We all can agree that basics of bookkeeping and accounting is not exactly the kind of task that anyone approaches with enthusiasm. It’s both tedious and time consuming.

However, that does not change the fact that bookkeeping is an important part of business. It allows you to effectively manage your business through maintenance of your company’s finances and other key indicators.

For effective business management there are certain bookkeeping mistakes you will need to avoid. These include:

Not maintaining proper Bookkeeping and Accounting records

Nothing can harm your business more than improper record keeping. This can be a huge problem especially during the tax season where you will have to spend hours searching for documents like past receipts.

The IRS can conduct an audit at any time. Failure to provide required documents can lead to heavy fines and penalties.

Not Categorizing Expenses

Any accountant will tell you that there are two different kinds of expenditures that companies can incur; capital and revenue expenditure.

Capital expenditure includes purchasing equipment and machinery that improve the operational efficiency of the company. Revenue expenditure on the other hand refers to day to day expenses.

A common mistake that bookkeepers make is that they do not accurately categorize their expenses. As a result, they face problems with cash flow management. They might also miss out on tax exemptions because of this.

Not Paying Attention to Sales tax services

There are some businesses which fail to report sales tax. What they do not realize is that failure to do so can result in heavy fines and penalties.

Lack of Proper Communication

There needs to be proper communication between bookkeepers and employees within the company. The bookkeeper needs to be aware of everything happening within the company.

Think of it this way; the company is planning on launching a new promotional campaign and has allotted a certain amount of money to the marketing team.

It is the job of the bookkeeper to determine if the company has enough funds available to finance a campaign like that or not.

Not Classifying Employees Correctly

Not all people who work within a company are full time employees. Some of them are hired to work on a specific project. These people are referred to as independent contractors.

The tax rates are different for independent contractors and full time employees because of which it is important that you properly classify all the people who work in the company.

Struggling with bookkeeping?  How about outsourcing the job? We can help you with basics of bookkeeping and accounting. We offer professional bookkeeping services in Florida. In addition to that we also offer medical billing and payroll services.