7 Common Bookkeeping Mistakes You Must Avoid

 Do you have a reason to believe that you messed up your books? Have no fear if you do! Almost every entrepreneur and small business owner makes at least one bookkeeping mistake while learning the basics. Even a professional in Santa Monica, CA, bookkeeping is not infallible. Thankfully, such errors are easy to fix if you catch up to them early.

Here, you will find a list of some of the most common bookkeeping mistakes. If you know about them, you should be able to avoid making them.

1. Guessing Your Way Through

Entrepreneurs often guess their way through bookkeeping. This usually happens when they are not entirely sure of what they are doing. The problem with guesswork is that they compound over time, leaving you with a whole year’s worth of books to fix at tax time.

2. Wasting More Time Than Needed

You will end up spending more time than necessary if your bookkeeping system is not tailored to your business. Fortunately, this situation is easy to avoid. The key is to set up a customized chart of accounts from the first day. If you do not know how to do this yourself, consult a professional accountant or bookkeeper.

3. Putting it Off Until the Guilt Kicks In

Nobody, other than professional providers of Santa Monica, CA bookkeeping services, enjoys the task of bookkeeping. However, if you wait until your shoebox overflows with receipts and the resulting guilt forces you into a bookkeeping binge, there are some serious consequences.

4. Mixing Business & Personal Expenses

Consider this: you take a client for lunch but forget your business credit card. You think you can pay for the meal with your personal debit card. At that moment, it might seem like the right thing to do. It might also seem easy to pay for a business expense with personal funds, but in the long run, commingling your finances makes bookkeeping and tax management a maze. It can even jeopardize your legal protection in the event that your business is audited or sued.

5. Not Going Through Your Financial Statements

Financial statements are a direct window into your business’s financial performance. If you do not read them regularly or avoid them entirely, you miss out on some big-time opportunities to generate revenue and avoid financial disasters.

6. Throwing Away Receipts

If you lose your receipts or throw them in the trash, you will be unable to back up the deductions you made on your tax return during an audit. You may also be burdened with a fine.

7. Hiring an Inexperienced Bookkeeper

When it comes to hiring bookkeepers, you get what you pay for. Instead of choosing someone from Craigslist, hire someone with experience in your niche. These people will have the required bookkeeping knowledge, tips, and tricks up their sleeves specific to your industry. They should also be able to take care of your books faster.

How Professionals Can Help

Avoiding these common mistakes is vital to maintaining the financial health of a business. A professional in Santa Monica, CA, bookkeeping has the tools and expertise needed to ensure your bookkeeping is efficient and accurate. Experienced bookkeepers can help you set up a customized chart of accounts, stay abreast of expenses, and keep financial statements in order.