10 Bookkeeping Mistakes Entrepreneurs Make

Almost every entrepreneur messes up their bookkeeping while they’re learning the ropes. Thankfully, errors are easily caught and fixable. Here is our list of common bookkeeping mistakes:

Mixing business and personal spending

In the heat of a moment, it might seem easy to pay for a business expense with personal funds, but in the long run, it makes bookkeeping (and taxes) more complicated.

Not reading your financial statements

Financial statements are an important tool. If you don’t check them regularly, you won’t have an accurate picture and you may be missing out on opportunities, or worse, running into financial trouble.

Hiring an inexperienced bookkeeper

Like everything in life, you get what you pay for. Hire someone who has bookkeeping experience and knows what they are doing. They may cost a bit more, but they will be quicker and will save you money in the long run.

Not hiring a tax accountant

A great tax accountant knows how to maximize small business tax deductions, help you make year end tax moves, explain your sales tax obligations, represent you in the event you are audited, and can help point out strategic financial decisions to help your business grow.

Recording account transfers as income

When you’re transferring money between business accounts, be careful that you’re not coding them as income.

Neglecting sales tax

The government doesn’t care whether you know the tax rules - they just want their money. Have an accountant help you to calculate the sales tax owing and avoid paying penalties.

Not classifying employees correctly

There is a major tax difference between employees and contractors. Make sure you get them right so you don’t mess up your books.

Guessing your way through

A lot of entrepreneurs either want, or financially have to, do everything by themselves, but don’t play the guessing game when it comes to your finances.

Wasting time

If you’re using a bookkeeping system that isn’t tailored to your business, you will waste a ton of time trying to navigate it and make it work for you. Find a system that works and save yourself the headaches.

Putting it off

Most people don’t enjoy bookkeeping, and most people procrastinate on the things they don’t enjoy doing. Don’t let that happen to your bookkeeping. The longer you put it off, the harder it is to remember what that charge for $359.65 is for.