Don’t Sabotage Your Operations With These Bookkeeping Mistakes!

Don’t Sabotage Your Operations With These Bookkeeping Mistakes!

Entrepreneurs who are just starting their business, and lack the experience that comes with years of practice in the field often commit bookkeeping mistakes. In the absence of a deeper understanding of the accounting process and the inability to dedicate yourself to a certification course, you can’t hope to maximize the profits of your company and avoid pitfalls. Hiring a specialized accountant should be one of the priority investments of your company. Let’s find out the other things you do to ensure you won’t receive any hefty fines from the IRS and that you’re not squandering your budget.

1. Taking the DIY approach

There’s a limited time you can spend on improving your business and optimizing your strategies to earn a position of authority in a highly competitive market. Consequentially, if you choose to squander this precious time on menial tasks like bookkeeping instead of delegating them to a certified accountant, you’re not doing your enterprise any favors. The money you save on accountant fees won’t buy back that time. Furthermore, the lack of experience may lead you to commit bookkeeping errors.

2. Opting for the least expensive routes

A penny-pinching attitude is only healthy in the business world up to a certain point. Sure, we’re not advising you to go all out and spend the budget recklessly on irrelevant products and services. On the other hand, if you select an accountant just based on the low fees, then you won’t benefit from the expertise a seasoned, more expensive professional brings to the table.

3. Not negotiating your prices with suppliers

If you’re offering your suppliers exclusivity, then it’s time to leverage that aspect and negotiate a better deal. Again, this is where a professional accountant would be able to utilize hard numbers to help you negotiate from a position of strength, by showing the vendors how valuable your business is to them.

4.Not tracking low-value receipts

A low-value receipt that goes missing here or there might not appear to be such a big deal, but don’t forget that they do tend to add up. Over the course of the year, those $5 receipts could in fact total to hundreds, maybe thousands of dollars that you can’t write off on your tax deduction because you lack the proof.

5. Failing to understand when ‘immediate expense’ write-offs are used

The zero tolerance policy of the IRS and other fiscal authorities is a major incentive for business owners to learn exactly what they can and what they can’t catalogue as immediate expense. Mistakes are frequently made when entrepreneurs classify an expensive computer, for example, as an immediate expense rather than an asset with standard depreciation value, because they simply believe this expenditure is urgent.

6. Writing off charities as tax deductions

Charity donations can only be utilized for tax deduction purposes by private citizens. Businesses don’t possess the same benefit, because in general their donation is recompensed by media exposure, publicity, public recognition, etc.

7. Using outdated sales systems

Modern comprehensive POS systems are capable of integrating a plethora of functions into a single network. This includes financial statements, completing transactions, managing the inventory, tracking clients eligible for loyalty rewards, so on and so forth. While they’re more expensive than the standard cash register, they do tend to pay for themselves quite quickly.