10 Common Bookkeeping Mistakes and Tips on How to Avoid Them
Failing to reconcile accounts
Reconciling bank and credit card accounts is essential to ensure that all transactions are recorded accurately. Failing to reconcile can result in errors and missing transactions. To avoid this mistake, reconcile accounts regularly, we recommend on a monthly basis.
Not categorizing expenses properly
Properly categorizing expenses is crucial for accurate financial reporting and tax filings. Make sure to categorize expenses consistently and accurately.
Mixing personal and business expenses
Mixing personal and business expenses can make it challenging to track business expenses accurately. Avoid this mistake by setting up a separate business bank account and credit card and using them for business expenses.
Failing to track cash expenses
Cash expenses can be easily forgotten or overlooked, leading to inaccuracies in financial records. Keep a record of all cash expenses and make sure to include them in your bookkeeping.
Forgetting to track accounts receivable and payable
Failing to track accounts receivable and payable can lead to cash flow issues and missed payments. Keep track of these accounts and follow up on outstanding payments.
Neglecting to backup data
Losing financial data can be catastrophic for a business. Make sure to back up your financial records regularly to avoid losing important information.
Not staying up-to-date with tax laws
Tax laws and regulations change frequently, and failing to stay up-to-date can result in costly mistakes. Make sure to stay informed of any tax law changes and consult with a tax professional if necessary.
Not keeping receipts and invoices
Keeping receipts and invoices is essential for accurate record-keeping and tax purposes. Make sure to keep all receipts and invoices organized and easily accessible. We recommend scanning/digitizing your receipts and storing them in a cloud like Google Drive.
Failing to use accounting software
Manual bookkeeping can be time-consuming and prone to errors. Using accounting software can streamline bookkeeping processes and reduce the risk of mistakes. Our preference for bookkeeping is Quickbooks Online.
Doing bookkeeping on your own
Bookkeeping can be a complex and time-consuming task. Consider outsourcing bookkeeping services to a professional bookkeeper to ensure accurate financial records and save time.
By avoiding these common bookkeeping mistakes, you can ensure accurate financial records, make informed decisions, and avoid costly errors for your business!