Bookkeeping Pitfalls to Avoid
Want to boost profits? Evaluate your systems and processes. When it comes to bookkeeping, everyone is in a different situation'; whether it's DIY or outsourcing. Find out what the most common pitfalls are and how to avoid them.
Which category do you fit into?
You do your own bookkeeping
Pitfalls: Costly mistakes such as duplicate transactions, mis categorizing expenses, and not properly reconciling accounts regularly.
How to avoid them: You should have someone double-checking your work to ensure it is accurate. You also want to have regular ‘money dates’ with yourself, preferably once a week, to review your books. Being thorough requires ample, focused time as well as continued education.
You've hired a bookkeeping company
Pitfall: You’ve hired a firm that doesn’t know your industry and/or they’re not up to date on changing technology or software integration.
How to avoid this: Interview potential bookkeeping companies and ask important questions such as, “How familiar are you with my industry?”, “How will I communicate with my team and what is your response time?”, and “Do you work with (insert name of your POS) often?”.
You have a CPA do your bookkeeping
Pitfall: Paying CPA pricing for bookkeeping. Not knowing whether your books are reviewed by someone else before they are sent to the IRS.
How to avoid this: Hire two separate firms for bookkeeping services and income tax filing. This way, you are not paying bloated fees for bookkeeping work AND you are confident of accuracy because multiple parties are checking the work.
You have a well-meaning friend or relative do your bookkeeping
Pitfall: You aren’t working with someone that understands what the numbers in a system like Shopify actually mean (not to mention software updates happen FREQUENTLY and require ongoing education to maintain) and if they mess things up, you’re potentially dealing with hurt feelings among friends.
How to avoid this: Don’t hire in-house, non-bookkeeper friends to handle the most important aspect of your business.
Getting it right when it comes to your books is crucial for your business and regardless of what stage you’re in (accurate, behind, messy, or completely out of whack) we can help you make it right.
If you need to outsource your bookkeeping, get a free cost estimate here!