You started your business because you’re passionate about what you do. As an entrepreneur, you’re in a powerful position to let your creativity take the lead. But here’s the part you don’t particularly love: managing your accounts.

No one would blame you. Bookkiping is not everyone’s cup of tea. When you’re just getting started, it’s challenging to figure out what needs doing and when it needs to happen.

Mistakes are inevitable and completely normal. But it worries you.

For all your efforts to stay current and organized, this is your Achilles heel.

What information do I need to save?

How do I categorize my expenses?

Am I making the right decisions as I move forward with my business?

The devil is truly in the details. Small business owners can make some common mistakes that can have expensive implications down the road if not managed proactively. Here are the top 3.


Not Keeping Receipts for Business Expenses

It sounds like a simple task: keep all business-related receipts. But as the owner, you’re extremely busy building relationships with your clients and keeping your content fresh and sustainable. It’s easy not to give too much thought to properly recording some of your transactions. But as time goes on, there’s a couple of scenarios that you’ll likely encounter as a result:

  • You forget that you made the purchase, which means you probably didn’t include this on your tax return.
  • You remember the transaction and made that deduction on your taxes, but you don’t have that receipt or invoice on hand.

While it doesn’t necessarily seem like the end of the world, these are bookkeeping errors that can compound over time. If you get audited, you’ll need to present proof of that record. If you’re missing this documentation, you could be facing some unexpected fines you didn’t take into account. The IRS has stringent recordkeeping requirements for small businesses. In an audit, these missing records could add another level of stress you don’t need. Up-to-date records ensure that you’re ready to present the necessary backup.

On the flip side, if you completely neglect to include these expenses as part of your deductions, you’re not capitalizing on the amount you could be getting back on your tax return.

Let’s avoid both of these situations entirely. So here is my advice:

  • Have all of your receipts in one place, which will make it easy for you to find what you need when it comes time to do your books.
  • Leave detailed notes about each transaction that will help you remember the exact circumstances surrounding the expense.
  • Develop a personal and organized system that helps you differentiate your business accounts from your personal.
  • Doing this will help alleviate any liability issues that may arise if you mix the two.

Understanding why you need to keep a record of your transactions can help prevent these costly headaches in the future.


Falling Behind On Your Bookkeeping

If you’re feeling daunted by the task of reconciling your accounts, you’re not alone. It’s easy to get overwhelmed by the sight of your receipts piling up, especially if you’re not entirely comfortable with the idea of doing your own books.

So, you put it off for a bit. Maybe a week turns into a month or two. You’ll catch up eventually, right? Well, here’s the thing. If you were overwhelmed before, it’s a sure bet that you’re looking at an even bigger stack of records to review. And when it’s done last minute, you’re going to feel rushed.

Indeed, this concept applies to many aspects of our daily lives. It’s especially true when it comes to your finances. Managing your books this way makes room for some serious errors. There are ways a professional bookkeeper can come in and take this off your plate, but if you experience these for yourself firsthand, it can be a hard lesson:

  • It’ll be difficult to recall the history behind particular transactions, especially as more time passes. Ultimately, this can lead to improper categorization of your expenses.
  • You miss tax filing deadlines.
  • You’re stressed, which makes you less likely to catch errors when it comes time to compare your bookkeeping records to your bank statements.
  • You might not have the correct insight into the true health of your business, which means you could be making critical decisions based on old data.

Time is a crucial factor. To maintain a healthy bookkeeping routine, you’ll need to review your finances monthly at the very least. I know it sounds like a tedious task, but it is well worth your peace of mind to stay on top of your books.


Bookkeeping On Your Own

Learning new software always requires patience and the ability to adapt. If you don’t have an accounting background or related expertise, the learning curve can be quite steep. It’s possible to teach yourself how to do your own bookkeeping, but if the very thought of managing your books stresses you to the point that you are second-guessing every action you take (or not take), you’ll end up going down a deep rabbit hole.

There’s a ton of terminology you’ll need to be familiar with to properly categorize your expenses, set up required reports, and accurately invoice.

A lot of the time, you’ll end up popping open YouTube or asking the internet various questions in hopes that you get a responsible and trustworthy answer.

The truth is, I’ve seen many business owners pay thousands of dollars for a bookkeeper to come in months later and clean up their financials. Usually, it’s because they weren’t able to properly consolidate their books of accounts or carefully watch their cash flow.

It’s also because they didn’t have all the tools needed to implement an accounting system that works for their business.

This is why having a bookkeeper is critical to a business owner’s success. Hire an expert who already has the necessary knowledge and essential skills to handle your records and avoid penalties. And most importantly, a bookkeeper will save you time and money.

If you’re looking for a bookkeeper to help support your business, let’s get the conversation started.