October is Small Business Month! đ While youâre busy carving pumpkins and replacing the Halloween candy you have likely eaten, thereâs one thing you donât want sneaking up on youâbookkeeping mistakes. No one needs the horror of untangling a financial mess come tax time. So, let’s talk about a few common blunders small business owners make (and how to avoid them), without scaring you off!
1. The “I’ll Do It Later” Syndrome
As the business owner, youâre running the show and bookkeeping is likely the last thing you have on your mind.. But putting it off is like letting dirty dishes pile upâeventually, you’re dealing with a mountain (that needs to be dealt with eventually!) Procrastination leads to rushing, errors, missed payments, and confusion. Image how difficult it would be to remember what you bought from Walmart this time last year, and where the receipt would be. Instead, try blocking off a little time each week to tackle your book work or consider hiring a professional.Â
2. Mixing Business and Personal Accounts
Imagine going trick-or-treating and tossing all your candy into one big cauldronâsure, it looks like a sweet haul, but now you canât tell the chocolate from the candy corn! Thatâs your bookkeeping if you mix your personal and business expenses and, depending on your company structure, personal transactions mixed within your business books can have potentially significant tax implications. Separate accounts keep things clean and clear. Get yourself a business bank account and ensure expenses are paid for from the proper account and all business sales are deposited into the business account.
3. The âAll-or-Nothingâ Approach
As the business owner, you should be focusing your time on growing your business. However, it is also important for you to understand the basics of your business finances and not rely solely on a service provider. While the DIY spirit is admirable, some things are best left to the prosâlike dental work, rocket science, and, yes, bookkeeping. Using tools like QuickBooks is great, but trying to do everything without an expert glance could cost you more in the long run. Bring in a professional bookkeeper who will work with you to ensure that you understand your business finances and obligations and who can work collaboratively to ensure your finances are helping to work towards your business goals.
4. Not Keeping Receipts
Letâs face it, receipts are like socksâsomehow they just disappear. But losing track of them can lead to missed deductions or trouble if youâre ever audited. Luckily, apps like Expensify or Dext let you take a picture and store them digitally, so no more crumpled paper jammed in your wallet!
5. Forgetting to Set Aside Money for Taxes
Ah, taxesâthe financial boogeyman that sneaks up when you least expect it. Forgetting to stash away money for taxes is like not stocking up on candy before Halloween nightâwhen the trick-or-treaters (aka the CRA) show up, youâre left scrambling.necessary.
As a small business owner, taxes might relate to payroll deductions, sales tax, personal or corporate income taxes. A separate business savings account can be used to transfer funds throughout the year so avoid any haunting surprises. A professional bookkeeper can help you to assess reasonable rates to set aside and provide other important tax planning tips..
Final Thoughts
Bookkeeping isnât everyoneâs cup of pumpkin spice latte, but itâs crucial for the health of your business. If you find yourself making these common mistakes, donât worryâyouâre not alone, and thereâs always time to course-correct. Or, better yet, hire a bookkeeper (like ahem us). Weâll handle the numbers, and you can focus on what you do best!
Happy Small Business Month! đ
