Here are five of the most common bookkeeping pitfalls, and some simple tips for getting back on track.

1. Mixing business and personal

All too often, entrepreneurs adopt a “buy now, sort later” approach to expenses, using the same credit card for personal and professional purchases. At the end of the month, they’re left poring over statements, trying to sort things out. Mixing business and personal expenses costs extra hours of bookkeeping each month, and muddies your overall financial picture.

Avoid this pitfall by using a separate credit card and bank account for business, and being disciplined about separating expenditures.

2. Neglecting to track reimbursable expenses

Receipt-tracking is a necessary part of business ownership. You need to keep track of receipts to understand spending patterns and effectively manage your company’s finances. And if you want to claim deductions at tax time, you’ll need to submit receipts along with your tax return.

But far too many business owners take a haphazard approach to collecting and organizing receipts—especially while on-the-go, where a whopping 50% of their expenses are generated. Get the deductions you deserve and simplify tax prep by using an expense-tracking app.  Options like Expensify and BizXpenseTracker can record mileage, billable hours, and other expenditures, as well as generate expense reports. Plus, many of these apps sync seamlessly with your business bank account and accounting software.

3. Not taking advantage of technology

Are you still relying on manual accounting methods? While basic spreadsheet tools can get the job done, they leave the door wide open for human error. Mortgage loan giant, Fannie Mae, once uncovered a $1.1 billion error on their Excel spreadsheet, citing “honest mistake” as the cause.

What’s more, manual methods simply can’t match the technological benefits offered by software like QuickBooks or Xero. These systems track invoicing, link with your credit card and business account, organize expenses, and generate insightful financial reports.

4. Not keeping accounts up to date

Let’s be frank. Most business owners don’t look forward to that weekly appointment with “the books.”  In fact, many entrepreneurs cite bookkeeping as their most dreaded responsibility and will find a host of reasons to avoid it.

5. Doing it all yourself

It is completely understandable for budget-conscious entrepreneurs to try to cut costs by handling bookkeeping on their own. However, taking advantage of professional help—even on a part time basis—can generate substantial savings of time and money over the long term.

Time to get savvy about bookkeeping. The biggest pay off? Saving time with these bookkeeping tips will allow you to invest your talents and energy where they will be most profitable.

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Unsurprisingly, flexibility and feeling in control ranked first in the “love” category. Meanwhile, almost 60% said bookkeeping was hands-down their most hated task.

Most business owners understand that effective financial management is key to their success. But lack of knowledge, frustration, and even avoidance can add up to accounting mistakes that derail future growth.

Protect your business and reduce your stress by avoiding these five costly accounting errors.

Mixing personal and professional finances

From day one, business owners should have a separate bank account in which to deposit their income and pay their business expenses.

It’s also crucial to designate a business-only credit card. Come tax time, separate statements will make submitting claimable expenses quick and easy, while reducing the risk of a painful audit.

Letting accounts receivable slide

It’s frightening easy to lose track of which customers have paid you and which clients are late. Implement a strict policy and schedule for tracking accounts receivable and pursuing unpaid invoices.

• ask customers to pay at the point of purchase or no more than 30 days later;
• contact clients to confirm they have received your invoice and to agree on a payment date;
• follow up immediately when payment dates are missed; and
• keep accurate, up-to-date records of each client’s payment history.

Investing in a cloud-based accounting solution can make AR a breeze by automating your monthly invoicing – and contacting late payers with a reminder email.

Not using tech to track your expenses

Tired of chasing down missing receipts and struggling to justify claims come tax time? There’s an app for that! Choose from numerous options, such as Receipt Bank, Shoeboxed or Expensify.

Many of these apps generate expense reports that are easy to share, or sync automatically with accounting software.
Neglecting to strategize for long-term growth

Effective accounting means managing day-to-day finances while making provisions for future growth. Software and cloud-based solutions offer easy ways to track your financials, but they also generate reports and provide analytic tools SMB owners can use for future forecasting.

Familiarize yourself with the reports your software can generate to track long-term trends, identify and mitigate risk, and discover new ways to increase profitability. Talk to your accountant about which reports and metrics are most important for your particular business and how to utilize them.

Final tip: Don’t go it alone

Small business owners are rarely trained accountants. Don’t try to manage your company’s finances all by yourself.

Collaborate with a trusted professional, invest in quality IT solutions, and spend some time familiarizing yourself with relevant tools and trends.

