5 mistakes small businesses make when doing their own bookkeeping
Picture this: your business is underway and all of a sudden you’re immersed into the highs and lows that come with a start-up. First things first, you’ve pinned down your priorities on the wall; Networking. Contacting prospective clients. Building rapport with existing clients. Check, check, check! However, resting silently on your desk with its devious gleam, is that growing pile of invoices waiting patiently to be noticed.
While it isn’t the fanciest of jobs, bookkeeping lies at the crux of a company’s success, and silly mistakes can cost you significantly. Stay tuned for 5 of the most common errors you want to steer
Mistake #1: Not hiring a professional to handle taxes
Want to save money by doing your own taxes? Think again. Small business owners often fail to claim all the deductions they qualify for, or underpay their tax amounts, which can result in severe
legal and financial penalties.
Investing in resources to hire a professional equates to customised specialist expertise and you’ll be well equipped with the glorious secrets of the trade to enhance your financial position. Not
only will you be updated on shifting tax laws and alerted before budding tax rises, but a professional bookkeeper keeps the costs of an accountant at bay, since they do all the preparation
for you. Besides, another pair of eyes keeping track of your finances never hurt anyone!
Mistake #2: Failing to predict cash flow
These days, it’s become all too habitual for business owners to take a glimpse of their bank balance and disregard creating a future cash flow estimate of their company. Creating a reliable
cash flow forecast can help you pinpoint and plan your responses to drawbacks in cash long before these problems arise. The benefit of this technique is twofold; you will secure your credit and
avoid damaging your rapport with creditors. Here’s a tip: Go online to discover plenty of cash flow forecasts, or, request your accountant to give you a helping hand if need be!
Mistake #3: Disregarding budgeting and not getting rid of inefficient costs
As stated above, many small business owners plainly forget to write up their cash flow predictions. Doing this will help you in refining your budget by detecting unprofitable expenditures over a long term cycle. From there, you can discern whether or not certain expenses have positively influenced your revenue or added value to your enterprise. Simply put, if these added costs trump
your return on investment, you can cut it from your budget before any damage is done!
Mistake #4: Ambiguous terms and conditions in contracts
As the owner of your business, you must hold your ground. Be upfront and smart with payment terms without settling for less. With a clear-cut payment outline, you’ll be aware of exactly when
the payment is due to arrive, without getting less value than you are entitled to. Create a straightforward framework when providing a quote and replicate this same method for your
invoice. Often, small businesses fail to be succinct within their contracts, and this merely confuses both parties involved.
Mistake #5: Delaying your invoices
Now that we’re on the topic of invoices, it’s time to raise the concept of punctuality. Without a bookkeeper, numerous small business owners have postponed the distribution of their invoices,
which has only served to delay their payment date. To avoid this, ensure you send out any invoices without further ado, because gaining sound value and consistent profit is what you’re in business
for. Don’t hold back on a follow up after your client has gone silent prior to an invoice!
Well, now that you’ve reached the end, give yourself a score out of five in terms of how many of these mistakes you’ve averted. Staying on top of these issues isn’t hard! All you need to do is get
your foot in the door to start.