From one-person food truck businesses to major corporate mobile food empires, bookkeeping is a significant part of any mobile business. While it is typically not one of the more glamorous jobs, bookkeeping is at the heart of a food truck’s success. Unfortunately that means that common bookkeeping mistakes can cost your business significantly.
Common Bookkeeping Mistakes To Avoid
Here are the most common bookkeeping mistakes you need to avoid:
Doing it Yourself
No matter how much they hate it, many food truck owners insist upon handling the books themselves. Having a competent bookkeeper coming in to handle the books can be extremely beneficial. These professionals have the skills to do the job quickly and efficiently and will provide a second pair of eyes to find errors and make suggestions.
A common mistake in the mobile food industry 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. Keeping an eye on collection and reporting of sales taxes can result in significant fines and penalties.
RELATED: Food Truck Sales Tax Basics
A system should be set up whereby a set amount of money is in petty cash and each time money is taken out whatever the reason, a petty cash slip must be 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 small businesses are nonchalant about using the petty cash fund without keeping accurate records.
Purchasing a lock box from your local office supply store and obtaining receipts for all disbursements is a great way to start.
Having someone handling bookkeeping is only effective if they are filled in and kept up to date on all of your food truck’s business financial transactions. A frequent mistake is buying food or supplies and not providing the bookkeeper with this information or receipts.
Keep your bookkeeper involved and integrated with what’s going on inside your business. This helps them create financial statements which reflect the true operational needs of your business.
One of the fundamental aspects of bookkeeping is reconciling the books and bank statements every month. Nonetheless, many mobile food businesses do not do take this step at all or make errors by not doing it properly. This is one more reason for hiring an experienced bookkeeper.
Make sure that your bank statements are properly reconciled every month. This will help to minimize errors and identify potential issues.
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 always be available Especially if you keep all of your food truck business files on your computer system.
There is always a chance that something could happen to electronic data, so you need to be prepared. It is important to back up your data to avoid potential losses.
There are fairly standard categories for expenses in the food truck industry. 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.
The Bottom Line
For the food truck owner, bookkeeping is often seen as one of the necessary evils that you face. The tedious and mundane task of bookkeeping can often take time you just don’t have. This is why well over one-half of all mobile food vendors don’t keep their finances up to date on a monthly basis.
Bookkeeping, as difficult as it appears, is actually your biggest secret weapon when it comes to business management and growth. It is only with accurate and consistent measurement of your food truck’s key financials indicators. Use this article to help you avoid these common bookkeeping mistakes and keep your truck on the road to success.