Avoid These 10 Costly Bookkeeping Pitfalls Before They Sink Your Business
                     Bookkeeping is a double-edged sword for business organizations. This is one of the basic 
foundations of the entire accounting and finance system. It doesn’t matter how experienced and 
qualified CPA you are, if you don’t have proper bookkeeping records, then you will be never 
able to anticipate the correct financial position of a company.
Most businesses don’t think of bookkeeping services as a crucial part of their business 
management and that’s one of the biggest mistakes. Giving less importance to bookkeeping and 
not hiring a qualified person to handle bookkeeping records is the dawn of bad accounting 
practices. It has been noted that 60% of business organizations in the US don’t have dedicated 
resources to handle the bookkeeping, they fail drastically in business management.
Apart from ignorance, there are plenty of different bookkeeping mistakes that are committed by 
business firms.  To make sure that the virtual bookkeeping process won’t cause a problem for 
your company, you need to always keep knots of the following ten bookkeeping mistakes in your
handkerchief.
10 Common Bookkeeping Services Mistakes That You Can’t Afford to Commit
1. Mistake of Miscalculation
Bookkeeping is a very simple process where you need to enter the dual entry of every expense or
income made by your company so that your company’s final balance sheet shows an equal 
amount on both sides. But, when your bookkeeping clerk forgets to add an entry or double the 
number of entries, then the final balance sheet won’t ever agree.
One of the trickiest parts here is that you won’t be able to identify your mistake until you made 
the final statement. Even then it is very tough to find one error among thousands of entries.
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So, to avoid miscalculation, it is advised to recheck your every entry twice and ask another 
person to evaluate your books as sometimes mistakes committed by yourself aren’t visible to 
your own eyes.
Also Read Why CPA Firm Should Outsource Bookkeeping Services
2. Confusion with Accounts
Sometimes due to the similar amount or nature of the expenses, the bookkeeping clerk adds an 
entry under the wrong account head. This is a very common mistake but impacts dramatically 
your accounting process. For example, if the entry of your home rent is added to your office rent 
account, then it will imbalance your personal and professional expense account. That’s because 
if you have drawn rent money from your capital account, then it will be a drawing and should be 
mentioned under the drawing account.
This error can be easily avoided if you keep your personal and professional bookkeeping records 
separate and even hire different accountants to create your personal and official records.
3. Using Obsolete Bookkeeping Software
Today, when traditional bookkeeping ledgers have been replaced with virtual bookkeeping 
software, then it is very important for businesses to get the latest bookkeeping software. 
However, most businesses consider updating their bookkeeping software an unnecessary expense
and keep on using the older version. And, which eventually results in low productivity and lots 
of errors.
It is evident that small companies can’t invest in the latest bookkeeping technologies, but they 
can indeed outsource bookkeeping services and get benefits from the latest technologies.
4. Not Appointing Experts
Bookkeeping is a mere recording process that can be done by anyone. This is the thinking of 
most companies and thus they hire inexperienced people at lower rates to handle bookkeeping 
work. At CapActix, we always condemn this ideology by saying that if you don’t have a solid 
foundation, then how will you build a strong building on it? It is the worst mistake that any 
company can commit.
Here, the solution is very simple either hire qualified bookkeeping in-house staff or outsource 
your bookkeeping work to experts.
Also Read How Outsourced Bookkeeping Services Can Help In Growing Your Business?
5. Lack of Budget Plan
It has been recorded that 13% of companies fail due to a lack of budget planning and won’t have 
the knowledge to invest in good opportunities. To make a thriving budget, companies need to use
past accounts and bookkeeping records as a source to correctly evaluate the deviation in the 
budget.
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To plan a figurative budget for your company, you need to make sure that your business 
expenditure and revenue accounts are perfectly clean and flawless.
6. Forget to Reconcile
Creating a bank reconciliation statement is one of the major parts of a bookkeeping process. 
Suppose, if you have issued a cheque of $2000 to your vendor and added the amount in your 
books under expenditure head, but your vendor hasn’t deposited the cheque in the bank for the 
next two weeks. And, now if in-between this period you create a balance sheet for your 
company, then you are going to get a surplus of $2000.
The solution to avoid this problem would be to fix a date in the month when you have to 
reconcile your cash book and bank statement.
Also Read 10 Reasons That Encourages CPAs To Outsource Bookkeeping Services
7. Not Keeping on Your Credits
It is a self-destructive step for companies if they don’t keep a proper record of their credits.  If 
you do not understand the interest value and fee, you might not get an enhanced credit score, 
even when you pay on time.
The easiest way to avoid this problem would be to create a clean and clutter-free credit statement
and regularly monitor it.
8. Not Creating Backup
The accounting process has been completely digitalized nowadays which has arisen an issue of 
data loss. Suppose, if your computer system in which you have stored all the company accounts 
got damaged due to viruses, theft, physical damage, and much more, then you will lose all your 
data in a blink of an eye.
So, here, you have to create a proper backup of your data on another computer or cloud storage.
Also Read 6 Core Benefits of Virtual Bookkeeping Services For Your Successful Business
9. Bad Petty Cash Management
Business owners often operate with a small amount of petty cash, but they have little or no 
knowledge of how to track it. Businesses need to maintain a proper petty cash system so that 
they won’t have to go through all their accounts to find the balance of a couple of dollars.
When a company has a large financial department where thousands of dollars entries are handled
on a daily basis, then it is advised to set up a petty cash account and accountant separately to 
avoid any confusion.
10. Ignorant to Tax Terms
When business owners themselves try to handle bookkeeping work along with the other 
management work, then they are bound to miss out on important tax terms and return filing rules.
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Moreover, people don’t consider bookkeeping as part of the taxation process. Well, business 
owners, bookkeeping is pretty much part of the taxation process and if entries aren’t recorded as 
per the latest tax guidelines, then be ready for heavy punishments and penalties.
Again, to avoid committing this mistake, you need to hire an expert or outsourced bookkeeping 
company.
Also Read Common Accounting Mistakes to Avoid To Grow Your Business Substantially
Conclusion
Bookkeeping isn’t only about recording expenses and revenue entries. It is a much-complexed 
job than that and needs to perform with a high level of excellence. To create flawless 
bookkeeping records make sure to misjudge the importance of bookkeeping work.
If you want the support of bookkeeping services from professionals, then you can contact 
CapActix at email – [email protected]. or can calling on  +  201-778-0509  without any 
hesitation.
www.capactix.com