While maintaining the books yourself when your business just starts may be feasible, Portland business owners will quickly find that the responsibilities of a bookkeeper – such as managing ledgers, journals, financial statements, income tax records – can quickly become overwhelming. Proper bookkeeping is essential for growing a business. It helps with cash flow and allows you to make better, more informed decisions.
Avoiding hiring a professional bookkeeper simply isn’t a wise choice. Inevitably, business owners who insist on maintaining the books themselves end up making costly mistakes.
Here are some of the most common mistakes business owners make by not hiring a bookkeeper:
ASSUMING BOOKKEEPING IS EASY. Bookkeeping is a task that can be easy – but only when one has the knowledge required. When bookkeeping, you need to be aware of required by industry regulators and tax authorities in the area you live in. Professional accountants will, by nature of their career, already have this knowledge. If you find yourself needing to do your own bookkeeping for a time, then it is highly recommended you speak to a professional accountant first. Their advice will be incredibly valuable.
NOT UNDERSTANDING THE REQUIREMENTS OF A BUSINESS STARTUP. People who are starting their own business for the first time often dive in without the necessary research. They know they provide a service or a product that they are skilled in delivering and believe they can profit off of it. But there are other things to consider, too. For example – what registrations and licenses are required for you line of business? Discuss they particulars with an accounting professional to give yourself a base knowledge to work off of.
USING A PERSONAL ACCOUNT. You may be tempted, when starting a business, to use your personal credit card or bank account for business transactions, but this only leads to complications down the road. Eventually, as your business grows, you’ll find it’s difficult to segregate personal and business expenses for tax purposes. Even if opening a business account isn’t a viable option to start with, then open a separate personal account to use only for business.
MAKING ERRORS IN DATA ENTRY. You cannot rely on accounting software to catch all your errors. The software will allow you to input errors, so you much be incredibly careful while entering data. You must know how to recognize errors and how to fix them. Common data entry errors include: entering incorrect dates for transactions, applying full payment for an invoice when only a partial payment has been received, applying a payment to the wrong invoice, selecting the wrong bank account, etc. A professional bookkeeper is both less likely to make entry mistakes and more capable in finding and fixing them.
NOT UNDERSTANDING BUSINESS WRITE-OFFS. One must understand the difference between what can and cannot be added as a business write off. For example, when you have a meal with a client you may write off a portion of that bill. Personal purchases cannot be written off. An accounting professional will have a more detailed knowledge of how business write offs work, so you aren’t left figuring that out on your own.
BUSINESS & ACCOUNTING SOLUTIONS OFFERS QUALITY ACCOUNTING SERVICES TO PORTLAND BUSINESSES. Avoid the mistakes that are all too easily made when you handle your own bookkeeping. Hire a professional accountant for your Portland business instead. BAS offers a wide range of outsourced CFO services to our business clients in the Portland area. We bring our extensive knowledge and years of experience in bookkeeping and other accounting services to your growing business. We are certified in cash flow, finance consulting and more. Contact us or call at (503) 710-6213. Know someone in need of CFO services? Consider our referral program.