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The Top 8 Mistakes Entrepreneurs Make with Bookkeeping

 

INTRODUCTION

In this article, we will discuss some of the most common bookkeeping mistakes made by Entrepreneurs owners that you absolutely need to avoid if you want to grow your business.

 

  1. Handle all bookkeeping work by yourself

Especially for an Entrepreneurs, it is very common for the owner to have a self-employed mindset. The owner will try to do it all by himself because of budget constraints. Although it does not seems like there is a lot of bookkeeping to be done at the beginning, you must develop a habit to record your book frequently to make your job easier in the future.

  1. Do not tally your book with your business bank account

It is very important to make sure that what is on the bank statement is the same as your books. As long as the numbers tallied, you can be assured that there is no bank payment or receipt that have been missed out by you.

  1. Forget to update your books. Sometimes

It is very easy to forget updating your book if you buy goods or services with cash or your company credit card. This will create trouble in the future as the numbers in your book will not tally with the numbers on the bank statement.

  1. Not using the right bookkeeping software

Bookkeeping software can help reduce your workload and make your recordings more accurate. You should invest in the right software for your industry and train your staff to use it.
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  1. Forget to backup your data

You should backup all the data in your computer in case of an emergency. It only takes you very little time, so there is no excuse for you not to do it. If you are using a computer system – it’s essential to back it up. It costs very little and takes very little time. There is no excuse not to!

  1. Not organising your information properly

You need to organize your information into the right category for easy reference. This will keep your recording simple and consistent for anyone who takes over your bookkeeping work.

  1. Not registering for taxable sales

If your company’s total sales reach a certain amount (depending on your country of residence), you need to file for registration. Failure to do so may result in fines.

 

  1. Do not have a separate business bank account

Even though you are a self-employed, it is a good practice to open a separate bank account solely for business transactions. This will make your bookkeeping job easier and makes everything much clearer. Yes, you need a separate bank account. Even if you just have one let property, I advise a separate bank account. It makes everything much clearer and simpler and avoids unnecessary work.

CONCLUSION

Also, should HM Revenue & Customs ask to see the business records, they would expect to see a business bank account. Having to provide statements for a ‘mixed’ private and business account would lead to requests to explain all the non-business bank receipts and probably more explanations on top. Therefore it is important to adhere to this bookkeeping tips.

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