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The health of your accounting and your books starts with the health of your chart of accounts, which is basically an accounting terminology that refers to a list of categories including income, expenses, and liabilities.
If your business is extremely consistent in how it’s spending money, what it spends money on, and how it receives money, then you can make sound decisions over the course of 90 days. This is data coming out of the accounting system that you can trust. You need to be able to produce quality data because without excellent data and you don't have the facts you need, you can't make the best profit decisions.
At the end of the day, your chart of accounts is something you should absolutely know and understand. In fact, it should be a great training tool you can introduce to your team. It should also be a tool for communication between you and your accountant, your tax pro, or whoever is involved in your finances. So don't underestimate the power of a great chart of accounts.
In this episode, we dive into the 10 common bookkeeping mistakes you should know and understand as an entrepreneur. This is an important and relevant topic, even if you don't like bookkeeping because it will give you insights into what you should be paying attention to when laying the foundation in your business in terms of your bookkeeping and your accounting.
In this episode, you will hear:
- Paying attention to income and documenting all sources of income
- Process fees and third-party seller fees
- Payroll and payroll tax
- Understanding the different wages related to payroll
- Understanding your income or sales tax
- Factoring in the benefits
- The owner's draw
- Treating cashback rewards in two ways
- Reporting your refunds properly
- Sales as a refund vs. refund in terms of expenses
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