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5 Expensive Bookkeeping Mistakes Small Businesses Make (and How to Avoid Them)
Five expensive bookkeeping mistakes that small businesses make (and how to avoid them)
Are you losing money without knowing it because of your bookkeeping? This Main Street Collective and LHS Bookkeeping article talks about five common bookkeeping mistakes and how to avoid them. Some mistakes are not doing regular reconciliations, putting expenses in the wrong category, not keeping track of inventory, ignoring depreciation, and mixing business and personal money.
1. Not doing regular reconciliations
If you don't do monthly bank and credit card reconciliations, you might miss mistakes or fraud. Solution: Make it a monthly requirement to reconcile.
2. Putting expenses in the wrong category
Putting business expenses in the wrong category can cause false statements and raise red flags for tax audits. Solution: Know what types of expenses you have and talk to a pro.
3. Not keeping track of inventory correctly
Bad inventory management can cause wrong profit calculations and the possibility of ordering too much or too little. Solution: Set up a system to keep track of your inventory.
4. Not Taking Depreciation into Account
If you don't account for depreciation of assets, you could miss out on important tax breaks. Solution: Know which assets lose value over time and get help from a professional.
5. Putting personal and business money together
Using the same accounts makes it harder to keep track of things and puts legal protection at risk. Solution: Set up separate business accounts.
LHS Bookkeeping helps Main Street Collective with QuickBooks cleanup, consultations, and ongoing support. They also help with managing large amounts of inventory and listing businesses in directories.