Why Your Business Needs a Full-Charge Bookkeeper

Even the most passionate and experienced business owners often overlook many of the accounting aspects of running a business. However, keeping your business’ finances in order is no easy task. When significant financial mistakes are made, it will not matter how qualified your employees are, or how many loyal customers you have. Your business can end up in trouble.

The Top 10 Bookkeeping Mistakes

  1. Using the wrong accounting method – It is important to understand which accounting method is right for your business. There are many factors that go into deciding between cash vs. accrual basis reporting: whether you use accounts receivable or accounts payable for example. Your CPA can help you determine which method is best when you file for your first tax return.
  2. Combining Personal with business expenses – Personal and business expenses should be kept separate at all times. Business owners are strongly advised to open a business checking account to record all the deposit and expenses. Any credit cards you use for business expenses should be separate and under your business name as well.
  3. Not understanding the difference between cash flow and profit – As stated earlier, it is important to understand the difference between cash and accrual reporting and to stay consistent. A company can be profitable with little cash flow and conversely, can have positive cash flow without being profitable. It all depends on how you are recording revenues. If you are using the accrual method, you could show a larger profit but not have a good handle on your cash flow.
  4. Inconsistent or inaccurate account reconciliation – Reconciling your books against the monthly business bank statement is a fundamental accounting You should never force balance your books; make sure all your deposits and expenses match your bank statement.
  5. Not backing up electronic or hard-copy files – You never want to be in the position of being audited with your computer down and an inability to access the documents you need. Having a paper trail is always a win in
  6. Being nonchalant about petty cash – Petty cash is convenient for purchasing stamps and office supplies but it is important to remember that it is not ‘extra’ cash and must still be correctly accounted for to make sure all expenses are being recorded.
  7. Inaccurate classification of income and expenses – Misclassifying an expense item can result in inaccurate financial statements and tax returns. Ensure your bookkeeper understands your accounts and descriptions when entering them into the accounting
  8. Inaccurate collection and reporting of sales tax – Businesses need a permit to collect the right amount of sales tax and must know which products and services are taxable and which aren’t. All sales taxes must be filed. Even in the event, your business has zero sales for that month; you must submit a zero return to the This does not apply if your business does not charge sales tax; in that case you do not need the permit or to report a zero return.
  9. Mishandling credit card entries – It is important to reconcile your credit card statements as you would a bank account; you need to record every expense from the statement and know that this will affect your Profit & Loss and Balance Sheet.
  10. Not backing up the QuickBooks File Daily – If you are using QuickBooks Desktop, files should be backed up daily in case there is an unexpected computer If you are using QuickBooks Online, there is no need to backup your files as you can access them remotely.