No matter how careful you are in your business, it is natural that mistakes sometimes arise. Bookkeepers cannot give you 101% guarantee that their work is accurately done. There’s no such thing as a perfect person. What we can do is to be familiar with these common errors so that we can check the parts where bookkeepers usually commit mistakes. It is important to be aware of the most common bookkeeping mistakes so that you can save the company’s financials in the long run.
1. Not keeping receipts
The first thing we need to remember is to collect receipts. For every business related receipt, it is important to claim every expense incurred and ensure that there will be a proof of purchase if it is applicable. Even petty cash receipts should also be kept. Even though the only have small charges but they add up faster than you thought. Having these receipts can greatly help the company by providing them accurate information when it comes to cash flow. More importantly, it will be a good habit to keep these receipts for documentation whenever there will an audit coming to your business.
2. Combining business and personal finances
It may be understandable for small business owners to combine their business and personal finances into one because of the incapacity of the business to stand on its own, however, it is not advisable to do so. It is because it can get a little messy in the long run. It is advisable to keep separate accounts for your business and personal purchases to keep the books clean. With this,you willbe able to see the operating costs of your business. It also ensures that all business income goes in here from day one. Lastly, it makes things easier when tax time rolls around because you already separated your finances and it will also help you get a clear view of your business’ achievement.
3. Not classifying employees
There are times when a business has different types of employees in its business. Usually, they have full-time staff, but there are also times when they need to employ part-time staff or contractual workers. If this is the case, bookkeepers should know which is which. It is important to classify your employees properly so that you can properly apply the taxes applicable to them.
4. Not having backup copy of important files
Records are important and it will be a big problem if this information will be lost. Although cloud storage may be convenient and secure for you, you should still look for other alternatives just incase. It is advisable to regularly pull hard records of bank statements, business reports, and other critical documents. These documents can help you in case your cloud storage will not work.
5. Outdated books
It is a bit challenging for small business owners to own a business because they really need to multitask. They would usually have multiple roles during the day, therefore there are tasks . If you feel that you cannot be a bookkeeper, then it’s time to seek professional help. You can always look for a professional freelance bookkeeper or a part-time bookkeeper to help you manage your books. It is one of the important things to comply–having up-to-date books. This is to make accurate decisions when it comes to your business.
To prevent these mistakes, it is best to hire a bookkeeper from the best. Eclat Accountancy Ltd offers a lot of accounting services that suit your needs. Visit wwww.eclataccountancy.co.uk now!