Your accounting books contain financial data you use to make strategic decisions. One mistake may lead to a ripple effect that is detrimental to your small business. Precise bookkeeping is necessary to eliminate mistakes in your accounting books. However, you or your employees may still make errors.
These are common bookkeeping mistakes that your small company might be making.
Forgetting to Reconcile Books
Accounting books and bank statements reconciliation is a must for every small business. This allows you to determine the financial direction of your company. Is your business profitable? Are you losing money? These are just two of the questions reconciled accounting books answer. Regular reconciliation of your books also allows you to pinpoint errors and rectify them. If you lack the time to do this on your own, it is best to hire an outsourced bookkeeper.
Improper Employee Classification
The influx of freelancers and consultants in the workforce has made categorizing employees tedious. Some small business owners make the mistake of classifying a long-term freelancer as a full-time employee. Misclassifications such as the one mentioned may lead to penalties that eat into your profit.
Failure to Monitor Petty Cash
Petty cash is important to small businesses because it allows them to pay for immediate expenses. Your company should have a dedicated employee who handles petty cash. This eliminates fraud and loss. It also helps to automate bookkeeping to improve efficiency and monitoring. Implement strict rules for petty cash that include: keeping receipts for every purchase and limits to what items one can buy using petty cash.
Small company owners make the mistake of mis-categorizing or duplicating categories, and entering data into the wrong category, when they do their own bookkeeping. These errors are costly and may lead to unbalanced financial statements and higher expenses. To avoid these mistakes, it is best to get a bookkeeper. This allows you to concentrate on growing your small business.
Doing bookkeeping on your own may lead to plenty of mistakes that will cost your small business money. Eliminate mistakes in your accounting books by hiring an outsourced bookkeeper instead.
We at Robookkeeper can get you in touch with experienced freelance bookkeepers that get the job done. You can contact us today or view our bookkeeping services for small business owners to learn more about what we can do for you.