5 Common Mistakes Made by Doing Your Own Bookkeeping
Trying to manage your business’s books can be a tedious and daunting task, especially if you don’t have any previous accounting experience. At CFO Source, we’ve helped a lot of small business owners fix their books and wanted to talk about five mistakes we see most often when owners do their own books.
1. Not Performing Reconciliations Regularly
Reconciling is the process of ensuring your books line up with your bank statements and accounting for any discrepancies. You need to reconcile your books regularly; otherwise, your numbers will be off, which could become an issue come tax season.
2. Not Keeping Receipts
There are a number of different kinds of business expenses you can write off on your taxes, but that can be hard to do without the receipts. Whether you’re buying some water for work that day or are buying a new piece of machinery, be sure to hold onto all of your business receipts.
3. Improper Expense Categorization
Just as it’s important to hold onto your receipts, it’s also pivotal that you sort these receipts and your expenses correctly. By sorting your expenses throughout the year, you’ll make the end of the year expense process infinite times easier.
4. Combining Business and Personal Expenses
Sometimes, when running your business, you may have business funds go through your personal account and vice versa, but this is a bad practice. It may be convenient at the time, but it will only serve to muddle your books.
5. Poor Petty Cash Management
Petty cash is an often overlooked but important part of running a business. You never know when some minor expense may come up and don’t want it to slow your business down. By keeping your petty cash funded, you’re ensuring the consistent running of day-to-day operations.
Consult with a Professional Maryland Accountant
Having issues keeping your books? Have a question? At CFO Source, we’ve helped hundreds of small business owners with their books. No matter your size or industry, we’re here for all your accounting service needs.