From one-person entities to major corporations, bookkeeping is a significant part of any business endeavor. While it is typically not one of the more glamorous jobs, bookkeeping is at the heart of a company's success, and errors can cost the company significantly. Below are 10 of the most common errors that you want to avoid.

1. Not saving receipts of less than $75. While such receipts may not be required by the IRS, they provide backup documentation for the many deductions you may claim. It is very simple to have a folder for such receipts, which can prove valuable at tax time.

2. Doing it yourself. No matter how much they hate it, many small business owners insist upon handling the books themselves. Having a competent bookkeeper coming in to handle the books can be extremely beneficial in that they have the skills to do the job quickly and efficiently and will provide a second pair of eyes to find errors and make suggestions.

3. Forgetting to track reimbursable expenses. Small business owners often pay for expenses out of pocket or with their own personal credit card then make the mistakes of failing to track these expenses. They then fail to submit the expenses to the company for reimbursement.

4. Not properly classifying employees. The proliferation of independent contractors, consultants, and freelancers has made it difficult to determine who is on staff and who is not. This results in misfiling when it comes to filing taxes since there are different rules and regulations for employees and non-employees.

5. Lack of communication. Having someone handling bookkeeping is only effective if they are filled in and kept up to date on all financial transactions. A frequent mistake is paying someone a bonus and not reporting it or buying supplies and not providing the bookkeeper with the information or receipts.

6. Not reconciling the books with the bank statement each month. One of the fundamental aspects of bookkeeping is reconciling the books and bank statements every month. Nonetheless, there are businesses that do not do this and others where errors are made by not doing it properly. Again, this is a good reason for hiring an experienced bookkeeper.

7. No backup. The paperless office does not exist in the real world, where audits do still exist. A paper trail, documentation or verification in the form of backup documents should be available, especially if all files are on the computer system, which could be prone to technical problems.

8. Not deducting sales tax. A common mistake in retail businesses is not deducting the sales tax from the total sales. This results in a higher total sales amount and does not lower the amount of taxes due.

9. Petty cash nonchalance. A system should be set up whereby a set amount of money is in petty cash and each time money is taken out for any purpose, a petty cash slip is filled out. When the fund is exhausted, the slips will total the original amount and a check can be written to cash to set up the full amount again. Many offices are nonchalant about using the petty cash fund without keeping accurate records.

10. Miscategorization or overcategorization. There are fairly standard categories for expenses. However, often expenses are entered into the wrong categories or too many categories are created. Use general bookkeeping guidelines for standard categorization and create as few new categories as possible. Try to follow generally accepted accounting practices.

Visit the AllBusiness.com finance and accounting center for tips on bookkeeping topics such as payroll, cash flow management and financial reporting.  AllBusiness.com is a leading provider of practical information and services for growing businesses.
Copyright 2006 AllBusiness, Inc

Although times are tough, small business financing is still available. Banks are collateral lenders and require guarantees from borrowers with a strong credit score who pledge verifiable assets to secure a loan.  

Getting the loan you’re looking for is possible if you’re informed. Use these quick tips to start you on your way to the perfect loan package.

Form a relationship. You need to identify a local community bank in your area and open an account relationship with them. They are typically small financial institutions whose market area is confined to neighborhoods or smaller cities. Most importantly, lending decisions are made by senior executives who understand the needs of their community, and have a personal relationship with their customers. Community bankers provide loans to people they know and trust.

Get your PhD, really. Passion. Heart. Determination. Write a short but compelling cover letter that details your loan request, your ability to repay and what makes you “special.” Truth be known, we are all guilty of drawing conclusions based on first impressions. Don’t waste the opportunity by not making a passionate explanation on why the banker needs to consider your loan.

Prepare your plan. A business plan with a concise executive summary explains in a few pages your experience and knowledge in the field, your competition, your competitive advantage, and who supports your business. A client list and testimonials from those you do business with are important to validate your business plan.

Submit financial documents. You will be required to submit the past two year’s tax returns for your business, yourself and your significant other. A year-to-date balance sheet and income statement also will be required plus a detailed budget for at least 24 months supporting how you will be able to repay the loan. Also, consider providing recent appraisals and/or an annual inventory report as well as a list of your accounts receivables that can support real estate and asset valuations.

Be clear on terms. Then pay. It is important that you show the lender you understand their underwriting requirements and that you are a qualified borrower. Plan for how the loan will be repaid if the business fails. Seeking money for your business is not a quick and easy process. It is critical to understand lender requirements and provide current and accurate information about you and your business.

Entrepreneur, Steve Bloom, started several business ventures in mortgage banking, real estate development and management, importing, sign manufacturing and business consulting. Steve has invested in several start-ups that provided opportunities in technology transfer, music video and merchant banking. He is currently the managing general partner for an apartment complex in Newark, N.J. and is a lecturer at Emory University’s Center for Life Long Learning. Steve is a frequent speaker for Chambers of Commerce, SCORE and the SBA and currently speaks numerous community groups on: “Crisis or Opportunity, Are You Ready.”

For financing flexibility, nothing beats a revolving credit line (RCL). Structured much like your personal credit card, RCLs allow approved borrowers to tap only as much money as needed to stay atop seasonal and business cycle fluctuations. Application and repayment requirements are generally far simpler than loans and other common financing options.

However, an RCL is by no means a panacea for a small business, nor is it entirely free of requirements and risks. In just 60 seconds, we’ll show you how to determine if an RCL is right for you.

0:54     What Do You Need and Why?
An RCL is suitable for temporary, short-term needs such as covering cash flow, purchasing supplies and inventory, and financing receivables. For larger, long-term investments such as new facilities, equipment and other fixed assets, a conventional business loan or other financing mechanism may be more appropriate.

0:48     Shop Around
Procedures to qualify for, use and repay an RCL vary among banks. Nearly all charge fees for start-up, transactions and annual use. Some also require collateral and annual reviews of how you’re using your RCL.

0:35     Consider the Costs
An RCL offers the convenience of credit cards and avoids many of the risks.  You must manage these funds wisely to make sure you don’t abuse them. Unlike loans, interest rates on an RLC may vary with the market, your balance and other factors.

0:27     Line Up Your Qualifications 
Your application for an RCL will require financial and operational information about your business, as well as your personal credit history. Your business plan should already contain much of this data, but the bank may ask for other submissions.

0:14     Build-in Sound Budgeting
Just because you qualify for an RCL doesn’t mean you have to use it. Good business planning, financial management and operational skills can help you minimize the need for an RCL (and, accordingly, your debt), leaving those funds available for true emergencies.

0:06     Cash In on Experience
Assistance with RCLs and other forms of business financing is always available from SCORE. Experienced counselors can help you through every step from needs assessment to applications and money management. And with no charge, these services are an ideal investment in the future of your small business.

• Think of a budget as a useful tool—a written financial plan that helps you set goals and measure progress.

• Start by coming up with a sales revenue target. Make it your best estimate.

• Based on past experience, estimate your cost of goods sold (e.g., 70 percent of sales) and subtract it from the sales revenue to come up with your estimated gross margin.

• Forecast variable expenses (items such as travel and commissions that vary according to the level of sales) and fixed expenses (items like taxes and rent that stay the same, regardless of sales). Subtract these expenses from your gross margin to arrive at your estimated net income (before federal taxes).

• Break your annual budget into quarters and monitor your progress every three months to detect problems and make corrections.