Clients new to our services frequently ask how to best organize their books. We tell them the sooner you clean up your books, the better among many other bookkeeping tips. Focus on growing your organization without letting the books fall to the wayside. Below are the 5 worst bookkeeping practices you should break right now.
1. Taking Care of the Bookkeeping “As Needed”
Bookkeeping is an important part of your business that should never be neglected. Set aside a time each week, month, and so on for the books. Take the time to check over each expense to make sure it’s legit. Check over each charge to ensure it is accurate. Look over the payroll to be sure who needs to be paid is being paid. This is true even if you do have a bookkeeper. Those of you who do have one may call them to have a chat on how your business is doing, if he/she sees any anomalies, etc.
2. Leaving Items “Off the Table”
No matter what your priorities are, there should never be an item on your books that is off limits from your rent/mortgage to your coffee budget. Inefficiencies in your budget can add up over time to do your business harm. Remember that this is an ongoing mission that never ends. Ask your bookkeeper to find ways to optimize your funds as well as your productivity. An accountant may be able to find tax inefficiencies, but only a bookkeeper with experience (especially in your industry) can really sniff out the waste.
3. Mismanaging Receipts
You are entitled to a few great business perks if you own and operate your own business or are lucky enough to have an expense account. A few of the many items you may write off are car mileage, travel expenses, phone bills, electricity, water, and even your internet costs. Keeping track of these expenses is impossible if you do so periodically. Keeping your personal and business separate is one of the best ways to keep tabs of your write offs. Credit cards made for businesses are a great way to keep track of it all. They keep all your expenses organized for your bookkeeper with many banks offering incentives such as expense separation, approved users, as well as many others. We like to recommend business credit cards that offer rewards you can use to in turn grow your own business.
4. Not Setting Up Procedures
Are you not the only one making business purchases? Your worker, no matter how well intended, can misuse their expense privileges by simply not knowing what your procedures are. Setting up business-approved purchases is rarely anyone’s idea of a good time. You can avoid many bookkeeping mistakes when you have the appropriate procedures in place for items such as how to charge an item, how to file the receipt, who approves expenses, how much is approved for each type of expense, etc.
5. Waiting Until Something Goes Wrong to Get a Bookkeeper
Hiring a bookkeeper should be a proactive measure, not reactive. We recently reported on a woman who stole $2.7 million from her employer due to lack of proper bookkeeping. Remember that the funds you save in not hiring a bookkeeper can be much smaller than what not getting one can cost. More importantly, a professional bookkeeper can assist in growing your business faster in addition to relieving you from tedious tasks such as reconciliations.
Houston Bookkeeping Practices You Can Trust
These bookkeeping practices are just one of the many aspects of your bookkeeping. If you need help in this or any other area, contact us.
