Bookkeeping is an inevitable aspect of every business and whether you do it yourself or outsource it to specialists like us, it is necessary to be aware of mistakes that can be avoided. At first glimpse bookkeeping might seem like a simple enough matter, however, simple bookkeeping mistakes can be expensive so here is a list of common mistakes that we see and fix all the time.
They don’t use software
Yes, we really do have people come to us who don’t use software at all … we’ve had several businesses come to us with their dusty old manual ledger books!
There are a lot of choices out there from using a spreadsheet to a bespoke accounting system. Although spreadsheets can work as a simple data entry tool, they are difficult to use as a tool to support growth for your business. They can also be time consuming, more open to mistakes and less time is spent focusing on your business. Managing the day-to-day business finances is so much simpler with the right software which is why we would highly recommend using Xero. Cloud-based platform Xero is an easy-to-use solution for small and medium-sized businesses. From invoicing to reporting, Xero takes the strain out of everyday accounting, reducing paperwork and boosting efficiency.
Leaving things too late
When it comes to bookkeeping the longer you put it off the more chance of mistakes. We all have those tasks that we put off until the last minute but if you don’t stay on top of your books this can lead to added stress, penalties and cash flow problems. Spending a little time each day on your books can help you keep on top and have a better understanding of your accounts.
Mixing personal with business
Not having separate bank accounts for business and personal, or using the wrong account to pay for things, can mean your finances can get a bit messy. Keeping them separate lets you know exactly where your business is at financially and saves you having to sift through hundreds of receipts and separating them into personal and business transactions.
It’s sometimes unavoidable, but with today’s ease of being able to make contactless card (and phone) payments the need to pay cash is decreasing. Paying by card means your bank records the date, amount and where the money was spent, making your bookkeeping much easier to keep on top of.
Not having a filing system
So many of us make the mistake of not keeping our receipts but all those small amounts can soon add up. Keeping and sorting receipts doesn’t have to be stressful or time consuming. We highly recommend using a cloud-based software like hubdoc or receiptbank. You simply take a picture of the receipt, and it stores the information for you. If you would rather have paper copies, then creating a filing system helps to keep them in date order making life easier when it comes to audits.
Not Reconciling Regularly
Making sure you reconcile your accounts regularly is essential in making sure your own record of income and expenditure matches up with your financial statements. Doing this regularly makes it much easier for you to see how much money you have on hand at any given time and to discover any errors early.
Does any of this sound familiar? These are just a few of the mistakes easily made so why not stop “making a pigs ear of it” and speak to us about how we may be able to help at email@example.com