It’s easy for a small business owner to disregard some of the small mistakes made with their bookkeeping. It’s understandable: owners are short on time. Other tasks feel more important and it can be difficult to keep up with changes in QuickBooks, too. With a bit of help, most of the common bookkeeping mistakes are easy to avoid. These changes will save both time and money, especially during the annual tax-time visit to the Tax Specialist or CPA.
Common Mistake #1 – DIY Bookkeeping
Bookkeeping can be hazardous to your business and stressful! Bookkeeping starts with the recording of all day-to-day transactions – expenses, petty cash, invoices, 
wages, taxes, payments, receipts etc. Pretty time-consuming and boring work for the business owner – so the task is often neglected, delegated to junior office staff or an inexperienced relative.
The stress builds when it comes to tax time, government remittance deadlines or creditor payment due dates. By trying to do it all yourself, you’ll waste valuable time, and possibly make costly mistakes leading to penalties or additional fees.
Solution:
Engage a professional bookkeeper to do the day-to-day data entry, bank reconciliations, cash forecasts, payroll, accounts payable, sales tax returns, and provide you with timely financial statements. Then, use your time, skills and expertise to manage and control your business, with better information at your fingertips.
Common Mistake #2 – Software You Don’t Understand
Are you using the accounting system in a way that is best suited to your business? Accounting software packages available today are powerful and sophisticated and, while they may 
appear to be user-friendly, there will be many features you won’t be using or may not be using correctly.
For many, software like QuickBooks is too complicated for a person not adequately trained or with the right level of accounting expertise. Sometimes, the software is not set up properly to handle the complexity of the business and provide the depth of reporting you need.
Solution:
Let a professional bookkeeper advise and set-up the right software for your business, or ensure that the software you have is used to its full potential. Use technology for productivity: today with mobile devices, ‘cloud computing’, remote access, and the like, you can be kept informed in real-time, perform transactions remotely and rapidly, and provide leading-edge service to customers. Don’t waste your time trying to learn software and keep up to date – leave that to the professionals.
Common Mistake #3 – Discovering runaway expenses have eaten up the bottom line
Tracking Disbursements: Do you have a system to track receipts for expenses? Do you separate business and
personal expenses? Do you put business expenses on your personal credit card?
Deductions: Do you claim all the deductions to which you may be entitled? By incorrectly allocating expenses during data-entry you can miss-out on valid tax deductions that should be claimed.
Budgeting: Do you have a budget – not only for expenses but for all elements of your business plan? Are your expenses in line and in control?
Categorization: Are expenses and income being categorized correctly? Do you identify capital expenditures and provide for amortization? Are you using too many or too few categories in your accounting system?
Solution:
By having an experienced bookkeeper accurately enter and code transactions and prepare timely expense reports and income statements, you can spot and deal with expense over-runs early. You’ll know if your cost-of-sales and margins are in line with your plan. You can have confidence that your sales tax returns are accurate and that you are claiming the deductions to which you are entitled. And if you have worked with your bookkeeper to translate your business plans in to a budget, then you will be able to monitor if you are on track, month-by-month.
Common Mistake #4 – Missing sales tax remittance deadlines
Is the dread of submitting sales tax remittances a recurring nightmare for you? 
Dreading the deadlines? The penalties for missing deadlines for sales tax remittances can be painful.
Are invoices valid? Are you checking sales taxes on invoices?
Solution: A professional bookkeeper can address all these concerns. She has the experience and the tools to successfully handle these re-occurring tasks.
Common Mistake #5 – Invoicing as an after-thought
Too busy to invoice or send statements? Do you issue invoices promptly and regularly, and as soon as work has been completed or goods delivered?
Do you have too much sitting in work-in-progress that could be invoiced and collected?
Do you have a system in place to alert you if an invoice is overdue? Do you review customer payment terms? Do you check credit worthiness of new customers? Are bad debts eroding your bottom-line? Do you have a plan to get debtors to pay on time?
Solution:
With proper systems and disciplines in place, and using the right technology, you’ll invoice promptly – and collect more quickly. Your bookkeeper will get statements out early and run reports that alert you to overdue debtors.
Common Mistake #6 – Checking cash-flow as an after-thought
Businesses — and life — is full of surprises! If cashflow is not monitored, planned, and predicted, the business could be bleeding cash.
Do you have up-to-date visibility of cashflow? The profit bottom-line doesn’t align cashflow and the timing differences make a critical impact? Do you do rolling cash-flow projections for the next three months to alert you to mismatches between collections and commitments? Do you know the impact on cashflow from the new business for which you are proposing? Are you making emergency appeals to your bank manager, or offering customer’s deep discounts to pay you early?
Are you reconciling regularly? Do you regularly (at least monthly) reconcile your bank accounts? Are monies from customers being receipted and banked? Have payments gone astray? Are the bank charges and interest correct or could they be reduced? Do you monitor bank balances to avoid interest or penalties or to earn interest when cash balances are positive? Have you factored your current government and tax liability into your cash-flow?
Are your drawings a drag on the business? Are your drawings from the business impacting cash-flow and impeding the business? Are they sustainable? Do you have separate business and personal bank accounts?
As you can see from the questions above, there is so much to consider when it comes to managing your cash flow. Circumstances can change in an instant, making it important that you know where you stand on an ongoing basis… hopefully allowing you to avoid a crisis!
Solution:
By preparing regular bank reconciliations, as well as monthly cashflow reports and rolling cashflow projections, you will enjoy a sense of confidence of being in control and able to anticipate and do contingency planning if necessary, rather than being driven in to crisis management.
By having a professional bookkeeper do regular bank reconciliations and cash forecasts, not only will you know your day-to-day cash position, but you can plan for contingencies. You’ll get your debtors’ statements out early so cash can come in faster. You’ll be able to take advantage of supplier discounts and minimize bank fees and charges.
Conclusion
Some of these changes seem like a pain, however, it is important for you to make these adjustments to ensure proper financial tracking, and most importantly, to support the needs of your business success.
Focus on what you do best
YourBizManager can help! You can start the process by sending us an e-mail to info@YourBizManager.com or by texting or calling 424-246-6006.
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About Doris Cristiano & YourBizManager
As an independent bookkeeper, Doris Cristiano has been providing flexible business services on the west-side of Los Angeles since 1997. To support business needs and growth, YourBizManager tailors its services to each unique situation and works closely with its Clients’ at their business or home office. More About Us
