If you interviewed business owners of failed businesses, a majority would tell you that they didn’t understand or feel comfortable dealing with the “book work.” Your ability to understand and perform day-to-day accounting tasks in your small business is a critical success factor.
One of the day-to-day accounting tasks that you need to do as a small business owner is record keeping. Here are the top 10 record keeping mistakes business owners make:
- Not having a record keeping system set up (the shoebox approach).
- Procrastinating on invoicing customers.
- Sticking checks in a drawer and forgetting to deposit them.
- Not tracking carefully which customers have paid.
- Not tracking invoices that are overdue.
- Not following up to make sure overdue invoices get paid.
- Putting “book work” at the bottom of priority list.
- Sloppiness—not recording checks, recording the wrong amount, etc.
- Abdicating all responsibility—“I have ‘people’ to handle that.”
- Creating an embezzlement friendly atmosphere—“I have ‘people’ to handle that whom I trust completely.”
Here are some tips to help you avoid the most common record keeping mistakes business owners make:
- Set up an accounting system that works for you.
- If you don’t have accounting experience, get help from an expert.
- Schedule time each day or week to take care of “book work.”
- Don’t procrastinate or move “book work” to the bottom of the pile.
- If you outsource or hire an employee to perform tasks, follow up to make sure things are happening as they should.
The way you handle record keeping in your business helps to determine whether you have a healthy cash flow or you’re always on the edge of financial disaster.
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