Common Mistakes People Make Regarding Bookkeeping
Owners of small businesses often look at bookkeeping as a necessary evil that they all must face. The cumbersome and mundane task of bookkeeping can often take up copious amounts of time. This is one of the reasons that around 50% of all small business owners fail to keep their finances up to date every month.
As mundane as it may appear, bookkeeping is actually your most significant secret weapon when it comes to business management and growth. Business owners can effectively manage and expand their businesses only through accurate and consistent measurement of their company’s financials and other key indicators.
To help you avoid common pitfalls, here’s a list of common bookkeeping mistakes most people make time and time again and why you should avoid them.
1. Not investing enough time in bookkeeping tasks
Whether you dislike your business bookkeeping or you simply cannot invest enough time to get it done, procrastinating regarding your bookkeeping duties is not healthy for your business. As a small business owner, you may find yourself being pulled in different directions simultaneously. It can be a complex process to accomplish the tedious task of keeping up with the books. However, it is easy to put it off for some time, vowing to catch up later but eventually failing to do so.
2. Not understanding how to keep clean records of business expenses and revenue
Keeping clean records is extremely important. Failure to comply costs small businesses millions of dollars every year. It is advisable to use software programs to keep records of your daily income and expenses, keeping track of everything. It is also essential that you keep separate records for each business you run.
3. Not using cloud-based applications for efficient bookkeeping
Paper records can get lost, misplaced, or damaged easily. This can ruin the integrity of your business data. By using a cloud-based system, you can go completely paperless, putting all of your crucial information at your fingertips at all times. Cloud-based bookkeeping software has several benefits, but the ability to access information and reports from anywhere is among the most significant. With most CIOs and IT professionals choosing cloud-based software for its operational convenience, keeping your books in the cloud makes business quick and easy.
4. Not understanding a Balance Sheet and Profit and Loss Statement
Although the Balance Sheet and the Profit and Loss statement contain some of the same financial information such as revenues, expenses and profits, there are significant points of difference between them. The balance sheet includes information on the assets, liabilities and shareholder equity at a given time, while a Profit and Loss statement summarizes the company’s revenues, costs, and expenses during that time. Each report is used to meet different business needs.
To avoid making these and other common mistakes regarding bookkeeping, please contact Symphony Development Group - Accounting & Bookkeeping Firm with offices in San Francisco, CA and Charlotte, NC. Symphony Development Group provides outsourced Consulting, CFO, Controller and Bookkeeping services remotely across the country, using the latest cloud-based technology.
Our clients are both local and also located across the US due to the reach of our cloud-based platform. Whether you are a start-up needing more intensive incubation services or have a multi-million dollar revenue line and need advice on accounting and the related software applications for controlling inventory, manufacturing or cash flow we have the ability to support you and your business