By October 25, 2021
“My wife does my books.”
He was proud of that. Until they started having problems with the taxes. They had a large invoice that had been left out of last year’s taxes, which they had already filed. They were desperate and needed someone who could help them out of the hole. Unfortunately, it wasn’t the first time that I have helped clients out of tax issues that could have hurt their business. DIY disasters are far too common in bookkeeping. They are preventable, but it takes knowledge and consistency to prevent them. Here are the top 5 errors that I see from DIY bookkeepers.
This is a little complex, but to sum it up- these problems occur when the person doing the books doesn’t know which order certain tasks have to be completed in. Certain steps have to be done in order to prevent errors. A professional bookkeeper will have a workflow for their accounting systems. Not knowing the proper workflow puts you at a great disadvantage. Using a project management tool like ClickUp to lay out workflows for these tasks is a great way to ensure steps aren’t missed and are done in the correct order.
Every transaction has an appropriate label. Proper labeling allows you to track income and expenses by type. Miss-labelled transactions can cause errors on your taxes. At best they might only affect your balance by a small amount, but small errors add up to big problems. You can use tools like Bill.com to track your income, expenses, and accounts payable and receivable. Plus, you can access the documents you need, with the proper labeling.
As I said at the start, errors on taxes are common. Leaving off an invoice or counting an invoice twice are common enough. No errors are acceptable when it comes to your taxes. Errors invite scrutiny and the potential for audits, fees, and fines.
Unfortunately bookkeeping is one of those things that gets put aside for more important issues when it’s a DIY thing. Those companies don’t do reviews regularly and as a result, don’t know where their business stands. And then, when tax season is on the horizon, or their number gets called up for an audit, they have to scramble to get their books in order. That’s why it’s always a good idea to implement an accounting system like QuickBooks to keep these items in order.
Getting Behind & Missing Errors
While this may sound similar to last-minute bookkeeping. The people who get behind and play catch-up all the time are more likely to miss errors in their bookkeeping. In fact, some of the other errors happen as a result of the fall-behind and catch-up mindset.
It’s always easier and cheaper to maintain a system than it is to fix it when it has gone completely off the rails. Every one of these preventable issues could be avoided by outsourcing the bookkeeping. A virtual bookkeeper like Three Rivers Bookkeeping will keep track of all the transactions and ensure that everything is maintained at a state of readiness. No more scrambling to catch-up. No more hoping that you didn’t miss any errors. No more questions about where your business is headed.
If any of these problems concern you, please contact me. I would love to chat about solutions for your business!