How to Avoid These Common Bookkeeping Mistakes
Bookkeeping mistakes made by small businesses are unfortunately all too common. Doing your accounts tends to be one of those important jobs which you put to the back of the to-do- list, instead focusing on the fun tasks such as growing clients or customers and making money! A ‘she’ll be right’ attitude just won’t work when it comes to your accounts, as bookkeeping is not something you can ignore and hope everything will be fine.
All too often I see small business owners who have made bookkeeping errors, having to pay unnecessary financial costs or even worse the need to devote many long hours to sorting out preventable mistakes. Below is a list of ten of the most common bookkeeping mistakes I have found people make and how you yourself can avoid them.
10 Common Bookkeeping Errors
1. Not keeping separate personal and business accounts
Keep things nice and simple – have a separate account for both your personal life and your business. This makes doing your accounts so much easier.
2. Making mistakes with data entry
Entering data into accounting and bookkeeping software is so much quicker and easier than doing it by hand, but you can still make mistakes when using it. Double checking figures before you press the enter key is a smart habit to develop.
3. Failing to learn how to use your accounting software correctly
While it can seem pointless needing to know all the little details of your MYOB or Xero accounting software, it is vital that you learn the basics to prevent costly mistakes with your accounts. I’m more than happy to teach and walk you through the most important areas of your software or cloud based system.
4. Not reconciling bank accounts
You need to know how much money you have at any one time to avoid overdrafts or bounced payments! Reconciling your bank account each month will let you show what your expenses and income was, how much GST or income tax you need to pay and also to ensure the amount of money in your bank equals the amount of money in your accounts.
5. Wasting too much time bookkeeping
Forget wasting hours and hours fumbling through doing your accounts. Instead concentrate on growing your business and hire an expert bookkeeper to do your accounts for you. Not only does it give you your time back, but it is also considerably more affordable and much quicker to have me do them.
6. Incorrectly categorising expenses and income
Pay careful attention when you are categorising your business expenses and income. This will let you see where your profits and losses are, enabling you to make informed decisions about the future steps of your business and make accurate claims on GST and business expenses.
7. Failing to keep accounts up to date
Business owners are busy people and all too often it is easy to put your bookkeeping tasks on the back burner. Prevent a huge mess of physical and virtual paperwork by scheduling a regular date to deal with your accounts.
8. Working within a budget
Having a budget is essential to prevent you getting in debt and being able to pay your bills. It can be tricky to set a budget, in which case I am here to help!
9. Not keeping backups
Computer based software does have the potential to go haywire and paperwork can easily be lost or thrown out. Make regular copies and put them somewhere different from your originals. A cloud based accounting system such as Xero will automatically do regular backups for you and you and your bookkeeper or accountant can also access it from anywhere in the world.
10. Poor filing techniques
A shoe box may hold all of your receipts, but it can be a mission to organise. Keep things nice and simple by either using a ledger, exercise book or even better, a cloud based accounting system such as Xero. It is way easier and simpler to keep your accounts up to date each month than face a major stress out and many long hours at the end of each tax year.
I am more than happy to discuss any bookkeeping mistakes you may have found and then to sort them out for you! Let me take your bookkeeping worries away by contacting me today.