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The Top Five Bookkeeping Mistakes – And How to Avoid Them

Nov 15, 2022

Did you know that bookkeeping is a common fear among small business owners? If you're reading this, it's likely because you are a small business owner or an accountant working with them. The fact is, most people hate bookkeeping because they find it stressful and confusing. However, if your business is to succeed, it's something you cannot avoid. Read on and learn about the top five bookkeeping mistakes you need to avoid so that your accounting remains stress-free and clear.

 

You Don't Know Where to Start

If you've just started your small business, you might not know where to start with bookkeeping. However, it's important to know that bookkeeping is not just confined to the accounting department. It's a company-wide responsibility. If you want to succeed, you must ensure that your financial information is accurate. 

 

You must know how much money you're bringing in, your costs, and your profit. You need to know how much money is coming in by cash or check, in what amounts, and on what dates. You also need to know how much money you're paying for your supplies and services and on what dates, including taxes, if applicable.

 

You Don't Have a Good System in Place

If you don't have a good system in place, it's likely your books will suffer. Many small business owners don't have a good system in place because they don't know where to start. They don't know what information they need to track or how to track it. 

 

If you don't have a good system in place, your bookkeeping will be a nightmare. If you track your data manually, it will take you hours, if not days, to complete your books. Your books will be full of errors, and you may not even know what they are.

You Do Your Books Manually, and They Take Too Long to Complete

If you do your books manually and take too long to complete, you may need to consider changing your methods. You may be tracking your data manually and not have a good system in place. If you don't have a good system in place, you will find your bookkeeping extremely time-consuming and stressful. 

 

You may not know what information you need to track or how to track it. You may be tracking your data in an Excel spreadsheet or using paper receipts. If you use paper, your books will take a long time to complete as you will have to manually input the data into your spreadsheet and/or accounting software. You need to consider changing your methods if you track your data manually and it takes too long to complete your books.   

 

Your Data Is Not Organized, or You Don't Use the Right Software

If your data is not organized or you don't use the right software, your books will likely suffer. If you don't have your data organized, you will experience a lot of stress as you will have to spend hours looking for the information you need. If you use the wrong software, you will experience a lot of frustration as your accounting software may not be user-friendly. 

 

If you use accounting software that isn't user-friendly, you will spend hours figuring out how to use it. If you don't have your data organized or you use the wrong software, it will definitely show in your books.

 

You Have Too Much Clutter in Your Accounting Records

If you have too much clutter in your accounting records, you will find it difficult to locate the information you need. If you have too much clutter in your accounting records, you will have difficulty locating the information you need. 

 

If you use a paper-based system and keep receipts, your records will be cluttered. If you have too much clutter in your accounting records, you will have difficulty locating the information you need. If you are using a paper-based system, your receipts will be full of clutter. Your accounting records will also be full of clutter. If your accounting records are cluttered, you will have difficulty locating the necessary information.

Work with N.E.W.

Our team at N.E.W. Accounting is prepared to meet all of the considerations above and exceed your expectations. We know that small to medium-sized business owners can feel bogged down by their company's numbers, and we want to work with you so that you can focus on the rest of your business. Contact us today to get started!

Embracing Change: The Impact of Technology on Small Business Accounting

09 May, 2024
Technological advancements have revolutionized traditional accounting processes, from cloud-based software solutions to automation tools, offering efficiency, accuracy, and accessibility like never before. In this blog post, we'll explore the profound impact of technology on small business accounting, highlighting key trends and innovations shaping the industry. The Rise of Cloud-Based Accounting Software Gone are the days of cumbersome spreadsheets and desktop software installations. Cloud-based accounting software has emerged as a game-changer for small businesses, providing access to financial data anytime, anywhere. Platforms like QuickBooks Online, Xero, and FreshBooks offer real-time collaboration, automated updates, and seamless integration with other business tools, streamlining accounting workflows and enhancing productivity. Automation and AI-Powered Solutions Automation is another significant trend revolutionizing small business accounting. Tasks that were once manual and time-consuming, such as data entry, invoice processing, and reconciliation, can now be automated with the help of AI-powered software. Machine learning algorithms can categorize expenses, detect anomalies, and even generate financial reports, freeing up valuable time for accountants to focus on strategic analysis and advisory services.

