Bookkeeping isn’t anything glamorous, but it is the backbone of your business. As such, minor mistakes can often snowball into serious problems before you know it. When starting your business, start as you mean to go on by making sure you’re able to avoid these three common bookkeeping mistakes.
Falling victim to procrastination
When you’re a small business, your time is at a particular premium. Whether you just don’t enjoy bookkeeping or you always have something else to do, neglecting it is the easiest way to encounter problems. Even just a few minutes a day can help you keep on top of your finances.
It’s important to establish a routine, daily, where you spend some time putting your finances in order. Set reminders, leave yourself notes, write it on your hand – do whatever you need to do to avoid getting sidetracked. It might seem like a bind, but it’s worth it in the long-run.
Mixing business and personal finances
When you’re a small business or a one-person band it can be easy to muddy the lines between your business finances and your personal accounts. It may not seem like such a big deal when you’re spending the money, but ultimately it makes your finances that much more complicated.
Make sure you have a specific business bank account and a business credit card. When you make purchases for your business, always make sure you use only your business finances to do it. It won’t take long to form into a habit, but it will keep your cash flow easier to track.
Disorganised or negligent record-keeping
You can’t keep a proper eye on your finances if you have poorly organised or missing records. If you’re in the habit of throwing your receipts away, for example, you could be in trouble if you claim for something and the HRMC asks for proof of your spending.
Invoices, receipts, bank statements – they should all be properly filed in numerical and date order. It’s much easier to do this while you’re a small business than wait for things to grow and become out of control. Making the effort now pays off.