Common Bookkeeping Errors
That Can Cost Your Business Growth
If you own a small business, you’re probably aware of the importance of keeping on top of your finances.
The key to small business success is growth. This can be direct growth in sales and profit, or indirect growth in the form of hiring and expanding the business. The biggest roadblock to growth is often an unexpected financial loss that could have been avoided if attention was paid to simple bookkeeping errors.
Double-entry bookkeeping is a method of tracking a company’s financial transactions in a bookkeeping system. The basic tenet is that in any business transaction, there are two parties involved, and that for every entry there is a corresponding and opposite entry. This is a common mistake made by small business owners with accounting responsibilities. You may think that a transaction didn’t happen when in reality it did. It’s important to check your books, receipts, and bank statements to make sure you’re accounting for all the money that comes in and goes out of your business
Mistake #1: Incorrectly recording your income
One of the most important things you can do is accurately record your income and expenses.
Incorrectly recording your income can be a big problem because it creates a lot of extra work. If you don’t include the details of your business income in your tax return, you’ll have to pay more tax, which means you’ll have less money to reinvest into your business.
Mistake #2: You didn't account for all of your expenses
You should be keeping track of all your business expenses. One of the biggest mistakes you can make when running your own business is not accounting for all of your expenses If you’re not accounting for every single expense, then you won’t know where you’re spending your money. It’s better to overestimate your expenses than to underestimate them.
Also You need to know which expenses you can write off on your taxes, and which ones you can’t.
No matter what type of business you own, it’s important to understand the basics of accounting and bookkeeping