Top Bookkeeping Mistakes to Avoid in Your Business

Entrepreneurs go into business because they are good at what they do, have a great idea and are passionate about their work. But this doesn’t mean they enjoy all aspects of their business. For example, a chef is great at creating menus and cooking but may dislike doing paperwork of any kind.

What many entrepreneurs may not enjoy is the administrative side of the business. For instance, bookkeeping. While there are many dos and don’ts for small business owners to maintain the financial health of their businesses, here are five things to consider for your small business bookkeeping:

– Consider taking a certificate in bookkeeping. This will not only help you learn more about the basics of bookkeeping but you will also be able to pick up tips and tricks to get the tasks done quicker. Plus, having a bookkeeping certificate ensures you have the information and skills to fully engage in conversations with your accountant or bookkeeper, if you have one, to propel your business forward.

– Get a sense of your seasonal cycles. It’s important to know which times of year are the busiest and which are the slowest. For example, a gift shop owner may see his biggest sales during the holiday season. Knowing when the money is coming – or isn’t – will allow you to establish a cash flow buffer for the slower periods and ride the highs during the busy times.

– Ask for better pricing and discounts. If you don’t ask, you don’t get it. When you’re buying products or services for your business, ask if there are opportunities for discounts. Perhaps you may get a better price if you provide a glowing testimonial or a blog post.

– Get to know your products and services intimately. You may have heard of the Pareto principle, which states that 80% of results come from just 20% of the action. Meaning, figure out which of your products or services are the most profitable. Focus only on those products, services or clients and drop the ones that are not as profitable for the time and effort you’re putting in. If you scale your business using this principle, you will be spending the same amount of time, but earning more and improving your bottom line.

– Know about your business’s finances. This takes us back to our first point, to consider getting a certificate in bookkeeping so that you understand your finances inside out. Be aware of your cash flow, what your accounts look like and what important numbers to keep in mind. If you have an accountant or bookkeeper, meet them often to stay on top of the finances.

What should you avoid when it comes to bookkeeping?

– Don’t put bookkeeping tasks off. Have you heard the term “eat a frog for breakfast?” Essentially, this means to deal with the things you don’t want to do first. If you usually tend to put off bookkeeping tasks like entering expenses or running reports, set an appointment for yourself in your calendar and get to those tasks. Once it’s out of the way you’ll feel a sense of accomplishment knowing it’s been taken care of and you can move on to other things.

– Don’t be afraid to outsource certain tasks. While you may have earned a certificate in bookkeeping and have the skills to manage your finances, if you don’t like doing it, or spending too much time on it, it’s time to consider bringing in a professional bookkeeper to help you out. This way you can decide how involved you want to be.

– Don’t think that taxes are a once-a-year occurrence. Sure, technically you only have to file your taxes once a year, but staying on top of them is a year-round activity. Make sure that when you’re doing financial filing, reporting and data entry, it’s always with an eye to what you will need to include in your taxes so that you don’t have to go through that documentation again. It will help you avoid duplication of effort, and you’ll have better records that serve dual purposes.

– Don’t get stuck in a rut. Are you continuing to do things a certain way because that’s how you’ve always done them? Especially if that way has been slowing you down or is time-intensive. It may even mean investing in new, advanced software It may be time to listen to others who perhaps have made changes to their for example.

– Don’t be afraid to ask for help, and don’t be afraid to say no. As a small business owner, it can be far too easy to take everything on, like it’s imperative to do it all on your own. It’s not true. You don’t have to do everything. The other important thing is to seek out help: find a mentor, a networking group that you can bounce ideas off.

Whether you handle your bookkeeping on your own or hire a professional bookkeeper, follow the list of dos and don’ts listed here to get a grip on the financial health of your business.

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