Bad bookkeeping habits can cost you a lot of money and lose sleep as some of these practices can get you in trouble with the Internal Revenue Service.
Not keeping your receipts –You will have a hard time proving those tax deductions as the IRS requires proof of payment. Also, if the item you purchased turns out to be a bad buy, then you will not have the proof you need to return or exchange it – you are stuck.
Commingling funds – One of the IRS’s pet peeves is commingling, which is mixing your business funds with your personal funds. Keep a separate business account using it only for business purposes and a specific account for your personal transactions. This professional handling of your funds will give credibility to the business intent of your business should it be questioned by the IRS. In the case of an audit, it also keeps your private concerns private – ever hear of problems caused by offering too much information?
Not paying your bills on time even when you have the money- This behavior is problematic for you in many ways. It costs you time and money. You have the inconvenience of lost service privileges; reconnect fees, late fees, higher interest charges, and problems caused by bad marks on your credit score.
Today’s banking technology offers automatic transfer options to pay these bills at the scheduled time. Maybe you like to pay more on your credit card than the bare minimum (and you should), but why not set an automatic debit for the minimum monthly payment? This small payment is manageable and not likely to overdraft the bank account if you forgot to plan for it. This way, you make sure your bill is always paid on time without late fees, and gives you a high credit ranking. You can then set up an extra principle payment at your convenience to knock down the remaining balance. So easy to keep things on track and less frustrating!
Not reconciling your bank accounts- It seems that today’s Millennial generation doesn’t appreciate the value of regularly reconciling their bank account. If it shows a credit balance online, there must be money to spend is the general mindset. That may seem sensible since they are not writing checks so much as previous generations, and they trust the bank’s math. However, it is not uncommon to find double-taken debits, fraudulent charges, and other inappropriate charges. Believe it or not, banks do make mistakes! I can personally testify over and over to the worthwhile rigors of reconciling your accounts. I have seen bank errors of hundreds to tens of thousands of dollars. I witnessed one business deposit alone of $12,500 that was missed entirely by the bank and the client until months later when the bank reconciliation was done. This amount was 10% of a very astute businessperson’s annual income, yet it completely fell through the cracks unnoticed. While you think you would miss such a deposit, these people thought they would too!
More importantly, reconciling your bank accounts will give you a proper handle on managing your business. This will get your books ready for the tax preparer and give your book credibility with the IRS and when applying for that loan! But most of all, as business owners and personal managers, we need to know where our hard-earned money is going. An excellent return for a few minutes’ efforts!
Being honest with yourself and mindful of your bad habits puts you on the road to betterment. Be to yourself what you would want from your best friend. Take a good look in the mirror every day. Vow to live with integrity, allowing yourself to become the great person you are. Own your mistakes, forgive yourself, and love yourself. Work on those bad habits and improve yourself every day!
Isn’t it time for you to create some new habits and pocket the change?
Consider applying The Business Untangled System to demystify your numbers. You can simplify taxes, bookkeeping, and systems while educating yourself to be more tax-deductible.
Business Untangled will hold your hands through the processes of business, system development, and implementation using tools such as QuickBooks, Tax Rescue techniques, and other marketing and business development tools. Through this, you will have LESS STRESS, PAY LESS TAX, MAKE & KEEP MORE MONEY!
Visit Business Untangled at www.businessuntangled.com or call 469-458-0447.
