Late nights, early mornings, coffee runs and to-do lists are the status quo.
What once was only an idea has now evolved into real customers and real money. Naturally problems occur, but you persevere. Week after week and month after month you keep grinding. Something is always demanding your attention, and likely bookkeeping is at the bottom of a very long to-do list. But before you let it get out of control, consider these common mistakes start-ups make with their bookkeeping that can easily be avoided.
- Not doing them
Simple yet surprisingly common. Bookkeeping just gets pushed further and further down the list as your mounting responsibilities grow. Before long you are stuck with a pile of receipts and bank statements and you don’t quite know how to make sense of it all. Luckily this can easily be avoided.
The simple solution: Do your books monthly (or have them done monthly) before they pile up. See our post on 5 reasons every business should do monthly bookkeeping here.
- Not having a separate business bank account
They say you shouldn’t mix business with pleasure. I’m not sure if that’s true but I am sure you shouldn’t mix business expenses with personal expenses. This makes it a nightmare when doing your taxes.
The easy fix: Set up a business account right away and only use it for business expenses. Not only will you simplify your tax preparation, but you will have an accurate idea of what your business costs to run. If you have multiple partners your bank can issue each one of you a debit card and tally up your expenses in one convenient statement.
- Writing too many checks
Physical checks create numerous inconveniences when it comes to bookkeeping. You are forced to retain check stubs or use an online imaging system to know what a check was for. Plus many banks don’t include copies of the checks in your statement (or they charge a fee for the service). This is a huge time waster when you are accounting for your expenses. Another problem occurs when you have uncashed checks out, you run the risk of accidentally over drafting your account. Aside from the potential embarrassment of having your card declined at a business dinner, you will likely incur some hefty bank fees to boot.
The alternative: Use debit or online bill pay. Many banks will send the checks out for you, and automatically update your balance so you always know the amount of funds you have on hand. You can even add memos to your online checks to further classify them. Debit cards are also great because you have a detailed record of the transaction on your bank statement, without having to track down a check stub.
There are many more common start-up bookkeeping faux pas, but by avoiding these few you can hopefully save yourself a few headaches down the road!