I’m not here to make you feel bad or dumb. There’s a reason I have this list, it’s because I see these mistakes all the time, which means you’re not alone! But I want you to have the best information and practices to keep you compliant, secure, and financially successful.
- Not keeping records, receipts, and backups, or only keeping some of them – every single transaction should be on your books somewhere…every expense, every dollar of income. IRS requires you to keep everything for 3 years, but 7 is recommended. So just do 7. Have a folder in your email labeled receipts and send them all away to that folder once you see they’ve cleared your account.
- Waiting until tax time to do your books. Not only will this be super overwhelming when you are coming up on a deadline, and be so much more time consuming than doing them on the regular, but you could be missing things like people who haven’t paid you yet, charges that were duplicated, automatic charges for subscriptions you don’t even use. This could result in thousands of dollars that belong in your pocket!
- Not paying taxes or trying to cheat them – ignoring your taxes won’t make them go away, and you’ll rack up huge penalties, have assets seized, go to jail – no good things come of it.
- Commingling personal and business transactions. Read more here to find out all the reasons this is a no no.
- Not categorizing your expenses correctly. This can cause you to miss out on the right tax credits and affect your profit margin! Click here for the 3 most common ones.
- Not reconciling your bank accounts – verifying that all the transactions you put in your accounting software/spreadsheet have gone through your bank or credit card account or vice versa. Click here to find out why this is important.
- Not running your Balance Sheet and P&L so you can see where you’re at, what you have, what you owe, what you’re OWED, where your money is going and where it’s coming from. You probably have a rough idea, but this report will tell you the straight facts.
PS – I’ll be teaching how to better read your financial statements in my Bookkeeping: Beyond the Boring course I’m releasing soon. Click here to be notified when it’s available!
- Cheaping out on your outsourced bookkeeping – cheap isn’t always good. Click here to read the difference between a “just okay” bookkeeper and a great one.