Having an up-to=date book is primal to your business success. Freelancers might be able to keep tabs on their bank account to know their business success. However, with bookkeeping applications and external help, you can easily explore your cash flow.
A timely, detailed and accurate bookkeeping service is primal to answering cogent questions like the profit you are making and increasing your profit if you can afford to hire help.
Most businesses attempt to handle the bookkeeping aspect of their business themselves. With time, however, you might become too busy to stay on top of it.
Here are mistakes to watch out for in your bookkeeping service needs:
Failure to Regularly Set Up Payroll Taxes
Not setting up payroll taxes could leave you exposed to an IRS audit, the last thing you want for your business. As a result, make sure you do not cut corners in removing payroll taxes and sending them to Uncle Sam.
Not Following Needed Accountant and Bookkeeping Training
It is essential to stay on top of current regulations as almost everything changes without prior warning. This will keep your bookkeeping service relevant.
Wrong Filing System
One common bad habit of bookkeeping is leaving your desk filled with important paper works and having files overflowing with documents which have been abandoned. It is possible to make accounting easy thanks to the paperless system.
Not Keeping Deadlines and Due Dates in Mind
It is a good feeling to be your boss as you have total control of your closing period and you can extend your lunch break as it pleases. Such privileges, however, do not apply when it comes to filing taxes and bookkeeping.
Lateness with filing your tax return and paying any debt might be risky due to the fines and penalties. As a result, keep tabs on all deadlines to avoid issues as such.
Failure to stay on top of your invoices
Bookkeeping is way more than having a great organization and being timely with your tax return and payment. You need to be after outstanding payments, even with your account, to ensure all invoices are honoured within the specified terms. This will go a long way to prevent your cash flow from taking a hit.
Working with an Inexperienced Professional
A business owner is generally wired to look for ways and opportunities to reduce costs and save money. However, going the easy or cheap way in everything is not a good call, making it important to work with a quality accountant.
You will be doing more harm than good if you work with inexperienced personnel in a bid to reduce cost, as your business will likely suffer in the long run.
Failure to Standardize Financial Report Processes Every Month
You might get a series of reports every month or keep the process simple at reviewing the balance sheet. It is important to get the same reporting every month at similar periods. This will help you standardize reports and make expectations clear so that you can easily track major financial data.
Ignoring Small Expenses
There was an unplanned meeting with a client who needed to discuss something with you. You chose a moderate restaurant, but you took care of the drinks for both parties.
You likely spent less than $10 on such, so you saw no need for a receipt – this, however, is a wrong call. For your business expenses, every little one counts, which should be properly accounted for. As a result, form the habit of documenting your business expenses no matter how insignificant they seem.
Not in line with your Major Accounting Metrics
There are vital performance indicators in your accounting system. These keys are important to measure your growth and see how you are doing. As a result, you should know your gross profit margin without thinking twice.
Not knowing this and other essential performance indicators is a horrible bookkeeping habit; after all, using a guess could cost you dearly.
FOR MORE INFORMATION ON HOW KAREN MUNOZ, EA CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.
THANKS FOR VISITING.
Karen Munoz, EA