Mistakes in bookkeeping can have a deeply heartbreaking effect, especially because they can be costly. Common errors like forgetting to account for invoices, improperly using accounting software like QuickBooks, or adding transactions at whim without understanding their impact on your books can be detrimental. (One thing that always helped me is to say the journal entry out loud before recording it.) And, God forbid, if you don’t track anything at all for ages, you could miss out on numerous tax deductions.

Never Leave Your Books Until the End of the Year

You need to make it a habit to do your bookkeeping regularly—either daily, weekly, or at the very least, monthly. Waiting until the end of the year can be overwhelming and lead to missed opportunities or errors. Once you’ve inputted all the transactions and categorized them, reconcile to ensure what’s in your bank account matches what’s in your books.

Do Not Just Add Transactions (Specific to QBO)

This is truly disgraceful and a reflection of laziness. Software like QuickBooks Online (QBO) consolidates redundant tasks like automatically categorizing transactions. However, this doesn’t mean the responsibility of accurately deciphering which accounts to use is eliminated. Software is a tool, but you need to be more hands-on and double-check things.

Understand the Workflow of Your Money Ins and Outs, and How They Are Accounted For

Understanding how money flows through your business is crucial. For instance, in QBO, when you create an invoice, you need to match it with a deposit in the bank account rather than just adding the transactions manually. The same goes for payments—when money comes in, how are you accounting for it? Are you using project management software? Where is the invoice going? These are essential considerations.

Have a Receipt Management System

Simple—take a picture, upload it to Google Drive, and sort it by day, week, month, and year. It’s super simple, but do not neglect this.

Do Not Mix Personal and Business Expenses

If you’re just starting your business and it’s been only three months, with inconsistent money flow, mixing expenses might seem understandable. However, if your business is sustaining your lifestyle, stop immediately and get a business bank account.

Business Bank Account

• Chequing Account: When your business starts reaching larger scales, you’ll want multiple business accounts for different departments.
• Reinvesting Profits: Avoid leaving the majority of your profits sitting in a chequing or savings account. Reinvest in the business and assets that will generate more income.
• Zero Balance Account: Learn more about using zero balance accounts to optimize your cash management.
• Company Credit Card: Get a company credit card to reduce the number of transactions.
• Business Loans: Consider taking out business loans for new equipment, offices, etc., to grow your business. (**Remember: use other people’s money to make money.)

Options for Business Bank Accounts

RBC Flex Choice Business Account

• $6 monthly fee