Concerned that your bookkeeping is incorrect? Not to worry. Nearly all business owners make at least one bookkeeping error while they are still learning the ropes. Fortunately, if you detect bookkeeping mistakes early on, they are simple to remedy.

Wasting More Time than you Need to

You’ll spend far more time than necessary handling the books if your bookkeeping system isn’t customised for your company. Fortunately, this circumstance can be readily avoided. The trick is to set up a unique chart of accounts right away.

If you don’t know how to do this yourself, an accountant or bookkeeper can:

• Customize your chart of accounts for your business
• Enter your initial balances
• Teach you how to classify your expenses properly before you start doing your own books
• Give you a “bookkeeping” checklist for you to tackle periodically (weekly or monthly)

Mixing Business and Personal Spending

It could seem simple to cover a corporate expense with personal finances in the heat of the moment. However, over time, mixing your finances might make recordkeeping (and taxes) a bit of a challenge. In the event that your company is audited or sued, it may potentially eliminate a layer of legal defence.
Make it a practise never to use your own money to pay for business costs to avoid these pitfalls (and vice versa).
Here are some tips to help you keep everything clearly segmented:

• Manage your business finances in their own small business bank account
• Get a dedicated small business credit card
• Your corporate bank cards should be marked with a sticker to prevent confusion with your personal bank cards.
• Keep a small amount of cash in your business checking account to cover quick, miscellaneous business expenses

Of course, it’s not the end of the world if you unintentionally use your company card to pay for a personal bill (or vice versa). You have two options for recording the purchase: as a “Owner’s Draw” or as a reimbursement to your business account. But if you can prevent the inconvenience in the first place, why bother?

Not keeping Records Up to Date

In order to avoid common mistakes and be effective for delivering the most recent information required to make important financial decisions, your books must be updated on a regular basis. The more you put off getting your books in order, the more effort it will end up being because you won’t be keeping them up to date. Small business owners that fall prey to this trap frequently find themselves in need of bookkeeping clean up services to sort through the chaos and restore order.

Not Reviewing your Books and Accounts

It’s just halfway done when you enter your checks, invoices, and receipts into your books. Check anything you enter into your accounts. This process is known as reconciling. It’s rarely challenging, but it’s tedious and occasionally even intimidating. It’s crucial because it will aid in the discovery of all faults, big and small.

You might believe you have more money coming in than you have if you entered an invoice incorrectly and added a zero. An incorrect receipt entry could result in you deducting more from your taxes than you should and expose you to fines and penalties. You can become unaware of the true amount of money you have available if you fail to catch an inaccuracy in your checking account.

Review and reconciliation is the answer. Regularly do it or demand that your bookkeeper do it. This is a simple duty to keep on top of if your invoices and receipts have been digitally captured and arranged.

Delayed Receivables

Managing receivables is a significant bookkeeping issue that small businesses encounter on a regular basis. You can be doing work for a long time without getting paid, depending on the kind of business you run.

Avoid being caught in a loop that is impossible to break. Customers that make late or no payments at all might spell disaster for your company. Tracking your receivables with diligence is the key to overcoming this difficulty. Create efficient billing practises.
Take action on outstanding invoices. Include the due dates and charge late fees for unpaid accounts. Software can even be used to automate billing and follow-ups.

Tracking Expenses

For small business owners, managing paper receipts, electronic invoicing, and recurrent expenses can be difficult. Accurately keeping track of your costs might be challenging without a good strategy in place.

At the end of the month, you shouldn’t be rummaging around your desk or car for a faded and tattered piece of paper. That doesn’t work. Additionally, some of you have workers who have expense accounts that require reimbursement.
An expenditure management snafu can become a nightmare. Using technology to keep track of your costs is the simplest method. My list of the best cutting-edge technology to simplify bookkeeping for your company includes tools like Expensify. It’s a terrific technique to make tracking your costs simpler.

Conclusion

Even if you have experience or an education in accounting, you may, as a small business owner, find yourself making one or more of these common bookkeeping mistakes. Often, the biggest mistake small business owners make is to take up the bookkeeping task on themselves, even though their own time can be spent more productively in processes which grow the business.
Typically, professional bookkeeping services have been costly, but now you can find a 100% free, easy and reliable Bookkeeping app called WhyQ KiraKira. It is a simple POS system, provide profit & loss analytics and offers microloan. If you’re a small business owner and wants to save a chunk on bookkeeping, WhyQ KiraKira is your saviour.