Financial Lessons to Learn From Successful Small Businesses

13 Apr, 2024
When business owners and mentors give advice, they usually look at multi-million or billion-dollar companies and their leadership for business lessons. While the world's most successful conglomerates can teach us much, they're not the only places to draw inspiration. Successful small business owners can teach any organization tips for running and growing their business, which are often more tangible than those of large companies. What financial steps do well-run small businesses take? Let's look at some of the lessons we can learn from successful small businesses. Budgeting and Forecasting Budgeting and forecasting serve as the foundation of financial planning for small businesses. By creating a detailed budget and regularly updating financial forecasts, companies can gain insights into their cash flow, allocate resources efficiently, and anticipate future expenses. A well-thought-out budget enables businesses to set realistic financial goals and track their progress toward achieving them. Moreover, forecasting helps identify potential challenges and opportunities, allowing companies to adapt and strategize accordingly. Investing in Technology In today's digital age, investing in the right technology is crucial for small businesses to stay competitive and efficient. Whether it's accounting software, customer relationship management (CRM) systems, or marketing automation tools, technology can streamline operations, improve productivity, and reduce costs. By embracing technology, businesses can automate repetitive tasks, streamline workflows, and enhance customer experiences, ultimately driving growth and profitability. Cost Control Controlling costs is essential for maintaining profitability and sustainability. Small businesses should regularly evaluate their expenses and identify areas to achieve cost savings. This evaluation might involve negotiating better supplier contracts, optimizing inventory levels, or reducing unnecessary expenses. By implementing cost-control measures, businesses can improve their bottom line and strengthen their financial position in the long run.

A Small Business Owner's Guide to Payroll

07 Mar, 2024
Running a small business comes with challenges, and managing payroll is undoubtedly one of them. As a small business owner, you must understand payroll and the necessary steps to ensure your employees are paid accurately and on time. Whether you're just starting or looking to improve your payroll knowledge, let's explore the essential information you need to streamline your payroll process and keep your employees happy. The Importance of Payroll for Small Businesses Payroll is calculating and distributing employee wages, benefits, and deductions. It plays a crucial role in the smooth functioning of any business, regardless of its size. Here are some key reasons why payroll is vital for small businesses: Compliance with Employment Laws : Payroll ensures your business complies with local, state, and federal employment laws. By accurately calculating and withholding taxes, you avoid penalties and legal issues. Employee Satisfaction : Timely and accurate payment is essential for employee satisfaction. A reliable payroll system helps build trust and fosters a positive work environment. Financial Management : Payroll provides crucial financial information, such as labor costs and tax liabilities. This data helps you make informed budgeting, forecasting, and resource allocation decisions. Tax Obligations : Payroll and tax obligations are closely related. Accurately calculating and reporting payroll taxes ensures you meet your tax obligations and avoid costly penalties. Understanding Payroll Basics Before diving into payroll specifics, it's important to understand some key terms and concepts. Here are a few essential payroll basics: Employee Classification : Understanding the distinction between employees and independent contractors is crucial. Employees are subject to different tax and benefit regulations compared to independent contractors. Pay Periods : Pay periods determine how often you pay your employees. Standard pay periods include weekly, bi-weekly, semi-monthly, and monthly. Choose a pay period that aligns with your business's financial capabilities and employee expectations. Gross vs. Net Pay : Gross pay refers to an employee's total earnings before deductions. Conversely, net pay is the amount an employee takes home after deductions such as taxes, benefits, and retirement contributions. Deductions : Deductions are amounts subtracted from an employee's gross pay. These include federal and state taxes, Social Security and Medicare contributions, health insurance premiums, retirement contributions, and other authorized deductions. Calculating Employee Wages and Deductions Accurately calculating employee wages and deductions is crucial to ensure that your employees receive the correct pay and that you comply with tax regulations. Here are the critical steps involved in calculating employee wages: Determine the Pay Period : Start by determining the length of the pay period; this could be weekly, bi-weekly, semi-monthly, or monthly. Calculate Regular Wages : For hourly employees, multiply the hours worked by the hourly rate. For salaried employees, divide the annual salary by the number of pay periods in a year. Account for Overtime : If employees have worked overtime, calculate the overtime hours and apply the appropriate overtime rate. This rate is typically 1.5 times the regular hourly rate. Include Bonuses and Commissions : If applicable, factor in any bonuses or commissions earned during the pay period. Deduct Taxes and Other Withholdings : Calculate and deduct federal, state, and local taxes based on the employee's filing status and income. Also, deduct Social Security and Medicare contributions, health insurance premiums, retirement contributions, and other authorized deductions.
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