An organized record of key financials like expenses and expected income is key to success for small business owners. For this reason, a proactive bookkeeping strategy through automated bookkeeping software is essential. With an online approach to bookkeeping, you can ensure that your files are always backed up and available for reference. A remote bookkeeping service can help those who are unfamiliar with using the software succeed to its full potential. Sloppy record keeping can lead to overspending, uninformed decisions, and other lapses in judgement. These are eight of the most common bookkeeping mistakes that can plague your online financial records.
1. Undeposited Funds
Payments that businesses receive from customers via QuickBooks are not automatically allocated to a specific account. Consequently, the online bookkeeper must manually deposit these funds into your bank account. Until they take that action, this money will remain in the undeposited funds account.
Having this money in both the undeposited funds account and the customer’s payment account will cause you to overstate your income.
For example, if one customer is paying you in September for services rendered during August, then the money will stay in the undeposited funds account until it is manually placed in the appropriate account.
Being vigilant about depositing your funds will help these financials to stay on track. A remote bookkeeping service can ensure that undeposited funds are promptly allocated to your bank account of choice.
2. Failing to Record All Assets
When generating a balance sheet, it’s important to include all assets relevant to your business venture.
Assets invariably comprise a large percentage of a business’s overall wealth. This includes obvious liquid assets like money in the bank account, as well as other less obvious assets like an office space, inventory, undeposited funds, and any technology or machinery related to the operation of your business.
Neglecting to record all of your assets will lead to an inaccurate balance sheet. This is especially crucial when reading your liabilities in relation to your assets. For the most precise measure of disposable income, be sure to keep these figures in line. A remote bookkeeping service can help you to make a comprehensive and accurate list of this information.
In some cases, it makes sense to duplicate an account in Quickbooks. If you are examining the state of your accounts with increased income, then this tactic would work well. When this isn’t the case, however, a duplicated account can cause quite the headache for your designated bookkeeper.
Duplicated accounts are easily overlooked, and can cause confusion for those reviewing formulated reports. Additionally, logging expenses or income into two separate accounts with the same name (or a misspelled account) can lead to the same headache. A remote bookkeeping service can help your company to avoid these accounting pitfalls.
4. Duplicated Customers
A strong attention to detail should be the ultimate goal for all online bookkeepers. This is especially true when entering information about customers. In the same vein as accounts, an inadvertently duplicated customer account can be a source of great stress.
Regardless of your business model, you should always have a simple and convenient way to read and interpret customer payment data. Errors like duplicate customer accounts cause business owners to read the incorrect data about their relationship with customers. Consequently, this can drastically affect business relationships. If you do find duplicate customers, the best course of action is to merge these two accounts.
5. Duplicated Vendors
Whether you operate an ecommerce store or a family-owned retail outlet, accurate financial records will go a long way.
Being diligent about inputting vendor information properly will allow you to best document your long-term relationship. It can help you to maintain precise records of payments owed, and gauge the profitability of their inventory. Without all of this information in a designated area, making informed decisions is almost impossible.
6. Open Bill Reports
For copacetic record-keeping, it’s best to pay any and all bills immediately. Without doing so, you may accumulate various debts, which can harm your business in the future. This practice will not only help you to stay on top of your payments, but also to keep your open bill report page blank.
If a vendor bill that your business paid still appears to be “open”, then there could be a larger problem. Thus, it’s important to keep your vendor payments linked to your bills. Without this association, your balance sheet will be inaccurate, with the added possibility of overstating your expenses. Additionally, oversights like this might inadvertently cause overpayment. With a bookkeeping service hosted in the cloud, you can rest assured that your records will be accurate and up-to-date consistently.
7. Open Invoice Report
Similarly, open invoices that indicate a client has not paid their balance are also an issue. This lack of association between customers, their invoices, and payments within the Quickbooks system can impact your projected earnings.
You should be proactive in ensuring that this connection remains intact. And, doing so will enable you to charge customers for the appropriate amount, rather than a lesser amount. It will also prevent you from overcharging customers, which could have irreparable consequences.
8. Cost of Goods: Negative Amounts
Another key component to keeping precise financial records is noting how much you spend on goods.
For retailers, keeping up inventory is one of the main costs of operation. By having a negative amount in this line, you are indicating that you were paid to receive these goods. In almost all cases, this is impossible. If your business is audited while the cost of goods is less than zero, this could cause further governmental investigation. Above all, a finance-savvy remote bookkeeper can ensure that these numbers are in order, preventing these investigations.
Without information that can be easily interpreted, your business cannot live up to its full potential. The above tips will help your business to keep organized, direct and clear financial records, which will aid in making informed decisions. Margo’s Bookkeeping specializes in providing remote bookkeeping services to help small businesses understand and utilize their financials.