You’ll feel empowered, which is step one to forging a more love-filled relationship with small business accounting!

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But what many business owners don’t take advantage of are key insights that can improve customer care and increase sales. Here are some smart ways you can use your accounting software to help boost your bottom line.

Gain insights that increase sales

If you’re not tapping into your accounting software analytics to better understand your customers, you’re missing a major opportunity to close more sales.

Most accounting software can highlight your biggest spenders and buying trends. How would knowing who your best customers are, your biggest selling products and how much each customer spends impact your marketing decisions – not to mention help you fine tune your sales strategies?

By the same token, when you know which products and services aren’t selling, you’ll be able to make more profitable purchasing decisions. Most accounting software offers inventory tracking to help you decide what to keep on the shelves, which products to sell off at a discount and which items to phase out altogether.

Improve customer care and boost profits

Accounting software can offer peace of mind when you know your financials are accurate and up to date. But another major advantage of an online accounting solution is how much time you’ll save by automating processes like invoicing and payroll – giving you more time to follow up with clients and seek out new prospects.

We all know how important the personal touch is when it comes to sales. So why not use your accounting software customer data to help remember your customers’ birthdays or thank them when they’ve hit a milestone – spending more than $5,000 on your products, for example?

With enhanced customer data at your fingertips, your business will earn a reputation for personalized service. You’ll be able to respond quickly when a customer calls with a question about a product or an order. And you’ll be able to suggest substitutions and offer valuable add-ons based on their buying preferences, so upselling becomes a snap.

How will you use accounting software to grow your small business?

Savvy business owners take the first step toward better profitability when they stop thinking of accounting software as simply a financial management solution and start thinking of it as a comprehensive tool for business growth.

You may be surprised at the many ways accounting software can help you better serve your customers or improve your sales strategies when you look at its true potential.

Now that you have a handful of ideas for making better use of your accounting software, what will you do differently to enhance customer care, improve your profits and continue to grow your business?

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New business owners have a lot on their plate, and can easily lose track of an approaching tax deadline or financial data needed to submit their return.

Organization is key when preparing for tax time. As is taking advantage of the many tools and resources out there to support new entrepreneurs.

Set yourself up for success by following these four pillars of painless tax prep.

1. Commit to clean bookkeeping from day one

Year-round, effective bookkeeping is the best way new business owners can minimize tax season stress. With the wide range of accounting software out there, there’s no reason to rely on time consuming manual methods that leave room for error.

All-in-one options like Xero, KashFlow and QuickBooks automate your most important bookkeeping processes, including:

• Tracking expenses;
• Tracking sales and income;
• Creating and sending invoices and
• Managing inventory.

With your financial records all in one place and up-to-date, you’re better positioned to maximize your refund, while avoiding penalties associated with incorrect or incomplete tax returns.

2. Capture every business expense

Each year, 21% of small business owners claim less than half of their business expenses, largely because they don’t have a reliable system for documenting expenditures while on the go.

Without carefully logged receipts, entrepreneurs must forfeit valuable tax deductions, sacrificing cash they could be funneling back into their business.

Cash in on claimable expenses by using a mobile app to record receipt data, track mileage and generate expense reports. As an added bonus, many of these tools sync with your all-in-one accounting software.

3. Separate business from personal

Right from day one, small business owners should clearly divide their personal and business expenses. Differentiating between the two will make it much easier to claim deductions on your tax return – and support those claims in case of an audit.

Recommended steps to separate your business and personal finances include:

• Create a separate bank account for your business, and designate a credit card solely for business purposes (this will help you track expenditures while building up your credit and borrowing power);
• Never combine business and personal expenses (for example, if you buy printer ink for your home and your business at the same time, ask for two separate receipts);
• Pay yourself a set salary from your business checking account each month (this will help you determine how your income, as well as the business, will be taxed).

4. Always consult with an accountant

Not sure exactly what you can claim as a business expense? Wondering which accounting software to use or how to interpret local tax regulations?

Consult with an accounting professional to put your mind at ease – well before the filing deadline! In addition to managing the nuts and bolts of tax preparation, regular meetings with an accountant will help you continuously improve bookkeeping practices and better understand the financial workings of your small business.

Those organizational strategies you commit to now will promote positive relations with your local tax authorities – and the long-term financial health of your company.

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