It is essential to be aware of common accounting errors, so you don’t make them yourself.
If you own a small business, you know how challenging it can be to do your own bookkeeping. While accounting software has made accounting and bookkeeping easier for small business owners, it has also made errors and accounting mistakes more common. In fact, repeated mistakes can lead your company into some serious financial trouble. It is essential to be aware of common accounting errors, so you don’t make them yourself. Let’s go over some accounting mistakes small business owners often make.
Not Saving Receipts
Even though receipts may not be required for tax filing purposes, they provide backup documentation for all of the deductions you claim. It is a good idea to have a folder for your receipts, which can prove valuable at tax time. Make sure you are always saving receipts. It just makes your life a little easier.
Data Entry Errors
There are countless accounting software programs out there that you can use to track your expenses. So, you should not be doing data entry by hand at this point. Tracking financial records by hand makes it much easier to make simple mistakes that could cost you time and money. Using a software that allows you to track your income and expenses in one place will allow you to automate most of the process, thus reducing errors.
Incorrectly Classifying Employees
Using independent contractors, consultants, and freelancers to help build your small business can make it difficult to determine who is on staff and who is not. This can cause a misfiling when it comes to filing taxes since there are different rules and regulations for employees and non-employees. Be sure you understand the types of employee classifications and file your taxes accordingly.
Not Reconciling Books Each Month
Reconciling means checking that an account balance listed on your books is accurate and correct and confirming that it matches the actual balance of your bank account. Reconciling your accounts is essential because small transactions can sometimes go unnoticed. Be sure to reconcile your books every month to ensure all of the transactions are accurately recorded.
Not Communicating with Your Bookkeeper
It is important that your bookkeeper knows what is going on with your business. Not reporting small mistakes to your bookkeeper can end up causing serious problems and extra work further down the line. Your bookkeeper is there to help you, but they can only help if you communicate your needs to them.
Contact Bowman & Company CPA Today
Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services aim at decreasing your taxes and increasing your net worth through responsible, timely, and accurate recordkeeping. We offer our services to clients throughout the Washington, D.C. metropolitan area including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter, Linkedin, Facebook, and Youtube.