Here are 10 basic bookkeeping mistakes that cost you money.
Not posting every transaction
Every transaction must be recorded. Best practice is to record them right away. You waste time trying to remember them after the fact and you might not remember all of them.
Not Outsourcing Your bookkeeping
Yes, you can do the books yourself. It’s not rocket science. But it’s not the most strategic use of your time and your company may not be big enough to justify the cost of hiring a bookkeeper on staff.
Not keeping track of your inventory
This one is a big deal. Money gets wasted. Delays in your business happen if you run out. Items go bad sitting on the shelf. Think of it as money sitting on your shelf or in the back room. Don’t let it go bad and don’t let it sit out of production too long.
Not having a written bookkeeping policy
A written policy helps streamline everything. It ensures that you and your staff follow best practices. If you have turnover on your staff the written policy helps you transition. It makes your processes transparent.
Missing important tax deadlines
These problems don’t go away if you ignore them. They just get worse. They usually come with added fees and penalties. Sometimes it is a very expensive mistake.
Not using bookkeeping software
You have to have a system. Sure you could do bookkeeping like the old days, recording things in physical journals. But why? Modern software makes it fast and easy and accessible from anywhere.
Not training your staff on basic bookkeeping practices
Whether you do the books yourself or you outsource it, make the job easier on the bookkeeper. Wasted time finds its way to your bottom line. Don’t make your bookkeeper track down invoices or find unrecorded payments. Whoever enters the transactions for your company should have a procedure to follow.
Not categorizing transactions correctly
This one can be obvious, like “miscellaneous” or “uncategorized” transactions. But the inaccuracy can also be very subtle. If a transaction is miscategorized but placed into a category that is plausible or one that sometimes occurs, it will be very difficult for the bookkeeper to catch the mistake. This will lead to inaccurate data, which could affect future decision making.
Not reviewing your finances regularly
Your business depends on your strategic decision making. On top of that, those who you employ depend on your decision making. And your decision making depends on accurate understanding of the finances.
Not reconciling your accounts
Reconciliation is one of the tools we use for catching errors in bookkeeping. It is very useful. If you’re not reconciling then there is a good chance errors are going unnoticed.
Avoid these mistakes and you will better maximize your profit which of course leads to achieving your professional and financial goals.