One of the main reasons firms run into issues with their projects is due to mistakes in bookkeeping and accounting procedures. Fortunately, there are a few tried-and-true strategies that can help you avoid critical bookkeeping mistakes, especially if you have time and billing software.
1. Not Having a Separate Business Bank Account
Many smaller firm owners make the mistake of merging their personal and business bank accounts. While it may seem convenient at the time, it can cause a complicated and time-consuming mess when it comes to separating expenses and figuring out deductibles for tax filing purposes. Lumping everything together will also result in paying much more for tax preparation services than if your financials were organized separately.
In addition to having separate accounts, you should have at least one designated credit card for business expenses. Making business and personal purchases with the same credit card makes it far more likely that there will be errors, which oftentimes results in fines from the IRS and can potentially trigger an audit.
2. Not Backing Up Data Regularly
Unexpectedly losing valuable data costs firm owners a significant amount of time and money, particularly if the loss includes confidential client information. What's more, even if the lost data isn’t client data, the day-to-day functionality of your firm will be severely impacted until files and documents can be restored. The popularity of cloud-based services means that retaining hard copies of data isn't anywhere near as necessary as it once was. You still need to have backups, however, so be sure that either you or your bookkeeper has at least two sources of digital backup data on hand at all times. Make sure your data is backed up automatically to a cloud-based platform, or that you are running data backups regularly, such as weekly or monthly.
3. Not Entering Data in a Timely Fashion
Although it's tempting to put off entering small amounts of data, it's better to do so as quickly as possible to keep things streamlined and organized. Keep in mind that bookkeeping is a matter of numerous small tasks that comprise a much bigger picture. Setting aside some time at the end of each day to input any necessary data that has accumulated over the course of the day is a far more effective approach than saving it up for the weekend or telling yourself that you'll get to it when you can. As a firm owner, you'll be responsible for entering a certain amount of minor data yourself on a regular basis, even if you hire a dedicated bookkeeper.
If you have time and billing software, you can automate your data and ensure that the data is correct every time. Manually calculating and storing data leaves room for errors- something your firm can’t afford to deal with! Time and billing software, such as one of the many features of BQE CORE, works with an all-in-one dashboard so that your time tracking, bookkeeping, and project management information is easily stored together in one place.
4. Not Delegating Bookkeeping Tasks
As tempting as it might be to tackle bookkeeping tasks yourself, it's not very realistic once your firm begins to grow. Unless you're well-versed in business law and accounting, this type of do-it-yourself approach may end up costing you more than it would if you hired a competent professional to do the job.
One of the main reasons why many firms fail is due to poor planning. Instead of focusing on business development strategies, as well as client procurement and retention, they micromanage foundational tasks - like bookkeeping - to the extent that their essential role as the heart and soul of the firm is neglected.
Delegate bookkeeping tasks, hire a dedicated accountant, or enlist in the assistance time and billing software to ensure this does not all fall on your plate and to also eliminate any potential errors that could be overlooked.
5. Not Using Time and Billing Software
Even firm owners who understand that delegating bookkeeping tasks frees up their time so they can focus on more meaningful tasks often fail to consider that accounting tasks are not one size fits all. Be sure to take the time to find the proper time and billing software that can be implemented into your practice.
Time tracking software for engineers, architects, and consulting firms is beneficial because it lets you effortlessly track and link all expenses and receipts to their respective projects for streamlined accounting and billing. You can also know how many hours were worked on a project and how much you need to bill for while feeling confident that the information is correct.
Invoicing and billing software allows you to track time, expenses, and billing all in one place. You can ensure correct invoicing with powerful fee schedules and immediately submit invoices and expense receipts to clients upon approval- then get paid instantly using ePayments.
6. Time and Billing Software from BQE
BQE CORE offers powerful project management, time tracking and accounting capabilities to help your firm avoid the most common bookkeeping mistakes. By setting up automatic billing for your clients, and automatically generating profit and loss statements, you will establish all the foundational basics required to set your firm up for success. Try a free demo today to learn more.