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How Do You Avoid the Common Bookkeeping Pitfalls?

How do you avoid bookkeeping pitfalls

How Do You Avoid the Common Bookkeeping Pitfalls?

It goes without saying, the only way to feel absolutely safe and certain that nothing flies under the radar and compromises your business operations is to hire a professional bookkeeper for your San Diego business. 

Perhaps you have been doing your bookkeeping by yourself so far and everything was going smoothly. But just when you felt like you were getting the hang of it, there was a slip-up that went completely unnoticed. Mistakes happen, especially if you are completely new to the world of bookkeeping. The trouble with bookkeeping mistakes and pitfalls is that they may get out of hand unless you get down to fixing the mess right away. 

The two crucial bookkeeping mistakes concern poor organization and poor time management. Bookkeeping can be a burden and a huge responsibility. Read on to find out if you are up for the task.

How do you avoid the common pitfalls of DIY bookkeeping?

Guesswork is entering a dangerous territory, especially when it comes to bookkeeping, and especially around tax time. Make sure you understand what you are up against beforehand.

In addition to consulting a professional bookkeeper when in doubt, make sure to:

  • Consult a professional when in doubt
  • Categorize expenses correctly
  • Be mindful of tax deductions
  • Complete the books by the filing deadline
  • Never mix business with personal spending
  • Use your time wisely
  • Do not procrastinate and put things off until the last minute
  • Do not report transport as income
  • Classify employees correctly
  • Catch up with your sales taxes 

What are the risks of DIY bookkeeping?

The risks of falling into the common bookkeeping pitfalls include repercussions such as:

  • Dealing with the piling receipts and transactions will be a nightmare
  • Minor issues can escalate and you will not have time to catch up and fix them
  • You may forget to document important items, such as tax-deductible expenses
  • Bank reconciliations will be all the more complicated
  • Making business decisions based on outdated information on your finances

What happens if you don’t keep financial records?

What happens if you don't keep financial recordsUnless you keep accurate and up-to-date financial records, you risk exposure to a series of risks, including:

  • Inability to interpret the financial performance of your business
  • Inability to perform bookkeeping accurately 
  • Inability to protect your business from theft
  • Lack of insight into your finances
  • Paying extra in taxes
  • Post-audit tax adjustments
  • Audit failure
  • Costs and penalties
  • Employee lawsuits

In other words, you run the risk of wasting time and money. It may also affect your future business deals and put the future of your business at risk. It is of paramount importance that you read your financial statements regularly, and it is even more important that you learn how to read them properly.

Is being a bookkeeper stressful?

As your own bookkeeper, brace yourself: you may experience more stress than a professional bookkeeping professional would. If you are just starting out, there are many unknowns you can never be fully prepared for until you have to deal with them hands-on. This makes outsourcing bookkeeping a safer and more cost-effective option, especially if you are already swamped with work and responsibilities. 

Putting the time and energy into finding a trusted professional bookkeeper instead will be worth your while, as they will not only do their work in a timely, consistent and self-reliant manner, but also show you the ropes and help you:

  • design periodical bookkeeping checklists
  • set up, organize and customize a chart of accounts
  • enter initial balances
  • classify expenses properly

Your trusted choice for professional bookkeeper services in San Diego

Sometimes DIY bookkeeping can feel like you’re in over your head, which is the last thing you need when you have a business to run. At David York’s Tax Service, we will gladly help you out and take over. Focus on expanding your business in North Park and pursuing new, more inspiring and more rewarding professional interests while we handle the technicalities. Schedule your consultation now!