4 Bookkeeping Mistakes to Avoid

Bookkeeping is an area of business that freaks out most normal people (I’ve never claimed to be normal, just nerdy).

What are you supposed to do?

How often?

And seriously, what do you actually even do?

Just thinking about it can give even the most rockstar business owner pause.

But I know that you’ve got this, and to help you continue to kick business butt and take names here are 4 bookkeeping mistakes to avoid.

Master these simple items and your battle is at least half over.

We’ll start with the most obvious one, not doing your bookkeeping it all.

Trust me, I’m well versed in sticking my head in the sand and avoiding what I don’t want to deal with.

But can I just assure you that everything will be much easier if you just get it done?

I know you started your business to work with your amazing clients and do the thing that lights you up (it’s only a few of us select nerds that light up about bookkeeping), but you have to take care of the business side of things.

Whether that’s buckling down and knocking it out yourself or outsourcing it to someone who loves to do it. Either way, the bookkeeping for your business must get done, it just has to. 

I know I can’t make you do anything, but the IRS can, and the IRS requires you to keep all receipts over $75.

If the IRS needs you to keep your receipts then you better believe it’s a big mistake not to.

While the IRS only requires you to keep receipts over $75, it’s best practice to keep everything.

Then your deductions are completely defensible in the case of an audit.

Storing those receipts doesn’t have to be a pain either, there are multiple options or methods out there.

Mileage is an often missed business deduction, and missed deductions mean less money in your pocket and more available for the government to waste.

If your bookkeeping software doesn't come with a mileage tracker consider looking into a service like MileIQ. This phone app uses GPS to keeps track of every trip and every piece of data you need.

It has robust reporting that you can provide to your tax preparer and get your full deduction, not to mention support in case you get audited by the IRS.

I’m not suggesting you need to have the financial knowledge of a CPA or investment banker.

There’s no need for crazy ROI, Time Value of Money, or debt to equity calcs (I almost want to vomit looking at those too), but you need to take some time to review your financial statements every month. 

Here are some basics to look for.

Revenue - Does this number seem consistent with what I’ve sold this month? When I consider my clients and services provided this month does this number make sense?

Expenses - Does this reflect what I’ve spent money on this month? Is this what I was expecting to see?

Cash - Does this agree with what’s in my bank account?

Accounts Receivable - does this agree to my outstanding client invoices? Is it in line with what I’ve recently sold but haven’t been paid for yet?

Liabilities (credit cards, loans, supplier invoices) - Is this in line with what I know I owe others? Is this what I was expecting?

Ask yourself these basic questions, and if the answer is no then dig a bit deeper into your numbers.

You might not catch every little mistake, but gut-checking your numbers every month will keep you on track.

Keep on top of these 4 bookkeeping mistakes and get quickly back to serving your clients and doing what you love.