In an attempt to save money, many small businesses handle accounting matters on their own. But with other things to look after, you might not track every income, expense, payment and tax effectively. That increases the chances of making mistakes. Clerical errors can be devastating, costly and time-wasting for a small business. The best way to evade these mistakes is hiring professional bookkeepers. Below are some of the accounting errors the experts can help you avoid.
1. Not Working With a Budget
No matter the size of your business, budgeting is crucial. A budget acts as the baseline that you use to analyse your business's operating costs. Unfortunately, many small businesses do not set a budget since they do not understand its essential role. Without a budget, you lack a foundation to plan your financial goals. Besides, you will not know whether you need to lessen your operating costs or increase your revenues.
2. Throwing Away Receipts
In this digital era, many companies are not interested in filing documents. Paperwork and files in the office are seen as clutter and are often thrown out. But even though businesses are turning digital, it is recommended that you save transaction receipts and bank statements. These are essential, as they help prove the accuracy of your accounting books. Also, the Australian Tax Office (ATO) might ask for these documents when you face an audit. Therefore, you need to ensure that you store these documents securely in a locked filing cabinet.
3. Working Without Backup
Storing data on the computer using the latest software looks like the safest way to secure data for many business owners. However, keep in mind that data on the computer can get lost, stolen or hacked. When that happens without a backup, you risk a breach of sensitive business information. Besides, this might cripple your business operations. It is, therefore, essential to have a backup book for this information in case of data loss.
4. Postponing Account Reconciliation
When it comes to business accounting, recording your cash flow and other expenses on the financial data books is not enough. You will also need to confirm the balance in the bank. Both the data entry books and your account should read the same amount. If that is not the case, it means there is a gap you need to fix immediately. Postponing an accounting reconciliation might prevent you from noticing an accounting mistake you made.
Even with the best software, you are likely to have a hard time running your business and balancing your books alone. Because of that, it is best to hire a bookkeeper to put your books in order and give you ample time to manage the day-to-day operations of your business. Contact bookkeepers in your area to learn more.
Share28 April 2021
Good day. I’m Linda and I run two family businesses — building contractor and aged care staff agency. It is quite a feat to juggle schedules and keep track of finances. I have become quite an expert with business management software. I have also learnt the vital importance of having good accountants to give advice and keep bookwork up-to-date. Prior to starting our family businesses, I honestly thought accountants existed to organise tax returns. I now understand that their jobs are much more complex and they can help your business prosper. I started this blog to highlight the numerous ways I’ve found that accountants can contribute to financial success. Please browse through the posts and I hope you find something useful within.