I am going to share today 7 common mistakes that business owners make when they are not compliant with their bookkeeping.
- Not issuing an invoice to clients – Have an invoice for every service or product sold.
- Not keeping track of invoices overdue – Some sales invoices may not be paid in full. Keep track of what comes in and from where to make it easier to reconcile.
- Not keeping track of money in – Use the deposit book every time you deposit funds to your business bank account. Make notes for amounts that are not income such as loans, reimbursements, refunds for returned items, transfers from other accounts, etc.
- Making payments before getting an invoice – Do not pay if you do not have an invoice. Otherwise, it will be difficult to find out what that payment was for and even have to chase contractors later. You need proof of purchase even if wrote a cheque (proof of payment) to a specific vendor. If you cannot prove your claim with a proper receipt or invoice, it will be disallowed.
- Paying cash for anything- Avoid cash transactions. It is very easy to lose track of expenses.
- Using various accounts to run your business – Avoid mixing business with personal transactions. For instance, if you filed a claim with your insurance company, make sure you deposit the proceeds received to your company’s bank account. Even if you paid for the expenses personally. Once the proceeds are deposited in your business account, you can provide an invoice with the receipts attached to it and be reimbursed.
- Treating money in the business as savings account -Take a salary to avoid the unpleasant surprise at year end when you have a big tax bill and no money to pay for it.
I hope you can follow some or all of the tips above to better manage your papers. Your papers are money in and out of your business. If you take care of them, your bottom line will not be healthy due to lack of documents.
“Reduce risks, pay on time, be efficient and save money and time. “ Renata Magalhaes