Being a small business owner is like walking on eggshells. You need to monitor your business closely to ensure its survival inspite of the tough competition among business industries. Unfortunately, there are instances when business owners lose track of the most important areas of business management. Your business is bound to fail if you take bookkeeping for granted. Aside from bad bookkeeping there are other reasons businesses fail. For instance, overlooking errors can take a toll on your record-keeping practices. If your data entries are incorrect, other areas of your business will also be affected.
1. Not tracking reimbursable expenses.
While small expenses may not hurt your business, habitually ignoring the task of keeping receipts can have a huge impact on your business. Small expenses are still part and parcel of budgeting and every item must be tracked so you know where your money has been spent on.
2. Not paying attention to backlog build up.
There is nothing wrong with focusing on the most important task that keeps the show on the road. However, constantly ignoring menial tasks such as bookkeeping may also get you into trouble and this can be stressful. Before the business opens, make sure you have a bookkeeping system so you can effectively keep track of other areas of your business without allowing a backlog to build up. Devote a specific day for reviewing both major and minor tasks.
3. Neglecting Bank Reconciliations.
Bank reconciliation is essential in bookkeeping process and just like other important tasks, this is something you cannot afford to neglect. Business owners should make it a habit to compare bank statements with accounting records to find out if there are errors that need to be corrected. Paying attention to bank reconciliation also prevent fraudulent activities that might be hurting your business if left unchecked. Business owners who fail to conduct bank reconciliation in a timely manner can lose thousands and make business suffer eventually.
4. Failure to learn the basics in operating bookkeeping software.
The idea of setting up a manual set of books for recording your business accounts can be a tiring process and be more prone to errors. Aside from the fact that the process is time-consuming, you need to pay close attention to details for you to make sure that the data you enter are correct. Every business should invest in a good bookkeeping software package that is not only easy to operate but can also minimise the amount of time you spend on the most important bookkeeping task. Business owners should make an effort to learn to operate basic bookkeeping software to gain deeper understanding of the information on the financial statement that a bookkeeper prepares.
5. Not having a separate personal and business account.
Your personal bank account needs to be separated from your business bank account because you can get everything mixed up if you do not kick the habit. A business owner may be faced with a tax problem if this issue is not addressed.
It is easy to overlook minor problems when you are too focused on the major areas of your business. However, bookkeeping is also essential because without it, your business will in chaos.