Many small businesses, especially new ones, believe they can save money by handling their own accounting. When done properly, this could be the case. But accounting is a complex discipline that experts are best suited to. For this reason, we recommend hiring a professional accounting service. It could save you in the long run. But if you do decide to go it alone, here are some small business accounting mistakes you should be sure to avoid.
Few things are more crucial to successful accounting than proper record-keeping. Professional bookkeeping services provide exactly that. From large to seemingly negligible financial transactions, you can rest assured that nothing will slip through their fingers. Bookkeeping is one of the world’s oldest professions, but modern-day bookkeepers are trained to use software to record transactions big and small, create invoices, and produce financial statements.
Neglecting to Back Up Data
One of the potential pitfalls of using software to record financial data is the possibility of data loss. This is not to say that keeping paper records is a better option; when done correctly, electronic data is far more secure than the alternative. It is absolutely crucial that you back up your data; few things can be more devastating from an accounting perspective than having records wiped clean.
Not Reconciling Bank Accounts with Books
One standard bookkeeping or accounting task is reconciling bank accounts with your records. This has to be done quite frequently to ensure that the amounts listed in your books match the actual dollar amount in your accounts. As time goes on, you’re likely to fail to record a few minor transactions. Eventually, this sum can add up. Reconciling your books once per month is an effective way to track your finances accurately. But it’s difficult to match the services of a professional accountant.
If you’re doing your own bookkeeping and accounting, you will likely end up making a few mathematical errors along the way. This can become problematic during tax season. The IRS will more than likely notice any mistakes and send you a notice. That said, it is best not to rely on them to do so. Common mathematical errors include transposition (reversing digits, e.g. 654 instead of 456) and improper rounding.
Above are just a few of the small business accounting errors that non-experts tend to make. Thankfully, accounting services are abundant and affordable in this day and age. You can count on us to perform our accounting duties flawlessly.
Contact Bowman & Company 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 to decrease your taxes and increase your net worth through responsible, timely, and accurate record keeping. 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.