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Small Business Owners Struggling With Bookkeeping

Small Business Owners Struggling With Bookkeeping

Bookkeeping, along with accounting is the language of business and it is the skill that every entrepreneur needs to master when planning to put up a business. There are several reasons bookkeeping should not be set aside even when your business is already doing well. 

Although it can be such a daunting task, it really pays off when you know how to keep your finances in check. Aside from helping you monitor your budgeting, bookkeeping will also help you lodge timely payments. Unfortunately, not every business owner has appreciated the benefits that bookkeeping provides. When success is within their reach, bookkeeping becomes a thing of the past. 

While some manage to cope with the demands of running a business, some just can’t keep up with it. For every business growth comes another opportunity for you to look at your time management skills and when you get sidetracked by other tasks, making bookkeeping the least of your priorities, you may need to redo how your business operates.

Common Mistakes That Small Business Owners Make

Trivializing budgeting 

When there’s plenty of room for advancements, budgeting your spending becomes trivial because you are solely focused on the more important tasks that you think are responsible for your business growth: selling or marketing. Bookkeeping is designed to keep your finances in check. It’s been created so you will have a full summary of your expenditures, income, sales and others. The business budget has four categories and these are fixed expenses, paycheque-allowance, prospective income and variable expenses. You should also set realistic balancing where you prioritize needs more than wants.

Unnecessary Expenses 

Doing some upgrades so you can improve your business’ quality of work is definitely a must, but you need to know the difference between spending and investing. When you invest, you are spending your hard-earned money on things that will allow you to reap long-term benefits. Expenses can either help you obtain current or long-term benefits. Focus on expenses with long-term benefits because even if you have spent much, you can be sure that these benefits have significantly outweighed the cost in the long run.

Underestimating Record-Keeping

Have you ever found yourself totally confused of your business’ financial expenditures? Maybe you are missing out on maintaining records and keeping all receipts? If this is the case, make it a habit to keep invoices in a safe place where you can easily retrieve them when needed. It can save you from losing important records and you will also be more aware of your expenses. It is recommended that you use bookkeeping software that gives you the ability to upload receipts. 

Failure To Separate Personal And Business Bank Accounts

When the money you used for business is the same as the one you used for your living expenses, losing track of your finances seems an easy thing to do. You might think that keeping both under the same account is a good way to manage your cash flow but the truth is, you can easily spend more than your credit limit because you think that you have steady cash flow. You have not prepared for the worst case scenario, which is going flat broke at the end of the month. The money that was intended for your living expenses have been spent on your business expenses. Not a good idea at all. 

Tamara Deterding

Written by : Tamara Deterding

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