When you need to do bookkeeping for your small business, you should ensure that you avoid some of the very common mistakes that are made all the time. Bookkeeping is one of the crucial things that you need to integrate into your business to keep it afloat and successfully push your business forward. We’re going to show you some of the common mistakes you should avoid in relation to bookkeeping.
Doing your bookkeeping yourself is a mistake. You should have a competent bookkeeper or accountant taking care of your business books, so that you can avoid errors and so that the job can be done quickly and effectively.
Neglecting to keep receipts of less than $75 is a mistake. Although you may not think it’s very important to keep the small-amount receipts, because they may be important for claiming deductions from the CRA.
Not tracking reimbursable expenses is a mistake. Always remember to track your out-of-pocket expenses as well as the expenses you pay with your credit cards or you may not be reimbursed for it.
Failing to properly classify your employees is a mistake. This can cause you to misfile your taxes in relation to your employees and non-employees.
Not communicating effectively is a mistake. You should be making reports and providing your bookkeeper with information or receipts necessary for the job.
Not making reconciliation with the bank statement on a monthly basis is a mistake. This is actually one of the most basic aspects of bookkeeping – it must be done and it must be done properly.
Failing to create backup documents is a mistake. You need to have some form of backup for your documents, just in case you end up in any sort of problems.
Not deducting your sales tax is a mistake. You have to deduct the sales tax from the total sales so that you won’t end up with a higher total sales amount, which means that you’ll owe more taxes.
Neglecting the use of petty cash is a mistake. It’s important to fill out a petty cash slip every time money is taken out for use. Ensure that there is a set amount of money allocated for your petty cash fund.
Another mistake is miscategorization or overcategorization. Simply put, you need to ensure that you don’t enter your expenses into the wrong category. You also need to ensure that you don’t create too many categories either.
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