Alright, real talk. Have you just about thrown in the towel on bookkeeping for your business because you can’t seem to get it right? You’re not alone! Over the last 10 years, I’ve worked with hundreds of small businesses and I’ve continually seen the same mistakes over and over that have led to frustration, fear, and headaches. Today, I’m going to give you the top 3: not having a bank account for your business, overstating your income, and not reconciling your accounts. Let’s dive in!
Not having a bank account for your business
When we first started our businesses, there was so much to think about. Who really has time to open a separate bank account for their business? The simple answer: you do. This will end up saving you so much time in the long run- I promise! Personal and business expenses mixed is an absolute nightmare. It can be hard to remember everything that was just for your business or just for your personal lifestyle if you don’t take the time to separate them now. It’s actually pretty simple to set up a separate bank account for your business. And I have good news- if you are a Sole Proprietor or LLC a lot of times it can be a personal account but used strictly for your business. If you have software like QuickBooks Online, you are wasting time sorting through all of those personal expenses when you don’t have to. So what are you waiting for? You can probably even get a new account started online these days – so go do it now!
2. Overstating your income
I see this a lot- people are constantly overstating their income. And what is the problem with that? It’s simple. It equates to you paying too much in taxes and NO ONE wants to do that! So how is this happening? Well there are two reasons. The first reason is that you are syncing a platform to QBO and not only adding income from the bank feed but you are also generating an invoice and marking it paid with the platform you have synced. The second reason is that you have expenses that you aren’t deducting for whatever reason. For example, maybe you purchased something on a personal card. Or maybe you are only using a spreadsheet and you forgot to add it. Maybe you are still using that combined account (seriously, go now…right after reading this blog and get a business account) and you accidentally mark business expenses as personal. This is a common problem that can be fixed easily if you take the time to sort through your expenses. I’m telling you, it will save you time and money!
3. Not reconciling your accounts
Reconciling. I KNOW! That is not a fun word! Sorry! Do you know what it means? It means to take your statements from your bank or credit card or merchant accounts and match those to what you have in Quickbooks Online or your similar software. It is essentially doing a double-check at the end of the month to make sure that what came in and out of your accounts balanced out correctly in your software for the month. This ensures your bookkeeping is ACCURATE which is the end goal, right? If your accounts aren’t reconciled and you go into tax time and use those numbers, there is a GOOD possibility you are reporting incorrect numbers because we are human and humans make errors which means something was probably missed or entered incorrectly over time. So take the time each month to reconcile so you can make sure that everything is correct and you save a lot of time when it comes to tax season!
All right, there you have it – the top 3 bookkeeping mistakes in small business. Now, if you’re wondering how to get started on a GOOD bookkeeping system without all the mistakes, I’ve got you covered. Check out my FREE COURSE – The Ultimate Guide to Bookkeeping. That’s right this is a free course that walks you through the Who, What, When, Where, and Why of Bookkeeping. So, don’t delay – go ahead and click here to sign up now.