or QuickBooks Self-employed.
#6.Employed - but there are also plenty
A common misuse of petty cash is to use it for personal purchases. The purpose of the petty cash fund is to provide small amounts of funds at a time and in an unrecorded manner, so that larger transactions can be made without drawing attention to them. Petty cash should not be used as a substitute for your regular spending money or replenished with any more than what was spent. If you do not have enough money on hand to make a purchase, something else should be done instead.
#7. Not Having a Back-Up
Petty cash is a type of expense account that allows small transactions to be paid without the need for formal documentation. It's important to know how you should and shouldn't use it, so we'll discuss some common mistakes people make with petty cash.
#8. Taking On a Project Without Ample Knowledge
There are many dangers in taking on a project without sufficient knowledge. One of the most common is to assume that you can handle tasks you don't have enough training for, or worse yet, to take on too much and wear yourself out. This post will cover some of the challenges people might face when they're trying to take on a new project without having all the necessary skills.
Our Certified QuickBookks expert advice is to leave bookkeeping to professionals. Thankfully, if numbers aren't your strong suit, there are companies that would be more than happy to keep your books for you. Contact MAC Bookkeeping today to learn more about what we can do for you and your company!
