This blog post will focus on some of the top mistakes some business owners make when it comes to bookkeeping, and how you can avoid them. These tips can help you keep your finances in order, and ensure all of your financial obligations are being met. The best thing is that these tips can help you in more ways than one. Here are four fatal bookkeeping mistakes small business owners make.
- Mixing personal and business funds
Once you start making money and accumulating expenses, muddying the waters with your personal finances can make the already stressful task of running a business even more difficult.
In this blog post, we discussed in detail why you should not mix personal and business funds. While it may seem more straightforward to keep your personal and business funds in one account, you will eventually find out that separating both accounts will save you time when reconciling your accounts.
- Manual Bookkeeping
Let’s face it, running a business is stressful in and of itself. Managing suppliers, managing customers, and sorting through orders are important responsibilities for any business owner. It’s quite draining to then add manual bookkeeping to your already full pile of daily tasks.
Also, you may think that documenting your cash flow in an online spreadsheet is ‘digitising’ your bookkeeping, but this in itself is wrong as it does not help you track from the source which goods or services have been sold or are doing better than others.
Manual bookkeeping has a major flaw, which is human error. There is the possibility of making minor or major mistakes. To completely eliminate the risk of human error, you are advised to automate your business finances. Read more on how to choose the right bookkeeping system for your small business.
- Using Bookkeeping Software Incorrectly
It is one thing to know that automating your bookkeeping is important, it is another to know how to use bookkeeping software correctly. When you use your accounting software wrongly, it messes up your records.
Consider using software whose customer support team is easily reachable. You may want to ask yourself the following questions before picking an app.
- Is the support free?
- What time zone are they in? Keep in mind that time zone changes can cause you to lose a lot of time.
- Does the support staff have experience and expertise with the software and your needs?
- Are there multiple ways to contact customer service, such as phone, email, and online chat?
As it is with everything else, putting important work off until the last minute is not productive. Being on time with your bookkeeping is as important as every other responsibility in your business.
Develop the habit of doing your bookkeeping on time. Reconcile your accounts and get your monthly records together on time. This way, you are well informed of trends in your business finances and can act on them immediately after you recognise them.
Learning from mistakes, internal or external, is very important for business owners. Mistakes, particularly with bookkeeping, are quite fatal to the business and should be avoided at all costs.
Dukka is a leading bookkeeping and payments app. We provide solutions for bookkeeping, payments, cash flow management, and access to finance for small businesses in Africa. We are building an OS for commerce for African merchants.
To learn more about what Dukka is doing or to have a general chat, visit Dukka.com.