Those of you who do your own books are most likely to make mistakes on a regular basis. Additionally, some “professional” small business bookkeepers can follow suit. This is why we at B&J Bookkeeping & Taxes are going to share our top 5 mistakes small business bookkeepers make.

1. Confusing Business and Personal Expenses

This mistake is common to make, especially if you are new to the practice. Unfortunately, this one is easy to make, as many expenses can fall under either business or personal. These expenses include:

  • Business lunches.
  • Business gifts.
  • Mileage that may or may not be for business purposes.
  • Software used for both purposes.

And many others. The downside is claiming something that is not deductible or forgetting to claim something that is. This is why a professional bookkeeper is best.

2. Not updating or adhering to current bookkeeping standards

Just as tax regulations seem to change every year, so can bookkeeping and accounting standards. It all combines together to make the job of a bookkeeper all the more difficult. This includes coming changes this year such as no tax on tips or overtime, social security exceptions, and many others.

Did you know? Over 70% of professional accountants report that their workload has increased due to new regulations? Source: CPA Practice Advisor

3. Failing to Perform Bank Reconciliations

This is the practice of matching up your bank and credit card statements to your actual spending. This ensures that everything matches. It can avoid costly mistakes such as duplicate payments, missed payments, or even unauthorized payments. We recommend performing this task by you or your bookkeeper at least once a month.

4. Failing to Prepare Financial Statements

As in the above, this is important to do at least once a month. A financial statement gives you a bird eye view of your income and expenses. This way you can spot unnecessary spending or over spending. It also allows you to see what your biggest money making good or service is. A good financial statement can also help you get a loan, create a budget, and make informed financial decisions for your business.

5. Paying Yourself Without Reporting It

You have to get paid too, but may forget to report it. This not only includes your salary, it also means any other benefits you take from your business. It can include health insurance, company car, business account, or even taking a little cash from the till. Not only can this lead to unbalanced books, it can get the attention of the IRS.

More on the Top Mistakes Small Business Bookkeepers Make in Houston

Many bookkeepers claim to be professional, even though they are new, have no verifiable clients, or make outrageous guarantees. We highly recommend you use the services of an established professional in your area. We at B&J Bookkeeping are here and ready to help clients who live in Houston, the surrounding areas, or Texas.