For anyone running a small business, there are myriad tasks to take care of on a daily basis, and it’s not unusual for important things like bookkeeping, inventory and payroll to start slipping through the cracks. However, making even the smallest of mistakes when it comes to bookkeeping, can lead to big problems with the IRS, missed tax saving opportunities, and can even stall growth.
Fortunately, working with bookkeeping services in Coral Gables offers the perfect solution for busy small business owners, helping you to avoid making any of the following costly DIY bookkeeping errors:
Mixing personal and business finances
Although this is a commonly made mistake, it can be among the most costly. Not only does it invariably lead to tricky expense tracking and inaccurate tax deductions, but it can lead to hefty IRS fines.
Having a dedicated bank account for your business, using a business-only credit card, and organizing all receipts in cloud storage, are good ways to avoid this.
Neglecting regular account reconciliation
Matching your books against your bank statements should happen every month, so that fraud or double entries can easily be spotted. There are tools such as software available to help you do this nowadays, but nothing beats the human eye when it comes to looking for errors.
Not classifying expenses correctly
Tax categories for deductible expenses can be confusing, but misclassifying them can trigger an audit or penalty, as well as mess with your reporting. With a bookkeeper to guide you, you need never misclassify a business expense again.
Poorly tracking invoices and payments
Poor habits surrounding invoicing and payments, such as unclear payment terms, lost invoices and a lack of follow-ups, can put a serious chokehold on cashflow. But with the help of invoicing tools, you can send invoices in minutes, set up automatic reminders, and accept online payments.
Ignoring payroll tax compliance
Guesswork won’t cut it when it comes to payroll taxes, especially with compliance becoming increasingly complicated year-on-year. Federal updates, rules that are state-specific, and changing employee classifications might have made more payroll taxes even more confusing, but getting it wrong can lead to hefty penalties from the IRS. Cut out the risk by working with an experienced local bookkeeper.
Never seeking professional help
You may be able to cope with some elements of your small business bookkeeping, but even if you think you’re doing a great job of it and are saving the cost of a bookkeeper, mistakes you’re highly likely to have made, could come back to haunt you quicker than you might think.
Ultimately, DIY bookkeeping can lead to inaccurate reports, missed deductions, and tax forms that have been misfiled, all of which can contribute to the eventual downfall of your entire business. For a reasonable fee, however, you can work with bookkeepers and experts in tax preparation in Miami to ensure you never make any costly mistakes, are always compliant with changing rules and regulations, and keep your business heading in the right direction.
A shaky financial foundation – the result of well-intentioned but potentially disastrous DIY bookkeeping – could see your whole business topple to the ground. Prevent this from happening by working with a bookkeeping service from the outset. It really is as simple as that.