Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

Common Small Business Bookkeeping Mistakes That Business Owners Make

By Amitaabh Saboo Subscribe to RSS | May 11th 2012 | Views:
loading
 
  



Every big business starts out small. Its growth and expansion depends on the management techniques applied by its owner. Small business bookkeeping is an area that can easily interfere with the growth of a business if it is overlooked. Most small-scale entrepreneurs record daily accounts of their businesses casually. They simply sketch separate tables for sales, purchases, receipts and payments entries. Sometimes they forget some petty cash transactions, a trend that can gradually limit the growth potential of their organizations.

Since Small business bookkeeping is a section of a company that deals with the entry and exit of money, entrepreneurs need to learn their mistakes and correct them. The first mistake that most of them make is using an incorrect data entry method. As mentioned above, incoming business proprietors use the cash accounting method. This technique is the simplest of all since it involves cash entries only. It is all about recording transactions that are processed with real cash instead of checks or credit cards.

As customers increase, transactions involving all methods of payments start to enter making small business bookkeeping more complicated. Several entrepreneurs fail at this point because they go on using their favorite cash accounting instead of introducing the more complex accrual accounting technique. This accounting technique makes it easy for a bookkeeper to match expenses and revenues accurately. As mentioned above, numerous novice proprietors do not account for petty cash transactions the same way they handle large sums of cash.

If employees discover that petty cash transactions are not logged properly they are likely to spend it on personal matters. A sound small business bookkeeping system should be designed in a way that allows each employee to submit a receipt every time he or she removes money from the petty cash reserve. The cash in the reserve should not be added until the current amount is exhausted. This will enable a clerk to compare the total sum of money on all receipts with the original sum of petty cash in the reserve. Another common mistake that most small-sized business owners make is failing to separate business and personal monies.

It is important to have separate accounts for personal savings and business profits and working capital. Furthermore, if an entrepreneur deducts money from the business capital account he or she should consider it a loan that has to be refunded. The problem arises when the deducted money is not refunded and accounted for. This habit is likely to ruin a business in the long-term. A good small business bookkeeping service should provide advice on personal and business finances. A business that lacks proper implementation of checks and balances in its bookkeeping and accounting system can slowly collapse.

This is because it can leave some loopholes through which money can disappear without a trace. Strong financial controls should be implemented to ensure that every employee controls a small portion of the entire accounting system. In this regard, it makes sense to outsource Small Business Bookkeeping work to an external accounting firm because it has many certified accountants, auditors and bookkeepers. The main reason why outsourced accounting firms excel is because they are versatile enough to do custom data entry as instructed by their clients.

Amitaabh Saboo - About Author:
Accurate Bookkeeping Services improves the ability of a firm to focus on business growth while simultaneously curtailing risks and costs. There are many firms offering bookkeeping services that work for small and medium businesses worldwide.

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/business-articles/common-small-business-bookkeeping-mistakes-that-business-owners-make.htm

Related Business Articles Subscribe to RSS

Corporate Agency in India - a Corporate detective agency in India providing services
Published by Microcell Systems on May 21st 2012 | Business
No one can decrease the factor that detective companies have become more and more popular and are pl...
 
Get details and systematic moving services for your reallocation
Published by Purushottam Chandra on January 10th 2012 | Business
Packing and moving companies are required in all sectors. They are not only requisite for residentia...
 
Medical supply is a critical part of health care services
Published by Chooseems on July 20th 2012 | Business
The health care issues arising all over, a scenario like this, demands for a good medical supplier a...
 
Order fulfillment services - its advantages and benefits
Published by Ema Sis on August 23rd 2012 | Business
Fulfillment also known as order fulfillment or else products fulfillment will be it whereby a person...
 
How can your business be benefitted with pick and pack services
Published by Diego Hall on March 13th 2012 | Business
This article focuses on the different functions performed by a pick and pack company. Before hiring ...
 
Hiring external payroll services for you business
Published by Payroll1 on July 23rd 2012 | Business
The payroll is one of the principle sections of a business. It is the chief segment of an organizati...
 
Tax preparation services: the things to look for while selecting one
Published by Amitaabh Saboo on January 6th 2012 | Business
To file taxes for your company, regardless of being how large or small is able to be tiring....
 
BPO services in India cover the entire range of corporate functioning
Published by Mark Nicholas on August 17th 2012 | Business
India accounts for a large part of the BPO services and the call centers in India add up to almost 7...
 
Do you require the services of an Ecologist Kent?
Published by Mary Porter on June 30th 2012 | Business
If you are searching for an ecologist Kent to work on your site then visit us here at Hone Ecology E...
 
With web application development services cope up with customers increasing demands
Published by Maya Gupta on April 6th 2012 | Business
To strategically improvise the market position of your website chose web application development ser...
 
Do you require the services of Drink Driving Solicitors
Published by Julia Roger on January 6th 2012 | Business
Every year, drink driving solicitors come to the aid of those who have been charged with being over ...
 
Packers and Movers Company with all kinds of services but with economy
Published by Purushottam Chandra on January 3rd 2012 | Business
Best company on packing and moving embrace you on conclusion of shifting support. We have all type o...
 
George Pope can offer you optimal purchase freehold services
Published by James Blee on June 16th 2012 | Business
As a qualified Chartered Surveyor with over thirty years of experience providing clients across some...
 
Are you looking for the services of Engravers Nottingham?
Published by on March 27th 2012 | Business
Our engravers Nottingham have the talent and the knowledge to deal with any kind of engraving job, b...
 
Outsourcing Payroll management services for small business in Delhi NCR
Published by Webin Lee on March 6th 2012 | Business
It is cheap to outsource the Accounting and Payroll services from the payroll management company rat...
 
Hart Construction in Kent is one of the foremost building services in Kent
Published by on March 15th 2012 | Business
Based in Maidstone we have offices in Sidcup and Upminster which allows us to provide construction i...
 
Do you require the services of Fraud Solicitors?
Published by Mary Porter on June 22nd 2012 | Business
Commercial fraud is a growing area of crime and though fraud might have a reputation for being a vic...
 
Transmission services south Florida making your vehicle problem free
Published by James Blee on February 23rd 2012 | Business
Amongst tourists in USA Florida is one of the most well-liked States. Florida is marvelously positio...
 
Toronto airport taxi services: Best of all!
Published by Jason Ausie on January 11th 2012 | Business
Toronto airport taxi services charge diverse charges depending upon the mileage covered and the hour...
 
Supply chain management is incomplete without pick and pack services
Published by Diego Hall on December 15th 2011 | Business
Pick and pack services are integral parts of a business. These services are so crucial that they can...