Business decisions can make or break your company, and, as a small business owner, you need to ensure that all your decisions positively impact the bottom line. Research has shown that bookkeeping is the number one accounting function that small businesses typically outsource. A bookkeeper can manage your books more effectively and accurately than you can so don’t make the mistake of doing your own accounting once per year during taxation time. This is not good practice. There are several mistakes small businesses make that could be detrimental to their businesses. The best approach is to engage outsourced bookkeeping services to avoid these pitfalls
Throwing Away Receipts
Small businesses sometimes operate very informally and believe that they do not have to account for each and every expense. Once you are treating with finances then an informal approach is ill advised. Typically, receipts below seventy-five dollars are discarded since they are not a requirement of the IRS. Once you are in the hands of outsourced bookkeeping services you will know that these seventy-five dollar receipts provide back up for tax deductions for which you can claim.
Wrong Classification of Employees
When running your small business it is important to accurately classify employees so that you know for sure who is on your payroll. You don’t want to make the silly mistake of paying taxes for an independent contractor, or failing to pay tax for a bona fide employee. Taxation law provides different rules for employees and non-employees. Don’t allow your lack of proper employee classification take your business downhill;outsourced bookkeeping services will ensure that you correctly classify persons who are part time, full time, seasonal, or just independent contractors working on a project and who are being paid for the job.
Every month your bank statements must match up with your books. With the bank reconciliation process you are required to match balances in your business accounting records for your cash account. This must correspond with information in bank statements. For your business to run smoothly a bank reconciliation statement should be completed regularly to ensure accuracy of cash records. If you are unable to complete bank reconciliations at regular intervals your best bet is to utilize outsourced bookkeeping services.
Throwing Out the Paper Trail
Many small businesses boast about their ability to be nimble and quick, due to being paperless. However, a paperless business is a myth. While auditing exists, being paperless is an elusive dream. If you have no intention to keep back up documents and to file pertinent financial documents then you could end up in a situation where you have no evidence to support your claims. Some small businesses use a single computer to back up data and this is risky; others do not want to invest in modern backup systems and prefer to use outsourced bookkeeping services.
Many small businesses fall prey to mistakes and pitfalls that place them at risk. Some organizations have problems categorizing, filing, addressing petty cash issues, and just managing their accounting function. Don’t become overwhelmed with the bookkeeping maze; safeguard you business by going the way of outsourced bookkeeping services.
Article Source: http://www.abcarticledirectory.com
Accurate Bookkeeping Services improves the ability of a firm to focus on business growth while simultaneously curtailing risks and costs. There are many Bookkeeping Outsourcing Firms that work for small and medium businesses worldwide.
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