8 Bookkeeping Concepts Every Business Owner Needs to Consider
Many business owners prefer to do their bookkeeping themselves, so I thought of outlining some of the mistakes that I have encountered after taking over my clients’ books, I hope they help you rethink your bookkeeping process and make some changes:
1.Mixing business and personal finances
Mixing up both expenses can complicate the books and make it difficult to sort through business write-offs when it is tax time.
2.Poor Cash Flow Management
It is important to make sure that payment schedules are clear and agreed upon, and follow them. Track your accounts receivable turnover ratio, or how fast money is received once an invoice is issued to a customer, otherwise you will lose the track of the money that you have never received.
3.Not setting a clear budget for your business
What business owner doesn’t want to steer the business towards profitability? You can do that if you have a carefully planned budget for operational, marketing and other expenses.
4.Improper record keeping
Maintaining accurate records at least on a monthly basis and having a proper filing system can save you time and money on your income taxes. It became so much easier with the ability to keep them on the secure systems like Google Drive and many others. Some apps go as far as just letting you snap a picture of the receipt and you wouldn’t have to worry about loosing that piece of paper, no more shoe boxes full of receipts.
5.Improperly categorizing expenses
Accurately putting income and expenses in the correct categories ensures proper measurement of profitability, which can result in significant tax savings, as well.
6.Not reconciling bank accounts.
Make sure that your bank statements are reconciled every month. This will help minimize errors and identify potential issues, like double charge.
7. Not reading your financial statements
If you don’t read them regularly (or you don’t know how to read them), you’re missing out on some big-time opportunities to generate revenue. In my previous post I explained just a few of the advantages that financial statements’ information can bring.
8.Wasting too much time
We all know that TIME IS MONEY, but many business owners still do not put enough VALUE on their time. Leave the time-consuming, dreadful task of bookkeeping to the professionals. This alone will free up more of your time so you can focus on the growth of your business. And you would never miss filing deadlines because the books weren’t done on time.
Do you need help with your work overload, so you could focus on your business? If yes please contact me for more information!