Financial stability is one of the key pillars in any business's success, which means both start-ups and larger-than-life corporate tycoons all need to improve their bookkeeping strategy to move forward. Breaking down your books and numbers makes up the less-glamorous side of running a business, but it’s a vital component in all your future financial transactions.
Small businesses have a common sickness of ignoring the importance of bookkeeping, but one small mistake in your margins can be crippling in more ways than one. Trial and error may help business owners pick up unique strategies to help set them apart, but when it comes to your financials, there’s simply no room for error.
With that in mind, the list below explores the common bookkeeping mistakes all start-ups should avoid:
Mistake #1: Failing to Keep All Kinds of Receipts
People typically pay attention to receipts that fall under the IRS requirements, but all forms of organisation fly out of the window to keep petty cash receipts. Keep in mind that small expenses can quickly add up to a hefty amount, which means all minor spendings can have a significant impact on your budgeting and even overall cashflow.
Keeping petty cash can even help you during tax season since some of it may be accepted as a deductible. Not to mention, keeping a complete record of all your receipts will also keep you out of trouble in case of an audit.
Mistake #2: Not Having Paper Backup
It’s logical to embrace technology in an increasingly paperless world since it removes inefficiencies in your bookkeeping system. While there is a myriad of automated software that streamlines your records, failing to have hard copies of your documents, financial reports, and bank statements can be dangerous if your company experiences a technological threat.
Mistake #3: Ignoring Reimbursable Expenses
Just like using petty cash as part of your tax deductibles, ignoring reimbursements, no matter how small, essentially feels like pouring precious money down the drain. This will cause a significant blow to your cash flow, no matter how “cheap” the reimbursable expense.
With that in mind, it’s better to create a dedicated policy and use bookkeeping software to stay on top of all the possible resources you can save. Who knows, even something as small as a dollar can help you down the line.
The Bottom Line: Starting Strong by Avoiding Common Bookkeeping Mistakes Made by Small Businesses
Small business owners may regard bookkeeping as a necessary component for tax purposes, but it also plays a pivotal role in budgeting, managing cash flow, and identifying fraud, theft, or waste.
Don’t let the bookkeeping pitfalls slow your business down, and let professional accountants help you create a solid bookkeeping system that suits your current needs.
Why Choose Us?
If you’re looking for a reliable and affordable accountant in Australia, we’re your best option. We offer various services that can improve your venture's profitability rate, so get in touch with us today for a free consultation!