Top 10 Bookkeeping Mistakes Made by Small Businesses

Statistics from the U.S. Small Business Administration reveal that about half of all new small businesses launched in the U.S. will fail within the first five years. What is the chief cause of small business failure? Poor financial management.

Sound financial management starts with an understanding of some basic rules of business bookkeeping, so here are 10 of the most common accounting and bookkeeping errors made by small businesses -- and how you can avoid making them.

1. Using the Wrong Accounting Method

2. Combining Personal and Business Finances

3. Misclassifying Workers

4. Not Performing Basic Account Reconciliation

5. Being Too Nonchalant About Petty Cash

6. Not Knowing the Difference Between Profits and Cash Flow

7. Using the DIY Method of Bookkeeping

8. Not Saving Receipts for Small Purchases

9. Not Implementing Adequate Internal Controls

10. Relying Too Heavily on a Paperless Work Environment

The money spent to hire a trained bookkeeper or accountant, even on a part-time or contract basis, will usually come back to the owner many times over given the time savings and all the mistakes that will be avoided. urBook$ can take on these tasks to avoid these costly mistakes made by many businesses.  Our bookkeeping, bill pay and payroll services can allow you to focus on what you know best - YOUR BUSINESS! Call urBook$ today 469.304.0036 and get on your way to relief of those financial tasks that have been weighing you down. 

Why you can't afford to delay hiring a bookkeeper!

Entrepreneurs thrive on a DIY mentality: Do everything you can yourself and don't pay for anything new until you have absolutely have to. It's especially difficult to hire financial help like a bookkeeper.

With user-friendly software such as QuickBooks available, many business owners feel they should be able to do keep their records on their own, even as they wrestle with finding the time and wonder if they're doing things correctly.

Deciding about "hiring a bookkeeper is something I struggle with all the time," is a quote stated by over 70% of business owners nationwide according to National Association of Certified Bookkeepers. While basic accounting easy to do, it takes focus away from working on the business. It is also a fact that bookkeeping and accounting become more complex and difficult as your business progresses year after year. 

Entrepreneurs who hire bookkeeping and accounting help usually discover they weren't doing nearly as well on their own as they thought they were.

Professional bookkeeping will clean up records that incorrectly mingle expenses and assets, review employee purchases for duplications, and take over the mundane but critical task of paying bills. Estimates vary however, studies have found companies save $500 to $1,000 in various fees etc. every quarter. So what are a small-business owner's options for professional help with financial tasks? 

Do I Need a Bookkeeper or an Accountant?

Actually it's a trick question. You may need both.

An accountant can analyze the big picture of your financial situation and offer strategic advice. He or she produces key financial documents, such as a profit-and-loss statement, if needed, and files a company's taxes.

After tax season is over, an accountant can also act as an outsourced chief financial officer, advising an entrepreneur on financial strategies, such as whether to secure a line of credit against receivables when introducing new products.

In contrast, a bookkeeper does the day-to-day hands-on tasks: making sure new employees file all the right paperwork for the company's payroll, submitting invoices (promptly) and following up on them, and paying the bills. The bookkeeper also tracks company expenses and can assure that every cost has been entered -- and recorded correctly -- into software like QuickBooks so that the business is ready for tax time along with filing any other reporting to, say, creditors or investors.

If you don't have a bookkeeper, you're probably not being as strategic as you could be in how you spend your money.

urBook$ can take on the role of your bookkeeper and free up your time to focus on your passion, THE BUSINESS YOU CREATED! Call urBook$ today 469.304.0036 to begin your journey of experiencing the urBook$ difference today! 

urBook$ End of Year Business Planning

The end of the calendar year means a lot of things for small businesses. It's time to start thinking about what you want to achieve next year and work on your formal goal setting process. Your are probably in the midst of holiday shopping for your employees, vendors, clients and colleagues. And, of course, it's time to start closing out 'urBook$' for this calendar year. 

In fact, right now is the time to check-in with your accountant to see if there is anything you should be doing to make sure your business ends the year fiscally healthy. A few small changes can make a big difference in your total income and tax liability for the year. Our goal at urBook$ is to ensure our client's have every resource to make prudent financial decision and set achievable goals. 

