Multitasking has become a virtue, and it’s therefore not uncommon for small business owners to believe they can sail through their bookkeeping duties without breaking a sweat. Now, although bookkeeping is simple in its working, business owners forget that bookkeeping still requires great attention to detail and a significant investment of time. But, regardless, businesses don’t see the value of having a full-time bookkeeping department employed. It’s understandable, housing a full-time department may turn out to be expensive. But, in most cases, that may turn out to be a fruitful investment. Here, we intend to elaborate on how some business owners are left grappling with common bookkeeping errors.
Mixing Business Expenses with Personal Expenses
It’s important to make the distinction between a personal account and a business account as one can’t use either of them interchangeably. There are several reasons why business expenses and personal expenses shouldn’t be mixed. For instance, you can’t get deductions for some of the expenses you failed to add, and you’d essentially be breaking the corporate veil if you’d be doing so. And, finally, if you do end up correcting these mistakes, you’d end up doing extra work to make corrective journal entries.
Not Being Regular With Transactions
Another systemic problem that business owners tend to face with bookkeeping is the lack of regularity on their part. We have seen instances where a business owner finds themselves in a tricky position with months and months’ worth of transactions to sort through and the deadline for filing returns fast approaching. In this situation, if your transactions don’t tally, finding the pin (mistake) in a pile of dry glass (transactions) can be a daunting task.
Not Maintaining Records
How are you going to make your set of applicable deductions if you’ve misplaced your receipts? Not storing your set of receipts can prove to be a massive blunder if the Canadian Revenue Agency comes down to your office for a round of audit. To be on the safer side, it’s imperative that you store receipts and other important papers for a period of seven years at the very minimum, you can even consider storing your receipts digitally. But, not doing so certainly qualifies as a bookkeeping error.
Doing it all By Yourself
Trying to manage your company’s bookkeeping tasks can prove to be a more demanding challenge than you thought at first, especially if you aren’t well-versed with financial management. Well, that’s because the accounting framework is subject to constant change and revision, and not having a specialist to look after these changes is a bad idea. A professional bookkeeper would know how to categorise all transactions, would be regular with their duties (bookkeeping can be tiresome and monotonous), and would prevent you from making common bookkeeping errors that we’re listing out.
This is the era of specialization, and it makes sense to allocate your bookkeeping responsibilities to designated experts. We, at Integrated Accounting Business Solutions, understand the challenges faced by a business owner and we extend our financial services for your benefit. Contact us to learn more about how we can help you.