Bookkeeping Mistakes and Practices: A Guide for Founders

Common Bookkeeping Mistakes

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Timing is everything in the startup world. Launching your product, securing funding at the right moment, and managing your finances on time are all critical to success. When it comes to bookkeeping and best practices, getting the timing right can be the difference between closing up shop and a successful startup. 

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Overpaying for Bookkeeping Services

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1. Over-investing in Unnecessary Services: Don't make the mistake of overpaying for bookkeeping services like Pilot when your financial transactions are still relatively simple and low in volume. Puzzle offers a smart alternative with a network of certified CPAs and bookkeepers you can turn to for help. You only pay for what you need when you need it.
   
   
2. Mismatching Your Needs with Your Solutions: Early-stage startups usually don’t have a high volume of invoices, bills or reconciliations to handle. You likely don’t need an in-house bookkeeper at this stage. With Puzzle, you can tailor your bookkeeping to precisely match your startup's requirements at each stage of growth, so you're not overpaying for unnecessary services.
   
   

Delaying the Hiring of a Bookkeeper

1. High volume and complexity
   
   On the flip side, don't put off hiring a bookkeeper forever. As your startup scales, so does the complexity of your finances. Waiting too long to bring in a bookkeeper can lead to errors, missed deadlines, and compliance issues. But with Puzzle, onboarding a bookkeeper is a breeze - just share access to your account, and they will be able to close your books while you run the business.
   
   
2. Founder Burnout
   
   While Puzzle simplifies financial management in the early stages, as your startup grows, it's important to consider bringing in a professional bookkeeper. This allows you to dedicate your attention to core business responsibilities. Even if you're a CPA, prioritizing bookkeeping over critical aspects of your company can lead to burnout and prevent growth.

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Not Using the Right Tools

​​Choosing the right accounting software is not just about what works for you as a founder but also about what works best for your bookkeeper. Here’s why Puzzle is the preferred choice:

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QuickBooks: The Legacy System

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QuickBooks may be a well-known name in accounting, but it's a handicap for startups from the get-go.

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• Lack of Automation: QuickBooks struggles with automating complex tasks. You'll never be able to automate accruals, which means more manual work and a higher chance of errors.
• Error-Prone System: The QuickBooks ledger can be edited and deleted without an audit trail, leading to more errors in your financial data. You need a system that is verifiably accurate.
• Outdated Interface: There is a reason why Quickbooks requires you to get a bookkeeper just to use their software. You want intuitive, not frustrating.
• Unhappy Users: Bookkeepers and CPAs constantly complain about QuickBooks' subpar customer service and functionality. You need a tool that makes your finance team happy, not one that holds them back.

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Xero: Simple Yet Limited

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Xero is known for its user-friendly interface but falls short in handling complex financial needs:

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• Basic Functionality: Xero is great for simple use cases but you'll quickly outgrow its basic functionality. You need an accounting platform that scales with you.
• Manual Processes: Limited support for manual journal entries and bank reconciliations will slow you down. 

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Pilot: Personalized But Pricey

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Pilot offers bookkeeping services with a personal touch, but it comes at a premium:

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• High Fees: Pilot's personalized service is expensive, making it less accessible for early-stage startups on tight budgets. You need an affordable solution. 
• Limited Flexibility: With Pilot, you're locked into their service model. Puzzle offers a flexible platform tailored to your startup's unique needs. Customization is key.
• Built on Outdated Software: Pilot uses QuickBooks, which means their data is held in quarantine until it is manually approved. With Puzzle, you'll have access to your up-to-date financial information on the 1st of every month, rather than waiting until the 21st like with Pilot.

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Bench: Outsourced but Limited Integration

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Bench offers outsourced bookkeeping services, but it comes with integration and customization challenges that can hold you back:

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• Integration Issues: Bench may not play nicely with other software tools you rely on. You need a solution that seamlessly integrates with your existing tech stack, not one that creates more problems than it solves.
• Customization Constraints: You're giving up control and customization over your bookkeeping processes with this outsourced mode. Puzzle allows you to tailor the platform to your startup's unique needs.

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Puzzle: The Integrated Solution

What every founder and bookkeeper needs:

• Advanced Automation: Puzzle helps you automate complex accounting tasks, which reduces errors and saves time. Your bookkeeper can focus on strategic financial management, not mundane tasks that slow them down.

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• Real-Time Insights: With Puzzle, you get real-time insights into your startup metrics every day: cash, burn, runway, MRR. Your bookkeeper can offer more accurate and timely advice with access to up-to-date financial information.
  
  
• User-Friendly Interface: Puzzle is easy to use and accessible for bookkeepers and founders. We know because our users tell us all the time. This reduces the learning curve and increases efficiency.
  
  
• Comprehensive Support: Puzzle offers a network of certified finance professionals ready to help when needed. If you want to get help from a certified bookkeeper or CPA, you can easily hire them through the dashboard! 

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Mismanaging Cash Flow

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For startups, cash is king. You need to know exactly how much money is coming in and going out at all times. Puzzle's real-time financial tracking helps you stay on top of cash flow and make informed decisions. Your startup's survival depends on it.

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Neglecting Financial Reconciliations

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Regular financial reconciliations ensure that financial records are accurate and up-to-date. Neglecting this practice can lead to discrepancies and inaccuracies that can derail your startup's financial health and may require costly cleanup services from a professional come tax season. Puzzle automates the reconciliation process to help you minimize errors and ensure accuracy.

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Lack of Real-Time Financial Insights

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Your startup is flying blind without real-time insights. Making informed decisions without a real-time overview of your startup metrics is impossible. With Puzzle, you'll always have your finger on the pulse of your startup's financial health. Our platform provides real-time updates and comprehensive dashboards, giving you instant access to the latest financial data. No more waiting for end-of-month reports or relying on outdated numbers.

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Our Advice for Best Bookkeeping Practices

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1. Automate Where Possible: Automation reduces the risk of errors and frees up time for more strategic tasks. Automate repetitive tasks like bank reconciliations, transaction categorizations, and financial reporting.

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2. Keep Detailed Records: Maintain detailed and organized financial records. This practice not only helps in accurate bookkeeping, but helps you remain compliant as you prepare for tax season and audits. 

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3. Regular Financial Reviews: Think of regular financial reviews like a check-up for your startup's financial health. They can help you identify potential issues early and make necessary adjustments.

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Effective bookkeeping isn't just important - it's absolutely vital for your startup's success. How do you avoid the pitfalls and embrace the best practices? Sign up for Puzzle!