To get you started, here are a few important year-end tax preparation steps you can take in order to close out the year financially and take advantage of additional deductions:

1. Review Your Reports

How was your year financially? This info is vital for your goal setting process and to ensure your books are up-to-date and accurate. Have your bookkeeper or accountant run all of the reports that are relevant for your business and schedule a time to walk through them together if you need more explanation on the numbers and specific breakdowns.

2. Defer Income

Any income received by December 31 counts as income for the current year. Shifting income to after January 1 delays it from being counted as income until the following year, and this can save you a significant amount of money, depending where you income levels are each year. So ask your accountant if it makes sense to defer December payments until January to cut your tax bill.

3. Make Purchases

Now is the time to spend money on items your business needs so you can maximize deductions. Does your equipment need to be upgraded? Can you stock up on office supplies? Are there vendor payments you can make in advance? Make a list of purchases you can make now to get the most out of your deductions.

4. Run an Inventory Check

If there has been a drop in market value of your inventory, you may be able to claim additional deductions. This depends on your accounting methods, so make sure you check with your accountant to see if this makes sense for your small business.

5. Start or Contribute to a Retirement Plan

Make payments to your retirement plan or set one up before December 31 to reduce your income for this year. Now is the time to max out your contributions. If you haven't yet set up a retirement account, talk to a financial advisor to determine which plan is best for your business.

6. Contribute to Charity

Not only is making a charitable contribution from your small business a great thing to do during the holiday season, but it can also be a good idea for your business finances. And you don't have to donate money. You can also donate items such as clothing, toys and other goods, and claim a deduction for the fair market value. Just be sure to get proper documentation and a receipt for your records.

7. Start Preparing for Next Year Now

Remember the slight panic that set in when you started thinking about closing out your books, digging for the data your accountant or bookkeeper asked for and through about your business finances as a whole? Get a jump on next year now by outlining a system you can use to make the process even smoother next year. Getting organized now will make next year a breeze!

Contact urBook$ today to see how our bookkeeping, payroll and bill pay services can assist your business towards successful business goals.  Remember end of year planning begins early, fourth quarter is critical! 

**Tips provided by www.sec.gov/smallbus - urBook$ can only suggest ideas to generalized end of year preparations. For more information, geared towards your business contact urbooksplano.com at 469.304.0036 for your consultation.**

Keeping Your Business Focus with urBook$

With everyone riding the same “start, stop, gas, brake” roller-coaster economic cycles, it is more important than ever to know where your business lies.  Keeping a forward-looking focus isn't always easy; however, it can cripple a business if results of years, quarters, and months past continue to act as a lead weight to the company.  Lou Holtz gave a speech to the 2008 Ryder Cup team that emphasized the word WIN.  What’s Important Now?  Holtz told the players to evaluate and remember the past but focus on the future.  If you just made a bogey, what’s important now?  Your next tee shot.  If you just made a birdie, what’s important next? Your next tee shot.  You focus on one shot, one play, one drive at a time.  The US team went on the claim the Ryder cup that year, lead by team captain, Paul Azinger.  

Business owners often lament results of the past when seeing staring in their historical financial statements.  At urBook$, we believe the results of the past are important, and those results shape your future performance.  Because of this, accuracy of financials and timeliness of reporting are an integral part of our business.  Financial statements provide a window to your past, and can govern your future decisions.  Unfortunately, urBook$ can't turn a loss into a profit, or slim margins in to expense reduction, but we can provide the accounting a bookkeeping services to give your business the most accurate, real-time reporting.  Lou Holtz stressed with message with his teams at Minnesota, Notre Dame and South Carolina.  He pushed his players, coaches and staff to think only about the next play or point, not what just happened.  He urged them to be aware of what just happened, but to focus on what will happen next.  You cant drive a car without a rearview mirror; however, it still plays a vital role in the overall operations of the vehicle.  For business owners, an accurate and timely glimpse into the past can be one of the best tools for managing a focusing on future decision making.  

