As a small business owner, you have many responsibilities. It will help if you manage your time and finances while keeping up with the latest trends in your industry. It can be easy to make mistakes when juggling so many things simultaneously. One of the most important tasks of any business is accounting. With accurate accounting records, you will know how much money you have and where it’s going. If there are mistakes in your accounting records, it could lead to serious problems down the road.
Here are the top 4 most common bookkeeping mistakes small businesses make.
Not Setting Financial Goals
Setting financial goals is essential for any business. The most common mistake small businesses make—and it’s easy to understand why—is failing to set financial goals. Without goals, you’re flying blindly, and if you don’t know where you’re going, it’s easy to get lost. When setting goals, the key is to go beyond just guessing at what your financial situation might be in the future. Think about what would be ideal, and then plan to get there.
Not Keeping Good Records
When you’re a small business owner, you’ll likely be doing a lot of tasks that don’t fall under bookkeeping. You may find yourself doing inventory, making payroll, or handling administrative duties for multiple employees. When juggling these responsibilities, it’s easy to let details slip through the cracks or neglect to keep good records. The only way to avoid this problem is by having a system to ensure that you’re tracking all relevant financial information—and recording it correctly—for every aspect of your business.
Not Tracking Expenses and Revenues Accurately
You wouldn’t believe how many small business owners let their finances slip through the cracks by not properly accounting for every penny they spend. That’s why having a good bookkeeper on your team is so important. You might also see many small business owners make the same mistake—budgets! Budgets are meant to help you monitor your spending, but they’re hard to stick to, so don’t feel bad if you can’t follow yours all the time. Just try to be aware of how much money you’re spending on certain things, like advertising or supplies, and adjust as needed.
Need a backup plan
If a computer fails, you’re out of luck if you don’t have a backup system. If something is lost or damaged by a fire or water damage, you’re up the creek without a paddle. It’s always a good idea to have an off-site backup plan if you own a computer and store any data on it (or, better yet, use cloud computing). Having a backup plan can save you thousands of dollars if disaster strikes!
If you are a small business owner, you need to ensure that you are properly taking care of your books. You will have fewer bookkeeping mistakes if you learn some simple financial principles and apply them daily. You need to keep accurate records of all transactions and know how the numbers work together.