Bookkeeping is a crucial element of running a landscaping business, and it’s also one that can be easily overlooked or done incorrectly. The task of landscaping bookkeeping is often tedious and can seem insignificant at the moment. But this is a prime example of when a small habit makes a big difference over time – staying on top of your bookkeeping practices will set your business up for so much success in the long run!
Keeping accurate financial records for your business will help you when tax season comes around and when you need to make crucial decisions – just to scratch the surface.
But if you don’t know what bookkeeping mistakes to avoid, you’ll likely make the same mistakes over and over again. Keep reading to learn some of the most common bookkeeping mistakes, and how to avoid them!
Landscaping Bookkeeping Mistakes to Avoid
· Failure to reconcile accounts regularly
We recommend reconciling your accounts monthly – this is simply the act of comparing your bank statements to your bookkeeping records in the software of your choice (i.e. Quickbooks, Xero, etc.). Failure to do this can lead to a pile-up of small mistakes over time, which results in a lot of confusion when you look back at your expenses over a given year.
· Mixing personal and business expenses
Your business expenses should always be kept separate from personal expenses. It’s so tempting to borrow from yourself just to make one payment in a pinch, but that one time can quickly snowball into a bad habit that throws off your entire financial plan on both sides. Either do your banking for these areas of your life separately or have clearly defined bank accounts for each with strict boundaries around what they’re used for.
· Forgetting to record all transactions
As we said earlier, recording transactions in bookkeeping software can feel tedious, but consistency is key in your bookkeeping process. Having a clear record will help your business exponentially in the long run. Forgetting to do so can result in serious stress and loss of cash!
· Not properly categorizing expenses
Don’t pay your employees with money that was intended to pay rent on your office space or stay reserved for repairs.
Using the Profit First method will help you lay out clear categories for categorizing your expenses – stick to that structure and let your bookkeeping follow suit.
· Failing to keep receipts and invoices
Keeping your business receipts and invoices is crucial for success in your bookkeeping records and having supporting documents when it’s time to do your taxes. Make the decision today to keep track of these records – simple as that!
The key to success in so many of these areas is simply consistency. Focus on one best practice for your landscaping business’ bookkeeping and work to implement that as a habit. Once that habit is created, move on to the next one. These tangible steps will help you see real processes and clarity in your finances. If you start using these tips and find yourself confused, that’s okay! Sometimes leaving lawn care bookkeeping to a Profit First professional is the best course of action, and we’d love to walk you through it.
Click here for our complete guide to bookkeeping and profitability for landscapers.