Common Bookkeeping Mistakes - #1 No System
In a successful business, the financial records must be accurate and up to date. One of the biggest mistakes business owners make is to not have a system at all for their bookkeeping. Not only can this waste time, it can also waste a LOT of money.
A system doesn't have to be elaborate, with an on-staff accountant or CFO. But it does need to be organized so that an outside CPA can make heads or tails of it at tax time. Having an organized system will save your accountant time when he/she is preparing your tax returns, and that in turn saves you money.
Things to consider:
- How will you file your invoices and receipts? Is your business small enough to simply use an accordion file? Or do you need a filling cabinet? Perhaps scanning software is necessary to go nearly paperless.
- How will you keep track of the numbers? Can you get away with paper and pencil? Or is computer software needed?
- How often will you reconcile your transactions? (Hint: it needs to be more than "never.")
- Who will implement and maintain your bookkeeping system? Do you as the business owner have the time and skills to do it? Or do you need to look at hiring someone to do it for you? (Another hint: your CPA typically does not offer day-to-day bookkeeping services.)
Regardless of the system you implement in your business, one that is efficient and easy to maintain is necessary. What good is a system if it's difficult to keep up with?
Don't lose out on time or money by having disorganized finances. Determine that 2016 will be the year that you develop a system for your bookkeeping, to ensure your business's success!