Bookkeeping Mistakes To Avoid
Bookkeeping mistakes are easier to make than you might think when you are not aware of all the fine details. Keeping your financial records might appear to be a fairly simple process when you first set up your business but there are many pitfalls for the unwary that can cost you a lot of money and create a lot of problems as your business develops.
The most common errors are:-
- Not keeping receipts for small amounts.They soon mount up and if they are deductible you are paying unnecessary taxes
- Not backing up your data. Most of us use computer systems for record keeping – but computers can go wrong and you might lose all your data.
- Not keeping hard copies – if you do you will always have the data you need if there is a technical problem.
- Not keeping track of petty cash – they may be small amounts but they are business expenses.
- Not classifying workers and subcontractors properly – there are so many regulations around using contractors, self-employed contractors, freelancers, part time workers, you need to make sure you have classified them correctly.
- Not keeping your accounts up to date. The year end can sneak up on you – and you won’t know where you are on a day to day basis
- Not deducting/charging VAT properly. You can end up in a real pickle if you don’t record and charge the correct VAT
- Not recording expenses properly – using clear, simple categories and not too many of them is the best way forward
- Not keeping track of overdue accounts – it can be uncomfortable or embarrassing chasing late payments but it can really harm your business if you don’t
- Not recording transfers between accounts properly. It is easy to record a transfer from another account as income – you will then have a totally false idea of how your business is performing not to mention messing up your tax liability.
- Not keeping accurate records. Filing is important, numbering invoices is important, small amounts are important. Record everything.
The biggest mistake made by many businesses is trying to do it all yourself. Where specialised knowledge is required it is always better to call in an expert – after all that’s what you do best – sell your expertise in your field.
Using a Bookkeeper or Bookkeeping service is the one of the best ways to ensure your business will succeed. They are professionals at what they do and they know all the traps and pitfalls to avoid. If they do the heavy lifting for you in keeping your finances on track, you are free to build your business focusing on the things you do best.
Farries Bookkeeping Services offers a free consultation to demonstrate how we can help you avoid costly errors. Get in touch and see how we can support the growth of your business.