Biggest Bookkeeping Mistake
I’ve spoken to many owner operators and quite frankly the biggest mistake I have seen is pretending bookkeeping doesn’t exist. Better yet, “doing the books” once a year for taxes only!
Next Most Common Bookkeeping Mistake
Tied closely for second is keeping incomplete or outdated books, but at least you tried for a little while. You might ask, why does it matter? I get my settlements weekly from my carrier I have contracted with and pay the IRS based on last year’s taxes. Here’s some tough love…you are thinking like an EMPLOYEE and not a BUSINESS OWNER! You need to have a bookkeeping system in place.
Take for example the very first full week settlement for my fiancée. I tracked settlements by comparing his records to the carrier’s settlement. Lo and behold, they didn’t pay him for an entire load!! How do I know? We created an invoice for the week in his bookkeeping software (Although, we didn’t send the invoice to the carrier.) He entered each move daily with the agreed upon price as an item. Granted it was only a $80 short 4-mile run, but can you imagine if only every other week they “miss” paying you for the work you performed under your contract. The cost is over $2000 in a year!!
What if your runs are higher paying than this, but they just make an error. How much would be the total owed? How much of your money is being left with the carrier versus in your owner’s draw? The mailbox where the other owner operators pick up their settlements is overflowing with previous week’s settlement paperwork. The carrier knows who doesn’t even check their settlements when you don’t pick them up. Conversely, if you point out errors the carrier knows you are checking.
Third Most Common Bookkeeping Mistake
What about missing or illegible receipts when it comes to tax time? Can you write off that repair job for $1600 if you know you did it, but can’t find the invoice from the shop? Most tax professionals need to see that receipt to be able to put it on there. They are putting their name on the accuracy of the preparation of that return. If you are keeping up with your bookkeeping on a daily, weekly, monthly basis you can probably still locate the receipt. If you did that in January, good luck coming up with that receipt in April of the following year when you are filing.
Bank statements and credit card statements do NOT count as a receipt. Speaking of taxes, if you have a slow quarter should you be giving the government the same amount? What if business picks up and you don’t remit enough to be within the range to avoid penalties and fees? You definitely don’t want to pay the fees and interest that go along with miscalculating the IRS payments.
Fourth Most Common Bookkeeping Mistake
Finally, not having complete up-to-date records for your business is hindering you from making informed business financial decisions. When you have a major breakdown, should you repair or replace? What’s your business’ financial health looking like for financing? Do you know your bank is going to ask you for at least the balance sheet and income statement?
Working with a bookkeeper such as myself, you just need to make a call or send an email. I would prepare them by the following day (assuming I have everything from you to be up to date). Not only would you have the reports, but the monthly coaching would provide you with the knowledge and ability to talk the talk with the banker who is reviewing your application for financing. As a former banker, when a business owner would look at me with a blank stare when I asked for financial statements, I knew that they would not be proceeding because they had no idea what they were or how to make them.
These are the reasons I am so passionate about helping others to not only do the bean counting, but to provide the professional advice like your own secret CFO of the company. Click here to schedule your free consultation.