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You could be making costly mistakes when you do your own bookkeeping

Posted by Edwina Fairley on Jul 6, 2017 8:43:00 AM
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olu-eletu-13086.jpgAre you an entrepreneur or small business owner trying to bootstrap your way to success? Times are lean and you’re bringing your lunch to work in a paper bag. You’ve got to watch every dollar and account for every missing pencil.

One of the easiest lines in the budget to cross out is bookkeeping. “No worries,” you think. “I’ll do my own bookkeeping. It’s just numbers and stuff. How hard can it be?”

Oh dear, here we go again.

Look, bookkeeping may seem simple. It may seem like the kind of dreary admin task you should really hire monkeys to do for you. But in reality, while having a simian bookkeeper swinging from the light fixtures and hogging the office fruit bowl may seem fun, too many business owners get themselves in trouble when they do their own books.

Here are three mistakes small business owners make when they do their own bookkeeping. Which ones are you making?

Mistake one: mixing personal and business expenses

Many entrepreneurs bootstrap their business from personal savings, and it can be a great way to get your business off the ground without accruing debt. But the crossover between business and personal should end there.

If you’re using your personal bank accounts and credit cards to run your business, you end up with a real headache to sort out come tax time. Also, how on earth do you manage to keep accurate budgets for both? Seriously, I am in awe.

Mistake two: not reconciling your accounts on a regular basis.

Reconciling your accounts regularly helps you to spot holes in your spending and ensures everything is tracking along the way it should be. Yet, it’s the first thing that gets put off when you decide to do your own bookkeeping.

With cloud accounting software, there’s really no excuse. Xero makes reconciling easy. In fact, it’s almost fun, like a game of Tetris where lines disappear once you match them up.

Mistake three: not keeping all the receipts

If the IRD comes knocking, asking you if this or that transaction is a legitimate business expense, you’re going to need to provide evidence in the form of your receipts. Once you hand those over, everything will be fine and you won’t be in any trouble …

… “Hang on a second. What receipts? You mean I was supposed to keep all those tiny annoying squares of paper?”

Um, yes. Yes you were.

And now you’re in real trouble. Not even your monkey can save you now.

How do you avoid these costly mistakes? The obvious answer is to stop doing your own bookkeeping. Hand the responsibility off to a professional human who can wrangle your accounts in order and help you stretch your money further.

That’s where we come in. Change gives you the best of both worlds – our philosophy is “humans where you need them. Software for everything else.” We’ll give you a monthly update on the facts and show you what to do to improve your financial health. We give you step-by-step, plain english answers to your financial questions, and we give you that year-round visibility that’s so key to entrepreneurial success. Go on, come talk to the team at Change today.

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