Bookkeeping errors can cost you more than you can anticipate. Generally, most businesses do not consider showing much interest in bookkeeping and try to manage it by themselves. However, they don’t understand how many mistakes can happen if they don’t keep it updated and don’t take it seriously.
It is understandable that bookkeeping is a great responsibility in itself and consumes a lot of time. But, business owners need to understand its importance as well. Outsourced bookkeeping is more beneficial than you think. It will help you to know the real financial condition, necessary changes, taxes, and many more.
To be on the safe side and avoid losses and errors in business, you should avoid bookkeeping mistakes at any cost. Having stated that, you should know some bookkeeping mistakes that you have to avoid.
7 costly bookkeeping mistakes to avoid
The following are the bookkeeping mistakes that you have to avoid no matter what:
1. Inaccurate Records
This mistake is the most common one made by business owners. It is important to make regular bookkeeping as irregular or missing records can cause long-term problems. It’s better to do it regularly rather than wait for the last day of the month. By doing so, you will be minimizing the chances of losing receipts. You can take help from bookkeeping and accounting services. Moreover, it will save you in case you are audited by the IRAS. Because if you don’t keep accurate records, you might have to pay a huge amount of money.
2. One bank account
This mistake should not occur at any cost. Always keep separate bank accounts, and do not use personal bank accounts for your profession. Many businesses think that it’s fine to keep one bank account. But, it can be a problem during the audit time. Keeping separate accounts will also help you to maintain fair and accurate records. Moreover, it is important to keep bank statements as proof of the transactions made.
3. No backups
Today, everything is digitized, most business firms use applications to keep their records in a digital form. Many are also contacting outsourced accounting services online for consultations. There is nothing wrong with keeping everything in a digital format. However, you should always keep copies of the records somewhere else. So, in case it gets deleted or lost. You will have a backup record ready. It is smart to be cautious as it will cut down last-minute pressure and loss.
4. Avoiding sales tax
This is also a common yet costly mistake made by business owners. They avoid accounts and report sales tax. They do not understand that not considering sales tax and ultimately cost them fines and penalties which no business wants to bear. Therefore, make sure to pay close attention to all the sales tax records to avoid penalties.
5. Poor cash management
For business owners, maintaining a record of all sorts of amounts small or big becomes a tough job to do. And sometimes, they forget or skip to keep a proper record of the cash flow, which causes poor cash management in a firm. For keeping track of small amounts, it is suggested that you start keeping a cash lockbox. By doing, so you will be able to track all the receipts.
6. Classification of staffs
Generally, a company has a lot of staff working on different projects, departments, and different employment periods. Some work full-time, and some work as freelancers. So, as a firm owner, it should be your responsibility to classify them so that there are no misfiling tax returns and extra tax charges.
7. Lack of communication
In a company, when bookkeepers and employees don’t communicate with each other, there is a high chance that the bookkeeping team will not be able to know the transactions within the firm and will end up adding false financial statements. This needs to be avoided; the bookkeeper should even know the small transaction to make accurate records.
Even the slightest errors can cause huge changes in the auditing process.
Though these 7 bookkeeping mistakes can be fixed most businesses failed to do so due to lack of adequate accounting and bookkeeping talent in-house. If that is the case any business can benefit from professional bookkeeping services by choosing the right outsourcing partner for bookkeeping. If you are business that is looking for remote accounting firms with expertise bookkeeping services, you can contact Outsourced Bookkeeping here: https://outsourcedbookeeping.com/