When you own your own business, you’re suddenly thrust into a million roles at once. You’re the boss, the employee, the secretary–and, yes, the accountant too! If numbers aren’t really your thing, handling your own bookkeeping can be quite the challenge. But when your budget can’t fit in the expense of a professional, you don’t have much of a choice. That’s a good thing, though; you’re perfectly capable of rising to the challenge. Just be careful not to make these common bookkeeping mistakes.
1. Using spreadsheets instead of software. Excel is all well and good, but these days, there’s so much affordable and accessible bookkeeping software that there’s no reason not to take advantage of it. Many of them will allow you to do so much more than a spreadsheet–like creating invoices, create reports, and accept online payments.
2. Not being aware of all your tax deduction possibilities. Read up on small business tax deductions, and take as many as you qualify for! This can include deductions for every mile you drive for business reasons, or space you use as a home office.
3. Lacking financial literacy. Familiarize yourself with the terms financial professionals need to know–like “profit and loss statement,” “accounts receivable,” what can qualify as “assets” or “liabilities,” etc.
4. Trying to do your taxes yourself (especially the first few years). Bookkeeping is one thing, but taxes are a different animal. If you’re feeling overwhelmed with forms and not sure where to start, hire a small business tax professional.
5. Using cash instead of cards. As long as you use cards wisely and pay off the balance in full each month, there are plenty of benefits to opting for them over cash. For one, they make it easier to track your spending. For two, they give you a paper trail in case you’re ever audited. And as a bonus, you can earn cash back or travel rewards with them!
6. Tracking expenses improperly. Saving receipts is fine, as long as that’s not your only system. Log each and every expense in that accounting program you should have gotten as soon as you read list item #1!
7. Allowing expenses to exceed revenues. If this is happening to you, try to cut back on expenses wherever possible, or get a working capital loan to get you through the lean times.
8. Being afraid to ask for help. Some people just aren’t cut out for bookkeeping. If it’s causing you a lot of stress and negatively impacting your ability to run the rest of your business, see if you can crunch the numbers to afford some help.
Running a business is stressful, so the final piece of advice is don’t forget to breathe! You’ll get the hang of this bookkeeping thing eventually.