Common Mistakes Start-Ups Make & How to Avoid them
Starting a business is extremely exciting, and more than a little nerve-racking. There are so many details to attend to and sometimes even important tasks don’t get done. The problem is, eventually, those tasks are going to begin to haunt you, and you’ll have no choice but to tackle them. Such is the case with bookkeeping. However, once you know the most common bookkeeping mistakes startups make and how to avoid making them yourself, you’ll have a much easier time.
Procrastination.
My favorite definition of procrastination is; ‘The Art of Screwing oneself’. I can totally relate to how true this can be for me specifically with the tasks I do not enjoy, I avoid it. It is amazing how good it feels to complete those tasks when I do, therefore I need to remind myself every time.
Bookkeeping certainly isn’t fun, nor is it exciting, however, it’s vital to the financial success of your company. It’s not something you can do sporadically, in fact, it needs to
be done regularly. Putting it off until later, soon develops into avoiding it. It’s easy to see that eventually, there are piles of paper and boxes of receipts, invoices, and other transactions to sort through and document. The problem is until you have everything inputted into your accounting software, you have no idea where your business stands. You could easily end up with less money in your account than you thought, and that could cause serious problems with vendors and cost you dearly in late fees and fines.
Avoid this by scheduling time in your calendar as though it were a business meeting. Take some time once per month to sort the documentation. Then once you have sorted through the paperwork send it to a bookkeeper for proper entry and organization of the financials. By doing this you are freeing up your valuable time to work on your business
Lack of Organization.
Organization is one of the most important aspects of bookkeeping. Filing invoices, sales receipts and other items by date and company name makes it easier to manage, but it also helps to ensure that nothing is missed. When it comes time to reconcile your bank statements, for example, it will take less time to simply go through them if they are filed sequentially. In addition, when tax season rolls around, you will spend less time searching for missing receipts and other documents, making the entire process that much simpler. This is true, whether you are doing your own bookkeeping, or you hire an accountant to take care of it for you.
Technology has made this easy and timely for bookkeeping and getting up-to-date information for your bookkeeper and for you to get reports in a timely fashion and provide a sense of relief that you have the necessary backup should you ever have to go through an audit, this fact alone should be enough to look into these readily available options!
Use a digital capture app (ie Recieptbank, Dext, Hubdoc). Digital capture is a system or an app that allows you to take a picture of a receipt, invoice, bill, statement, etc. and to upload it into a holding area that can connect to bookkeeping software (attaching the picture to the transaction within the software) and can store this information for several years. Voila, your bookkeeper gets the necessary documentation in record time!
Doing it Themselves.
With all the do-it-yourself accounting software programs on the market, many business owners are under the impression that it’s something they can, and should, do for themselves. Although it is not impossible, there are some sound reasons to outsource bookkeeping tasks to a professional. A professional bookkeeper understands that the tendency to procrastinate causes problems. Therefore, they take a straightforward, get it done as soon as possible, approach. Secondly, they have the latest technology and the knowledge of how to use it effectively to manage your books. Finally, they can also provide financial statements, perform payroll duties and prepare and file quarterly and annual taxes.
Xero recently did a key study determining that the success rate of businesses who work with a bookkeeper was much higher than those who do not. The study found that after five years in business, 85% of businesses who employed bookkeepers were still running. At the beginning of this book, I shared the statistic that only 50% of all small businesses were still in business after five years. There is a marked difference when the right supports are in place.
Stop “Winging it” and start planning, get a team of experts and use them!
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Main author; katryna coltess