As an entrepreneur, your prime goal is to ensure that your business grows and thrives to ultimate heights and to achieve this, you absolutely need to avoid these frequent bookkeeping mistakes we are going to explain below.
Handling all auditing work by yourself
Most business owners have a DIY attitude, which means that they do every little thing pertaining to business by themselves. It’s advantageous to cut the expenses, but you also have to understand that although not so much auditing work is done in the beginning, later on as the business progresses you will be required to habitually log your books. So if you are not prepared adequately as you start, your business will be a source of many headaches.
Solution: Plan for a professional accountant in advance, so that you can get your auditing work done fast and thoroughly.
Failing to record existing books
When you make purchases and pay using credit cards or cash, it is highly likely that you will forget to update that information. Such an action will cause a mismatch between the numbers in your books and those in the bank statement.
Solution: To avoid making errors, make sure to either note down the purchases in a notebook or get an accounting app that eradicates all the paperwork by just taking a snap of the receipts.
Using the wrong bookkeeping software
Proper auditing software is one that meets business needs and reduces the workload for your workers and to the industry as a whole.
Tip: Make sure to invest in the best software available that will give you high accuracy in record making. Ensure that staff is able to use it too and if they are not, offer the necessary training.
Having one account for both business and personal activities
Being self-employed should not give you a reason to think that you shouldn’t get separate accounts for your activities. If you use one account, everything will be jumbled up, causing you to get confused and to get errors when going through your books.
Solution: Open a business account that will solely be used for business transactions only. It makes the bookkeeping job easy and everything gets clearer for you.
Failing to organize information accordingly
Disorganized work is very displeasing and annoying, both for the business owner and for whoever stands in for you to do the auditing job. Failing to have proper categories in your account books makes referencing exhausting and recording difficult.
Solution: Have your work neatly organized to make tasks such as referencing and recording effortless and to give an easy time to your accountant while bookkeeping.
The book numbers don’t match with bank statement numbers
Witnessing this can be a sign that a receipt or bank payment was not accounted for during auditing. When this happens you can be sure that trouble may arise soon, especially when they go missing completely. Constantly failing to update information will eventually lead you astray because of the confusion it will bring as you try to fill in numbers to make them balance.
Solution: Always make sure that what has been tallied on your books is similar to what is in the bank statement, as it will give you confidence that everything is perfect.
Seek to adhere to the above bookkeeping tips for better and accurate bookkeeping results that will build a strong business foundation for your business.