Successful Teams Lead to Profitable Business

I attended a trade show in The Midwest this week and a common lament among small to middle sized business owners was finding and retaining quality employees. I emphasize retaining because there are labor pools, staffing companies and recruiters that all help to place people in specific industries, but very few professional firms will to consult and collaborate on the accounting and tax ramifications surrounding employee retention. The staff at urBook$ handles clients with varying sized workforces, with individual ways of retaining key people.  Often times, a long term incentive plan can serve as a way of rewarding and retaining key employees, without diluting ownership, and perhaps offering tax advantages for the business owner as well. Long term plans can also serve as an excellent alternative to the standard raise, which may just be "kicking the can down the road" in the eyes of employer and employee.  The accounting aspect of a 401k or ESOP (Employee Stock Ownership Plan) can; however, be a daunting task for the business owner, likely steering them away from considering this as a means of employee retention. At urBookS, we encourage the business owner to let us shoulder that accounting task, allowing the owner to confidently discuss and offer these types of retention plans to key employees.  We collaborate side-by-side with your financial planner to implement these types of programs.  When these incentive plans are appropriately explained, outlined and administered, they become a mechanism to incentivize those key employees to become even more energized about the company and it's long-term success.

When long-term success becomes the goal of the workforce, the business owner may find them self dealing less with "fire-drills" and more with careful planning an execution. Consider visiting with us at urBook$ to discuss the financial aspects of long term incentive plans for employees and their corresponding accounting needs.

urBook$ - Accountable, Reliable & Dependable Services to Our Clients!

Moliere once said “It’s not only what we do, but also what we do not do, for which we are held accountable.”   That principal belief is a driving force at urBook$, by which we bolster not only Accountability to our clients, but Reliability and Dependability as well.  urBook$ strives to offer the most customizable solution for the hands-on business owner, while not losing the ability to run one’s business.  This means the client truly gets the best of both worlds:  The accountability of having a business manager oversee the financial aspect of the business combined with maintaining a very tangible control of the business.  Most business owners have key employees in HR, Payroll and Accounts Payable capacities that take immense ownership in their roles.  Our boutique offering allows these professionals to maintain ground level control over timing of payments, while enjoying the peace of mind that when it comes to financial reporting, these items are categorized correctly.  Income reconciliation, Bill Payment and Taxes are all critical areas of emphasis at urBook$ when it comes to managing our clients’ business.  No detail is too small and no invoice is overlooked.  The client tells us who, what, how much and when, and we take care of the rest.  With the increasing trend of data breaches, urBook$ is continuously improving ways to not only protect its client sensitive data, but also maintain the integrity of client records.  We strive to be a reliable and dependable resource when it comes to the financial management of your business.  

Common topic business owners face today & how urBook$ can help!

To Hire? To Build? To Lease? To Expand? To Buy? 

These are the dilemmas facing business owners in today’s economy.  At urBook$, our professionals pride themselves on being knowledgeable, trustworthy and honest financial resources for their clients.   

Most business owners get their economic and financial news from mainstream media.  . .which is great if you are running a Fortune 500 company.  Most of us are running what is classified as a “Small” to “Middle Market” business.  This means we employ a local workforce, produce a good or service that supports our local and national economy, lease (or perhaps own) our own business real estate and have a significant capital investment in our company.  Chances are, the value of your enterprise is the largest asset of value to you, and urBook$ aims to help our clients make proactive decisions when it comes to finances.  The Income Statement should be a planning tool, as well as an indicator of profitability.  The Balance Sheet should be a tool for financial decision making, leverage management and working capital analysis, and not just a set of double lines that we painstakingly strive to balance.  urBook$ takes charge of your performance indicators and uses them to help you, the business owner, make prudent financial decisions.  There is a reason that among the exclusive ranks of C-Level executives, there exists a position of Chief Financial Officer (CFO).  urBook$ can provide the business owner with accounting, guidance and direction, while avoiding the payroll cost of a high level executive.  

Contact urBook$ today at 469.304.0036 or visit our website at www.urbooksplano.com for more information on becoming a valued client today!