One of the most important aspects of running a business successfully especially if you're a small business owner is managing your income and expenses successfully. Its common to find small businesses making bookkeeping mistakes, ignorant to the long-term repercussions that they may face on their viability.
There will never be a system that is 100% error free or fool-proof, but whether your books of accounts are maintained by an accounting solution like Quickbooks Online or Xerox or even Excel spreadsheets, human error is an extremely costly liability.
With that said, let's look at some of the most common accounting hiccups and ways we can avoid them.
Manual entry of values in spreadsheets are bound to have erros.A slight mistake in a single keystroke can create disastrous results like breaking your formula or One of the challenges with spreadsheets is that one wrong keystroke can inadvertently break your formula or shift a long column of data down a cell.
No matter how careful you are, mistakes happen. Even if you’re very careful to protect your spreadsheets from those types of errors, other simple errors, like transposing numbers (typing 95 when you mean to enter 59), are possible. The bigger the rush you’re in to finish your accounting process, the more likely it is that you’ll make this kind of mistake.
Double check your work: Have a 2nd party re-check your work or reconcile financial statements frequently. Don’t leave the responsibility entirely in the hands of one individual.
Train your team on how to use your system, whether it’s the fundamentals of using Excel or best practices for using a cloud accounting system like Quickbooks. Make sure you understand how to use the systems, too.
Overseeing books and tacking funds can be a tedious procedure. You presumably began your business to have the capacity to do work that you are passionate about, not for your deep love for bookkeeping
Thus, you may be tempted to slack on your bookkeeping duties However, you're essentially expanding your liabilities and improving the probability of errors and making it harder to utilize your budgetary data to control your business' development.
Schedule your time on your to-do-list and ensure you spend daily an hour with your books. Spending an hour daily will help you focus on other core aspects as well and keep your numbers accurate.
Use a cloud accounting solution that connects with your point of sale and inventory solutions so that you can automatically pull that data for bookkeeping instead of doing double (or even triple) data entry.
Every company needs to develop policies and procedures for handling petty cash. Ideally, all cash from sales should be deposited in the bank at the end of the day, but a small proportion is usually kept aside to deal with minor demands.
But, petty cash can be a headache—and even a drain on your cash if you don’t set it up properly.
Each organization needs to create strategies and methodology for taking care of the handling of petty cash. In a perfect world, all money from deals ought to be stored in the bank toward the day's end, yet a little extent is typically kept aside to manage minor requests.
In any case, insignificant money can be a migraine—and even a deplete on your cash in hand on the off chance that you don't set it up appropriately.
Set up an efficient system that can help you track the cash kept on hand for business expenses.
Require receipts and documentation about what the cash was used for.
Keep petty cash locked up. Don’t make it too easily accessible. Don’t keep large amounts of cash on hand.
Use an expense tracking system like Expensify to help deal with your whole arrangement of cost repayment and insignificant money so you can keep all that data in a single place. In case you're following costs and unimportant trade out spreadsheets, reconcile it week after week and keep all receipts together in one place.
The word "budget" sounds prohibitive. Be that as it may, in all actuality, having a settled spending plan does not banish organizations from spending on what is fundamental or what is required to easily complete activities.
A financial plan is just a strategic system to ensure you're directing your going through toward needs of higher priority with the best ROI
Make sure you’re comparing your budget with your actual spending on a regular basis so that you’re not overspending.
Plan for unexpected expenses so that if an expense comes up, it doesn’t put your business at risk.
When you are dealing with a developing business, you can't deal with each and every part of your business efficiently like a managerial guru—nobody has skill in each and every zone. Sooner or later, you may require help for streamlining your bookkeeping process.
Regardless of whether you cherish accounting and bookkeeping, it may bode well to hire 3rd party help amid the tax season or for undertakings like payroll processing. Progressively, organizations are swinging to bookkeeping experts for vital business guidance to enable them to develop their business. It can be justified, despite all the trouble to pay for mastery in specific regions.
Along these lines, break down your qualities and look for help for your shortcomings to flourish in this highly competitive market.
Think through whether you need someone on staff to handle your accounting procedures, or if it makes sense to just hire help when you need it—during tax season, for example.
Talk to other business owners in your area—ask them who they use when accounting needs come up.
For small business owners, keeping things running smoothly and prepared for growth requires paying attention to your own strengths and weaknesses.
If bookkeeping isn’t your strength or passion, start with developing some systems so you can keep things as simple as possible. Leverage software tools and accounting professionals when it makes sense, and don’t be afraid to ask for help when you need it.
For small business owners, keeping things running easily and adjusting for development requires focusing on your own qualities and shortcomings.
On the off chance that accounting isn't your quality or curbs your enthusiasm, begin with building up a few frameworks so you can keep things as basic as could be expected under the circumstances. Use programming devices and bookkeeping experts when it benefits you, and don't be reluctant to request help when you require it.