5 Common Bookkeeping Mistakes Small Business Owners Make… and how to fix them

Bookkeeping might not sound like the highlight of running a small business, but keeping your books in check is like brushing your teeth: skip it too often, and you’ll be dealing with a bigger mess down the road. Here are five common bookkeeping mistakes made by small businesses (yes, they happen to the best of us) and how to dodge them like a pro:

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1. Neglecting to Track Expenses

The Mistake: Skipping over those “little” expenses — like that $3 coffee on a business trip or the “office decor” plant. But small, forgotten expenses add up to larger-than-life accounting headaches and missed tax deductions.

The Fix: Set up a system to record every single expense. Yes, even the coffee. Good bookkeeping software that connects to your bank and credit card accounts is like a digital assistant that doesn’t require a lunch break. You’ll thank yourself come tax time!

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2. Mixing Personal and Business Finances

The Mistake: Using your business card for personal purchases. You just wanted that pack of gum, but suddenly you’re asking your accountant why your “office supplies” are full of suspicious expenses.

The Fix: Treat your business finances like your toothbrush: keep them separate from everything else. Open separate bank accounts and credit cards for business expenses, and use them exclusively. Not only will your books be cleaner, but you’ll look like a pro if the taxman ever calls.

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3. Failing to Reconcile Bank Statements

The Mistake: Reconciliation might sound like something from a relationship seminar, but skipping it here could leave you wondering why your bank account balance is off (and worrying you’ve fallen victim to fraud… or your own forgetfulness).

The Fix: Schedule a monthly date with your bank statements and bookkeeping records. Line everything up to make sure your numbers match. It’s oddly satisfying, like fitting the last piece of a puzzle — and way better than any surprises down the line.

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4. Inaccurate Record-Keeping

The Mistake: Whether it’s a typo or just an “I’ll remember to fix it later” moment, inaccurate records are a bookkeeping nightmare waiting to happen. And no one wants a nightmare that involves an auditor.

The Fix: Use reliable software to minimize manual errors and aim to keep your records up-to-date and accurate. Regularly review your entries, and if anything looks funny, don’t wait. Ask a professional for help; you’re not alone in the numbers game!

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5. Procrastinating on Bookkeeping Tasks

The Mistake: The classic “I’ll do it later” trap. Waiting too long to tackle bookkeeping turns routine tasks into an epic backlog. And if you let it go long enough, there’s a good chance you’ll end up with an avalanche of receipts you’d rather not climb.

The Fix: Set aside a regular time each week or month for bookkeeping. It doesn’t have to be fancy: a calendar reminder, a cup of coffee, and a bit of background music can make all the difference. Staying on top of it is the simplest way to keep things running smoothly.

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Conclusion:
Avoiding these common bookkeeping mistakes can save you time, money, and a whole lot of stress. Think of these tips as a lifeline that helps keep your business afloat and your sanity intact. And if all else fails, remember: it’s never too late to call in a pro!

Keep that bookkeeping ship steady and sail smoothly into financial success!