Accounting Services Unlimited

Accounting and Bookkeeping in New Orleans - Top 10 Tax Mistakes

10. not saving “small” receipts.

While the IRS may not require receipts under $75, they provide backup documentation for the many deductions you may claim. It is very simple to have a folder for such receipts, which can prove valuable at tax time.

9.forgetting to track reimbersable expenditures

Small business owners often pay for expenses out of pocket or with their own personal credit card then make the mistakes of failing to track these expenses. They then fail to submit the expenses to the company for reimbursement.

8. petty cash nonchalence

A system should be set up whereby a set amount of money is in petty cash and each time money is taken out for any purpose, a petty cash slip is filled out. When the fund is exhausted, the slips will total the original amount and a check can be written to cash to set up the full amount again. Many offices are careless about using the petty cash fund and keeping accurate records. This can amount to a significant cost over a year.

7. miscategorization or overcategorization

There are fairly standard categories for expenses. However, often expenses are entered into the wrong categories or too many categories are created. Use general bookkeeping guidelines for standard categorization and create as few new categories as possible. Try to follow generally accepted accounting practices.

6. lack of communication

Having someone handling bookkeeping is only effective if they are filled in and kept up to date on all financial transactions. A frequent mistake is paying someone a bonus and not reporting it or buying supplies and not providing the bookkeeper with the information or receipts.

5. no back up

The paperless office does not exist in the real world, where audits do still exist. A paper trail, documentation or verification in the form of backup documents should be available, especially if all files are on the computer system, which could be prone to technical problems.

4. not reconciling the books with a bank statement each month

One of the fundamental aspects of bookkeeping is reconciling the books and bank statements every month. Nonetheless, there are businesses that do not do this and others where errors are made by not doing it properly. Again, this is a good reason for hiring an experienced bookkeeper.

3.not properly classifying employees

The proliferation of independent contractors, consultants, and freelancers has made it difficult to determine who is on staff and who is not. This results in misfiling when it comes to filing taxes since there are different rules and regulations for employees and non-employees.

2.not deducting sales tax

A common mistake in retail businesses is not deducting the sales tax from the total sales. This results in a higher total sales amount and does not lower the amount of taxes due.

1.doing it yourself

Having a qualified bookkeeper handle the books is extremely beneficial to both efficiency and expenses when starting or growing a small business. The ROI professional accounting services can produce is among the highest from any of your expenditures.