One of the biggest mistakes small business owners make is not doing their bookkeeping tasks properly or not doing them at all. You forget about one financial report, and soon enough, you’re swamped in an ocean of paperwork, invoices, and journal entries. If you aren’t careful, it’s very easy to fall behind on your bookkeeping tasks.
In this article, we’ll go through the five most common reasons small businesses fall behind with bookkeeping. We’ll also give you some advice on how to get ahead and improve your company’s bookkeeping.
Bookkeeping and accounting are often the most challenging parts of running a small business. While it may not be the most interesting aspect of work, without proper bookkeeping, your organization could face severe consequences in the long run. Suddenly, tax season is just around the corner, and you realize you’re out of time. Improper bookkeeping can even result in the end of your small business.
There could be several reasons why your small business bookkeeping is behind. Here are some of the most common issues:
Small businesses can fall behind with bookkeeping due to a lack of organization and time management. Although procrastination seems harmless at first, it can create a lot of problems. This is especially important for startups. If you don’t prioritize bookkeeping from the start, you’re setting your small business up for failure.
Think of your organization like a working engine. If just one gear wheel stops rotating, it will slow down, and eventually prevent the entire machine from functioning properly.
If you’re handling bookkeeping tasks on your own, your workload will increase in a matter of months. One option you have is to set aside some time each week to finish all your bookkeeping tasks. Make it your number one priority until all the receipts, invoices, and financial statements have been organized.
The best thing you can do for your company is either hire a professional bookkeeper or a virtual bookkeeping service. It’s a bookkeeper’s responsibility to keep track of every dollar coming in or going out. Doing this will allow you to focus your time on matters you can actually handle.
Assigning all your company’s bookkeeping tasks to anyone other than a professional bookkeeper is a serious mistake. What’s more, it’s a mistake that many small business owners make when they first start out.
You may think that you can handle it, but it’s always best to leave the financial reports and cash flow statements to someone who understands them. Preferably, someone with a degree in finance. A degree in business will not suffice.
Don’t undertake these financial tasks if you’re not good with numbers. It will put your entire business at risk. Even the slightest mistake in one financial report can lead to an array of issues in the future.
The solution to this issue is simple – hire someone who knows what they’re doing. If you choose to hire an online bookkeeping service, like Swyft Books, you’ll be working with professional bookkeepers with valuable experience. You won’t have to worry about financial statements or organizing invoices. Swyft Books bookkeepers will also prepare your tax returns for you, so you can remain calm when tax season comes around.
Most people avoid bookkeeping because it can be extremely boring and time-consuming. While it’s true that bookkeeping takes up a lot of your time, the more you put it off, the more you’ll need to catch up with everything. Even when you finally find the time, you’ll rush through all the reports and paperwork.
There are a couple of things you can do to catch up on all your bookkeeping tasks. The first step is to find all your business receipts and invoices. They should be categorized according to time and date. Bookkeepers usually store all of the financial documents in a general ledger.
Another thing you can do to get ahead of your bookkeeping tasks is to reconcile all your bank accounts. To avoid any issues with the IRS, make sure that your business expenses are separate from your personal expenses. Having multiple bank accounts is always a wise idea. Once you’ve caught up with all your paperwork, don’t allow the same situation to happen again.
If these tasks are too overwhelming for you, consider leaving them to a professional. If you hire Swyft Books, then you won’t have to send your financial records or receipts personally. Instead, our online bookkeeping service will access these documents through online banking and your merchant processor.
You don’t have the time to finish all your bookkeeping tasks, but you’re worried that a bookkeeping service will cost too much. Even though you have to set aside resources to afford a bookkeeper, it will be money well spent. Think of it as an investment in your small business.
If you’re not sure whether you should hire a full-time bookkeeper or outsource an online bookkeeping service, the latter is actually more affordable. There’s more to hiring a full-time bookkeeper than just payroll expenses. You also have to consider all the employee costs, such as insurance, benefits, training, recruiting, taxes, and other additional fees.
Outsourcing a bookkeeping service is the smarter option, as you have to pay for the service and nothing more. If you prefer to handle all the bookkeeping tasks on your own, and you don’t want to pay for any type of bookkeeping service, it will cost you a lot more in the future.
For example, if you make a mistake while doing your tax returns, or if you accidentally don’t include something, you might have to pay a fine.
Lastly, some small business owners like to believe that they can do everything on their own. While some find bookkeeping and accounting intimidating, others don’t take it seriously.
Even if you are good with numbers, taking on too many responsibilities at once is a risky move. As the work piles up, the greater the chances of you making a mistake. This kind of attitude could result in negative consequences. It’s better to be safe than sorry.
Not to mention that you would have much more free time if you hired a bookkeeper.
Falling behind on your small business bookkeeping is easier than you might imagine. That’s why it’s important to stay organized, keep track of all your business expenses, and compile financial reports in a timely manner. The best thing you can do for your small business is to hire an online bookkeeping service.
If you hire Swyft Books, you’ll get a free trial. After making sure that Swyft Books is the right fit for your small business, you won’t ever have to worry about taxes, invoices, and financial statements again.