Reasons Small Business Struggles With Bookkeeping

entrepreneur 696976 1280It is easy to pay little attention to bookkeeping when your business is going well. Why would you still go into the smallest details of your business when you can focus on more important things? Any business owner can hover on the brink of disaster with this mindset. Your business’ bookkeeping task does not end where your success begins.

In fact, you can’t take shortcuts on other tasks such as selling without prioritizing bookkeeping. You can overlook financial activities but once these errors take their toll on your business, it is already too late for you to realize that you have already made a costly mistake. If bookkeeping stays in background, you won’t be able to determine the factors that have driven the success in your small business.

Avoid These Bookkeeping Mistakes:

Failure To Maintain Records

A small business can swim in its pool of success and just watch the bookkeeping task take a nosedive. As the temporary allure of your business starts to fade, bookkeeping starts to resurface, but this time, there are numerous questions that quickbooks can’t provide any answers to. Record-keeping is important in every business. Even if you have already tasted the sweet success of your business, this does not take the glamour out of bookkeeping. Make sure you keep all receipts in a safe place as you will need them in the future.

Unaware Of The Amount You Spend For Your Business

It is perilous to every business to assume that there is still enough cash without budgeting your spending. Keep in mind that you are spending money to run your business on a daily basis. If you are complacent that you have sufficient money at your disposal, unable to keep your financial activities in check can make you spend more than you know. When budgeting the money for your business, make sure you separate them into 4 categories: 1. Fixed expenses; 2. Prospective income; 3. Paycheque-allowance; 4. Variable expenses. You should give priorities to needs more than wants.

Spending Rather Investing

There’s a difference between spending and investing. When you spend, your business does not obtain any benefits from it as you just let your money go out the window. On the other hand, investing your hard-earned money can help you reap long-term success. While it can be inevitable to spend, make sure that the benefits still outweigh the cost. Although the balancing act can be challenging, making a sound judgment usually does the trick. If you need to buy office supplies, think first if these are necessary to improve your business’ quality of work.

Not separating your business bank accounts

You can easily lose track of your cash reserves when you don’t separate your business and personal bank accounts. If you continue to follow this practice, you may end up using all the money for your business and you have nothing left to pay for your living expenses. You can avoid confusing your personal bank account for your business bank account if you pay your business expenses from a business credit card. There should be a credit limit so you can control your cash flow. It will also give you the ability to be more flexible.

Andrew Donnelly

Written by : Andrew Donnelly

Andrew Donnelly is a degree qualified accountant and registered tax agent. He is the principal of Brisbane Bookkeepers, which provides bookkeeping services to small businesses in Brisbane and its immediate surrounds.

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