From sole proprietorships to multiple partner LLCs and corporations, bookkeeping is one of the most important aspects of running a successful business. Without solid and accurate bookkeeping, you don’t know where the financial health of your business truly stands, you can’t be approved for business loans or lines of credit, and you can put in jeopardy everything you’ve been building.
Here at Maggi Tax, the friendly and expert small business bookkeeping pros understand that sound bookkeeping is at the heart of any good business endeavor. But unfortunately, the problem for many small business owners is that it’s a tedious job and stressful to stay on top of all the time, leaving room for costly errors.
With that potential for costly errors, we wanted to discuss the five most common mistakes we see with small business bookkeeping so you can be sure to avoid them in your business.
Here are the five most common mistakes with small business bookkeeping that you need to know about:
Not Keeping Receipts of Less Than $75.
One of the most looked over aspects of small business bookkeeping is forgetting to keep receipts for purchases of $75 or less. While you may not have to show them to the IRS, they help provide backup documentation for many of the deductions you’re claiming on your tax return. Be sure to keep all receipts for less than $75 in one folder and use them at the end of the year to help your deductions.
Forget To Track Your Reimbursable Expenses.
This area can quickly add up to savings when tax time comes. As a small business owner, you’re most likely paying for expenses out of your own pocket or even with your own personal credit card. Don’t make the mistake of forgetting to track these expenses. You can prevent this by submitting them to your company for reimbursement.
Not Classifying Employees Properly.
When it comes to classifying your employees, it’s critical for your bookkeeping to ensure that you’re classifying every employee correctly. You must be sure you have each designated correctly, from consultants and independent contractors to freelancers and full-time employees. Why? Because there are different rules and regulations for employees and non-employees that impact your tax returns.
Not Reconciling Your Books Every Month.
One of the foundations of solid bookkeeping is reconciling your books against your bank statements at the end of every month. However, small business owners still do not take the time to reconcile their accounts, and this is the most common area where accounting mistakes are made and missed. When you hire the experienced and professional bookkeepers at Maggi Tax, we incorporate this into your personalized bookkeeping services, so you don’t have to stress over accounting errors ever again.
Not Deducting Your Sales Tax.
This is one of the most common small business bookkeeping mistakes we see with our clients. Small business owners often forget to deduct the sales tax from their total sales, which automatically results in a higher total sales amount but doesn’t do anything to lower the amount of taxes they owe.
These are five of the most common small business bookkeeping mistakes that we see here at Maggi Tax. However, there are still many others like petty cash nonchalance, miscategorization, or overcategorization, and even no paper backups to look out for when you’re doing your own bookkeeping.
Want to find out how the small business bookkeeping experts at Maggi Tax can help you grow your business and build a solid financial foundation? Call us today at (813)-850-0131.