Prevent Bad Bookkeeping from Hurting Your Small Business

1040 tax forms

A lot of small companies have a staff or family member without any accounting or bookkeeping experience record their transactions, which seems cost-effective, but can be a bad decision in the long run.

The money you “save” could actually be costing you.

What Can Go Wrong

It doesn’t take much for a bookkeeping error to wreak havoc on your business. It can prevent you from getting paid for completed work, strain or ruin a valuable vendor relationship, cause you to be audited, or worse. Here are some common errors that can have lasting consequences:

  1. Not saving receipts. Even the most meticulous business owner occasionally forgets to save a business-purchase receipt. It might not seem like a big deal if a restaurant receipt is missing here or there, but those small purchases can add up to big money. Plus, you don’t want to have to answer to Uncle Sam if you claim expenses without proof.
  2. Not understanding the value of logging short-term supplies and long-term assets differently.
  3. Making mistakes when writing off charitable donations, for example, claiming deductions for donations that were offset by concessions like advertising space.
  4. Failing to back up data. Make sure your bookkeeper uses software with a failsafe backup system, even if your data is in the cloud. It makes sense to keep one copy of everything in the cloud and another securely on your desktop or hard drive.
  5. Not accurately reporting sales and payroll taxes. If you distort your sales or payroll taxes, you can expect hefty fines.
  6. Not having checks and balances. Always review cancelled checks and petty cash ledgers once a month.
  7. Not staying up to date. Failing to keep your books current can lead to not knowing where you stand financially or coming up short for payroll. A professional will provide accurate, timely reports so you know how things are going.
  8. Mixing business and personal accounts.
  9. Managing billing inefficiently.

Can You Afford Not to Outsource Your Bookkeeping?

If you don’t have a fairly strong background in accounting and business tax law, it’s probably not a good idea to handle your own bookkeeping.

Hiring a Cincinnati bookkeeping company will minimize the chance for errors in categories like tracking expense, paying vendors, balancing bank accounts and staying ahead of payroll.

Delegating this non-revenue-generating task to a professional will set your mind at ease and free you up to work on your business.

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Finding Skilled Restaurant Bookkeeping Services

Finding a professional bookkeeping service that knows how to keep restaurant books correctly can be tricky. Bookkeeping services that manage restaurants’ finances must keep a defined, simple Chart of Accounts. They should break sales and direct costs into Food, Beer, Liquor and Wine, and break payroll down by Front of House, Back of House, Management and Owner. They should maintain Rent, Utilities, CAMs and Security as occupancy expenses. A cloud-based point of sale system that allows for ad hoc and on-the-spot reporting is critical. Work with a payroll provider that tracks the FICA tip credit and can run departmental payrolls. Keep a daily cash report connected to drawer and safe balances. For any ‘paid-out’ expenses, ensure amounts are recorded and receipts are attached to the report. Have all credit card tips paid on employee’s regular paychecks. Paying tips from the drawer amounts to giving short-term loans to your employees.