Bookkeeping is a task that requires strict attention to detail. One mistake in categorizing or in the entries will lead to higher costs or might incur penalties. That’s why your accounting books need regular updating and reconciliation. Doing so allows you to identify errors and correct them immediately. However, delegating this task to an inexperienced employee will take longer to finish and may leave your books still full of mistakes.  

Experts on online bookkeeping services cite the following common bookkeeping mistakes that small businesses make.

Failure to Reconcile Accounts

Bank reconciliation is important because it allows you to determine mistakes in your accounting books. It enables you to identify which transactions led to the errors in your financial statements and records. It also allows you to identify possible fraudulent transactions within your operations. Failure to reconcile your accounts will cause multiple problems such as you won’t know your real financial situation, you’ll have less cash to pay dues, you might incur tax penalties, and others. It’s up to you when you conduct a bank reconciliation, it can be daily, weekly, or monthly.

Not Monitoring Possible Reimbursements

Small businesses need all the resources they need to maintain operations and keep an eye on growth. You might overlook reimbursable expenses that you could’ve used. Save more money and benefit from tax deductions by monitoring your expenses. Use apps and programs that simplify this process. Doing so makes it easier to track possible reimbursable expenses you incur.

Not Keeping Receipts

Companies that offer online bookkeeping services cite that some businesses forget to keep receipts for their business transactions. Some of these amounts may be small, but it’s possible to include them in your deductions. Keep your receipts in their own cabinet or box. Scan or take photos of these so that you also have a soft copy. You can download apps or software that simplify taking pictures of your receipts and storing them in the cloud.

Mistakes in Handling Petty Cash

Entrepreneurs and their employees sometimes make mistakes in handling their petty cash. They don’t keep receipts, they don’t put up a specific allowable amount to spend, there’s no dedicated custodian, or they use the petty cash for non-business needs. All of these create problems when it comes to filing taxes and updating accounting books. If you have no enforced policies about your petty cash, theft and fraud are other problems you’ll face. Always document expenses drawn from your fund. This allows you to monitor where your money goes and who is spending it.

No Backup Files

Experts on online bookkeeping services mention that your accounting books will be full of errors if you lose important financial documents and receipts. Loss of these will mean that your books will have gaps in its entries. You will also have a difficult time doing bank reconciliation and balancing your statements. These mistakes are costly and may incur your small business penalties and additional costs. Always backup your files whether you print or photocopy extra copies or store these in the cloud. Cloud storage provides you with plenty of benefits such as data security, prevent loss or damage due to natural disasters, and you or your employees won’t misplace it just to name a few.

Failure to Classify Employees Properly

Misclassification of employees is a possibility especially if you have outsourced work. Your costs may increase or decrease because of the number of in-house or outsourced employees you have in your team. In-house employees need benefits, vacation days and you might have to invest in their training and work-related trips. Failure to classify properly may incur tax penalties and fines. These will cut into your small business’ profit.

Poor Team Communication

You need to communicate with your team about their tasks, the phases of a project, the goals you want accomplished, and the quality of the output you need from your employees. Even if you’re working with an outsourced bookkeeping company, you need to tell them the work you want done and the deadlines for the output you expect from them. This reduces the need for constant corrections and eliminates mistakes. Communication also puts everyone on the same page and allows the team to find a solution whenever a problem arises.

Improper Categorization of Accounts

You’ll need organized accounts and categories if you want to debit or credit entries properly. Duplicate categories or the input of an expense into the wrong category may result in mistakes in your accounting books. This paints an inaccurate picture of your financial standing and may cascade into higher costs and penalties that reduce your profit.

Not Deducting Sales Tax Properly

Some small businesses forget to deduct the tax from their sales. Doing so may mean penalties and additional expenses once they have to pay their taxes. Avoid this problem by deducting the sales tax properly.

You might make these mistakes if you have an inexperienced team updating your books and doing your bookkeeping. Their errors can cost your small business money you need to grow your company and implement your marketing strategies. In such cases, your cost-effective option is to outsource bookkeeping.

Why Outsource Bookkeeping?

Outsourcing your bookkeeping needs is a viable option for small business owners like you. Outsourcing is a proven strategy that many companies (big and small) implement to reduce costs without sacrificing the quality of work. An outsourced bookkeeping company can fill gaps in experience and expertise. They can update your accounting books, keep you abreast of your company’s financial situation, and reconcile accounts for you just to name a few services they can offer.

Before you hire an outsourced service provider, review their credentials, meet their team online or face-to-face, read reviews about them from previous and current customers, and compare prices with their competitors. Doing all these allow you to find the company that fits your needs.

Whenever you need outsourced bookkeeping services, we at Robookkeeper can provide you with what you need. We offer first-rate bookkeeping services for small businesses. Our team of experienced bookkeepers can update your accounting books while you go about your operations. We check for errors in your books and correct them, do bank reconciliation, and other similar services you may need.