Small Business Bookkeeping Mistakes That Can Really Cost You

Are you a small business owner and worried about keeping your business afloat?

One of the biggest issues that new entrepreneurs make is with their small business bookkeeping. Making mistakes with bookkeeping can run your business to the ground!

So how do you ensure you keep your bookkeeping for small businesses free of issues?

Here are the bookkeeping mistakes you should avoid:

Improper Record Keeping

You have to ensure that you make no mistakes when you record your accounts. Keep track of every earning and expense your company incurs.

The simplest mistake can cause serious issues when you have to file your tax returns. As a result, the best option is to get bookkeeping services here to help you with record keeping.

Have Separate Bank Accounts

Even if you work as a sole proprietor, it’s always best to have a separate bank account for your business.

With a separate bank account, you can keep an eye on your company’s cash flow. You’ll also have fewer issues if you get audited as you’ll have your company and personal assets separate.

Tax Obligations

One of the most stressful aspects of running your small business is fulfilling your tax obligations.

You want to ensure that you meet these obligations with every financial transaction.

For example, let’s suppose you have to charge a sales tax with every sale. Make sure you keep separate records of each time you’ve charged sales tax. You should know how much sales tax you’ve collected, so you’re ready to send it to the IRS when needed.

Likewise, make sure you know how much income tax and social security you’ll have to pay for each employee. Have this information calculated and recorded before you pay your employees.

Keeping Receipts and Invoices

If you get audited by the IRS, you might run into trouble if you don’t keep receipts and invoices with you.

Even if this isn’t an issue, you should keep a copy of every receipt and invoice you receive. If you don’t wish to keep paper receipts, take a picture of them. You should save these on an external hard drive and a cloud storage drive.

Make sure you receive an invoice or receipt from all your vendors. This helps you avoid issues later with payment discrepancies.

You also need to issue receipts to all your customers even if they don’t request them. Keep a copy of each receipt that you send a customer.

That’s How to Handle Small Business Bookkeeping

Now you know how to handle small business bookkeeping and avoid the mistakes that can ruin your company.

Make sure you always keep accurate records of how much you earn and spend. Use an accounting service to help you keep these records.

You want to also fulfill your tax obligations and keep records of all taxes owed. You must you always keep a paper or digital copy of your receipts and invoices. Ensure that you also issue receipts to your customers.

You can find more great business tips on our website!