3 Common Small Business Bookkeeping Mistakes

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When you’re trying to figure out your small business bookkeeping, you’re bound to make some mistakes, just like I did. So, today I am diving into the 3 common small business bookkeeping mistakes you are probably making in your business.

As with anything in this entrepreneur journey, there is definitely a learning curve to understanding and having confidence in your ability to do your small business bookkeeping. That’s ok! In fact, as your business grows and evolves, so will your bookkeeping methods and best practices. Implementing some standards and getting that confidence is essential to being able to manage your business’s money when you do start to grow!

I am a long way from where I started in my business and bookkeeping 10+ years ago and I know YOU can do it too; especially if you address and avoid the 3 common small business bookkeeping mistakes below.

Be sure to grab the ebook A Beginner’s Guide to Bookkeeping if you need a little extra help to get started today.

Small Business Bookkeeping Mistake #1:

You’re not doing your bookkeeping regularly

Bookkeeping is just like any other part of your business. You need to do it consistently, regularly, and thoroughly, to make sure that it’s done right.

Keeping track of your finances is an important part of your business, and not doing it regularly can cause you so much pain and headache later down the line.

Set a calendar reminder on your phone or write an appointment in your planner to do your bookkeeping. Maybe that’s once a week, once a month, or once a quarter. Depending on the size of your business and the amount of your bookkeeping. The only rule I enforce with a passion? You may NOT do your bookkeeping once a year. If you’re honest with yourself, you probably can’t remember what you ate for lunch last Wednesday, and you definitely won’t be able to remember all your income and costs for 12 months either.

Small Business Bookkeeping Mistake #2:

You’re not organizing your receipts

If you’re like me, you have a lot of digital receipts and a lot of paper receipts. You need a place to put them so that you can stay organized.

I don’t care where you put them. Whatever works for you.

If what works for you is having a bucket on your kitchen counter, great. Put all of your paper receipts in there.

You can get this free receipts SVG and make your own receipt box if you want to get crafty while doing your bookkeeping too.

If you are a person who doesn’t like paper clutter in your house and would rather scan everything into a OneDrive folder, great, do that.

When you’re getting receipts from online shopping, they should all go into some folder, whether it’s in your e-mail inbox and it’s a folder named the year. Simply drag and drop all your emails with receipts there.

If it means you want to PDF the invoice and you want to put it in a OneDrive folder and label everything and number everything and put it in month folders, great. That kind of organization makes my heart sing. If you know yourself and the most you’re going to be able to do is drag and drop your e-mail invoice into a folder, then that’s fine.

Bottom line: you have to do what works for you. The important part is when you get a receipt, put it somewhere. So your paper receipts and your digital receipts stay organized so you can find them to do your bookkeeping

Small Business Bookkeeping Mistake #3:

You don’t know the difference between GROSS and NET

Your GROSS numbers are how much money you make without deducting anything; fees, refunds, discounts, and 1000 other things that go into running your small business. It’s the base number of how much money you made. That’s the number that’s going to be on your 1099 from sites like Shopify and Etsy.

Your NET is the money that you actually get to take home and put in your bank account. Hooray!

This is the money that Etsy sends you once a month, or however often you’re paid, or you’re Shopify payments that you receive to your business banking account. Net is your take-home money.

On your 1099 you will have your gross amounts (how much you made in sales) so you will need to have a separate record of everything that comes out of that amount. So your listing fees, transaction fees, PayPal fees, discounts, and refunds all need to be captured and logged. You need to keep track of all of that because when you do your bookkeeping, you have to take your gross amount in one column and all of your deductions from that amount to equal your net.

It’s not as easy as just being able to say, well, this is how much money I got paid and putting that amount in a column, because when it comes time to do your bookkeeping and your taxes, your 1099 has your gross amount on it and you have to be able to show how you got from that number to your net number.

Need more help? I’ve got you.

Watch the video of this conversation here:

Want some DIY help with bookkeeping? I have an ebook that will walk you through some of the basics!

Click here to buy your copy of A Beginner’s Guide to Bookkeeping.

Once you complete your purchase, you will receive a receipt/email with the links to download the e-book and the additional attachments. Save them to your computer so you can edit and print as you would like.