Maintaining complete and accurate accounting records is expected of any business, including small businesses. Studies has shown that a business with poor track of accounting records are specifically destined for failure… whereas businesses with good records have a much better chance of survival.
Here are some common mistakes to avoid in your business operation;
Not balancing your Records to your Bank Account:
Bank reconciliation ensures that everything that has gone through your bank has been included in your account. It is one among other things an accountant or a Tax auditor will always request for. Here are a few things that could happen if you do not reconcile your books;
- Your accountant or tax preparer has to do a lot more work meaning more cost for you
- You may well be paying more taxes than necessary as you could be missing expenses that could be claimed as tax deductions
- You are at risk of getting a tax audit and the tax inspector will spend a lot more time drilling down into your affairs for not maintaining complete and accurate accounting records. the reason you ought to be disciplined to balance and reconcile your records to your bank statement every month.
Not doing the books often enough
Bookkeeping is a must for every business and keeping your books regularly will save such business the stress of having to track details of missing records that cannot be recalled as result poor accounting records.
Not recording cash payments for business
Many small business owners pay cash out of their pocket for business expenses, most times, mix up business finance and personal finance. Not keeping accurate record of these expenses can equate to a thousands in lost tax deductions. A business should Keep an accurate record of all cash receipts and payment and monitor cash balances, including all transaction documents. Getting a simple bookkeeping and accounting software such as QuickBooks, Sage, Xero, etc. makes it easier to record cash payments and other transactions.
Not recording adequate information about transactions
Small business owners often meet their accountants with all kinds of documents, bank statements, receipts or even their computer records and a bad memory. However, when everything is fresh and current, you need to add an explanation next to every transaction that’s not obvious to someone else, such as your accountant or tax auditor. You can save hours with your accountant, have a stress-free end of the year and peace of mind if you get a professional to organize your books.
Trying to implement accounting/bookkeeping software program beyond your level of expertise
This mistake is often the most costly of all. Some business owners have not received any form of accounting or bookkeeping training, the vast majority of accounting software requires a high level of understanding. Unless there is a specific need, most small business owners would be much better off with an easy system that allows them to accurately track money coming into their business and the money that goes out. If they issue invoices and they also need a system for that and that can track both Account Receivables (debtors) and Account Payables (creditors).
Accounting software provide a business with records that actually HELP it understand and manage its business operations, while actually minimizing the time your accountant needs to spend preparing tax returns. And the best part is: the owner can get on with running the business instead of trying to be an accountant.
Do You Need Accounting Help?
Consistent up to date and cleaning of accounting records for sound business decision making, may be posing some difficulties when you are preoccupied with other business functions. Is it time to consider independent professionals because of certain technical complications that could occur along the line? It could also be daunting, time-consuming procedures. Not recording correctly and poor monitoring can cause complications and confusion.
At Fritznoble , we assist our clients on the best available options that suit their businesses...Reach out/ Outsource With Us… If Accounting works are bothering you, then it’s time you outsourced your accounting and bookkeeping requirements, this will help you concentrate more on core competencies of your business; with a team of professionals to help.
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