You know there are mistakes in your bookkeeping that you are making.
You’re not an accountant and frankly this stuff is just confusing to you.
But you really can learn how to do things the right way...without having to get a college degree in accounting or having to pay a lot of money to have an accountant fix things for you.
Yes, if you have things done incorrectly, it can cost a lot of money to hire a professional to do it correctly for you.
The easiest way to do your bookkeeping is to do it regularly and right from the beginning.
Need help learning your bookkeeping, but not yet ready to hire someone to help you? Then you need my bookkeeping toolkit.
Bookkeeping really can make or break your business and can be the reason that your business fails.
What are the common bookkeeping mistakes that you are making?
Not doing your bookkeeping at all.
It doesn’t matter if it’s something you don’t want to do or don’t know how to do it. Your bookkeeping and accounting need to be done on a regular basis for your business.
Everything needs to be sorted into expense accounts.
Your bank accounts need to be reconciled.
Part of bookkeeping is also analyzing your numbers and using them to continue to grow your business. What are the patterns and seasons that pop up in your business? What things continue to repeat in your business?
Are all of your invoices paid: both to your vendors and from your customers? These are things you’ll catch when you do your bookkeeping more regularly.
Also, where are you spending money that you don’t need to be spending?
Just because its not easy for you and you don’t enjoy doing your bookkeeping, it is one of the most important factors of your business that needs to be done regularly.
Not looking at anything besides your revenue.
You all those business owners who post on social media how they just had a 6 figure launch?
They won’t tell you how much money they spent to have that 6 figure launch. They won’t reveal how much money actually stayed in their pocket.
And a lot of people don’t even know how much money actually stayed in their pocket.
To many business owners, the most important number is knowing how much money they brought in.
But that’s not the only number there is. You must also know how much money you spent in your business regularly as well.
Is your business actually producing a profit? Or do you have a loss in your business?
And just like above in the questions for not doing your bookkeeping, what are your patterns and seasons in your business? Do you make more money at specific times of the year? Do you spend more money at specific times of the year, or even month?
Not saving money for taxes and/or making estimated tax payments.
You always think you have time to make the payments or save the money.
But when you don’t actually save money every single time money comes into your business, then you don’t have to worry about this as much when it comes time to make the estimated or actual tax payments.
Taxes are a part of owning your own business.
When you work for someone else, the taxes come directly out of your paycheck and it’s not something you specifically have to worry about.
But when you work for yourself, you have no one else doing that for you. You do also get to count your business expenses against your income when you work for yourself, and you can’t do that with a job.
Save 20-30% of all of the money that comes into your business for taxes. Even if you don’t need that amount of money for your tax payments, it will help you build a savings fund for your business anyway.
Not spending time to understand your business money.
There are a lot of factors that go into your business money, not just the money that you bring in from your customers and buyers and the money that you spend.
There are fees that you pay in your business - merchant fees, for one - that you just can’t get away from. They are a business expense that you will always have.
You have to pay taxes in your business that are normally all done for you when you work for someone else.
You also need to keep your business and personal money separate.
You should be paying yourself on a regular basis from your business.
These are all aspects of your business money that you should be understanding and actually knowing in your business.
Only looking at your bank account to see if you can buy something in your business.
Just because there is money in your bank account today, doesn’t mean you can invest in that course that you think you want to buy.
You need to also know when more money is coming into your business.
You need to know what upcoming expense payments you have.
You should be looking at all things for your business finances, not just your bank balance to determine if you can buy something new in your business.
The smartest thing to do when wanting to make new purchases in your business is to create a savings account where you put money away for your business purchases that you want to make and only spend money on courses and purchases for your business from that savings.
Not regularly checking the activity in your business bank account and reconciling the bank account.
This is basically doing your bookkeeping.
Do you know what all of the transactions in your business bank account are? Do you know where your money is going?
Are all of your transactions in your business bookkeeping on your bank statement? Does your bookkeeping and your bank match?
Not separating your personal and business finances.
Your business and your personal finances should always be separated. There shouldn’t be any commingling.
Not only is this easier for you and your bookkeeping, it also makes it much easier if and when you happen to get audited. Everything is all in one place for your business when you keep them separate.
Plus, you won’t be forgetting stuff when it comes to your business expenses when you keep them separated. It is very easy to forget business expenses when you are always using your personal checking account to pay for everything.
And when you keep them separate, if something were to happen in your business, there is the separate, legal entity of your business versus your personal life.
Not using business accounts for your business money.
You should have a PayPal business account. You should have a business checking account. You should have a business credit card (if this is something you want). Any other financial accounts you have, should also be for your business.
This is very similar to separating your personal and your business finances.
Trying to avoid PayPal and Stripe fees (and any other fees you can avoid).
I get that the fees really do add up. But they are a part of doing business. They are a cost for most of the processors to be able to process credit cards, usually.
All businesses, big and small, have these fees.
You really shouldn’t add this fee as a separate fee to your invoices. Just raise your prices slightly to cover the fee.
This is a cost of doing business. It is a business deduction on your taxes to reduce your taxable income.
If you process payments for your business through a personal PayPal account, you run the risk of the account being shut down and losing all of the funds that are in there as well. PayPal’s terms of service are very strict in this aspect.
Just create the business accounts and pay the fees.
Bookkeeping mistakes really can break your business.
You need to know what is happening financially in your business at all times, and this is where your bookkeeping comes in.
If you need help with your bookkeeping and business finances, then hire it. You’ll end up paying more for the help if you continue to wait and let everything pile up. Plus, you may even end up paying more in fees for the taxes.
When everything is completed on a regular basis and you don’t wait for it to be done, then your business flows even easier, and you’ll even be able to make more money in your business.