9 Bad Bookkeeping Habits to Break in 2018
It’s the start of a new year. If you’re a business owner, then now is the perfect time to get your bookkeeping in order. Admittedly, keeping the books straight isn’t the most glamorous aspect of any business. But is it essential? Absolutely!
Bad bookkeeping introduces confusion and inefficiencies into your business. Even worse, it can leave you fumbling for answers when the IRS comes knocking. As Certified Public Accountants, we wanted to share these 9 bad bookkeeping habits that you should break in 2018:
- Paper, paper everywhere: Are there stacks of invoices on your desk? Receipts tucked away in a drawer? Do you have an overflowing filing cabinet? It’s 2018, there’s no need for paper clutter. Choose paperless billing if any vendors or creditors offer that option. For any business transactions that require paper, scan them immediately upon receipt and load them up to a virtual filing cabinet.
- No deadline discipline: It’s tempting to not set strict deadlines if you’re the owner of a small business. You may want to keep business relationships informal—especially with vendors you trust. But if you don’t know when to expect payments, bills, or deliveries, then you can’t accurately plan. Start setting deadlines with everyone you work with. And ask them to provide you with deadlines.
- Putting off payroll taxes: Quarterly payroll taxes are every employer’s responsibility. It can be an easy item to overlook when you are dealing with the day-to-day of running a small business. But eventually, the IRS will notice if you’re not keeping up. Outsourcing this service to a firm like Tobin & Collins can help your business stay on track.
- Ignoring education: Accounting and bookkeeping rules, practices, and software are constantly evolving and changing. You or someone on your team should be attending training sessions about bookkeeping at least once a year so you can be sure that your business is in compliance with the latest rules and regulations.
- Hiring a newbie: You might be able to save money in salary by hiring someone new to the field of bookkeeping and accounting. But any mistakes they make could come back to haunt you if the IRS has questions. It’s better to spend the money on an experienced candidate or outsource your bookkeeping services to a reputable firm like Tobin & Collins.
- Skipping software integration: Did you know that accounting software like QuickBooks can integrate with many other software platforms for inventory, billing, and expense management? All of this software can be communicating in real time, which will reduce the chance of error, save time, and increase efficiency.
- Refusing report standardization: If you own a business, then you’re going to have to review monthly reports, whether it’s a profits and loss sheet, an inventory report, or a balance sheet. No matter what the report is, make sure you’re getting it at the same time every month in the same format. That will make it much easier for you to compare reports and get an accurate picture of where your business is headed.
- Ignoring aging invoices: There’s nothing better than sending out a stack of invoices—unless they don’t get paid. Sending out the invoice is only the first step. Staying on top of the invoices to make sure they get paid in a timely fashion is essential for a healthy cash flow.
- Not knowing key numbers: As a business owner, certain key metrics should be at your fingertips. For example, do you know your gross profit margin, cash on hand, or income to expenses ratio? If the answer is “no” then this is the first bad habit to break in 2018.
If you need help getting your books in order in 2018, contact the tax experts at Tobin & Collins. For over 50 years, Tobin & Collins has provided accounting, tax, and business support services to clients in the New Jersey and New York metropolitan area. Our exceptional team of professionals provides personal service to ensure we resolve each client’s financial challenges and provide sound financial strategies that puts clients on the path to future success. Contact Tobin & Collins today.