Accounting is very difficult for many and this fact has been established as small business owners often struggle with the financial details. As simple as it may sound, this is where most people trip up and where you could send your future self a headache. The best antidote for bookkeeping mistakes is preventative measures at the outset!
Mistakes To Avoid:
- Mixing Personal and Business Finances
Muddling together personal and corporate accounts leads to confusion. This complicates things when it comes to tracking expenses, filing your taxes and finding out how well of a financial position you are in.
How to Avoid It: Set up a business bank account. Keep all transactions completely separate so that you never, ever use it for personal spending. For Cheltenham Accountants, visit https://www.randall-payne.co.uk/services/accountancy/cheltenham-accountants/
- Not Keeping Receipts and Records
Inaccurate accounts could be missing receipts or not accounting for all costs, leading to trouble with HMRC. You could miss out on valid deductions or worse, have to pay penalties.
Prevention: Start saving all receipts and invoices (paper or digital) Instead, scan important papers as you need them with accounting software or apps.
- Falling Behind on Bookkeeping
All this does is let the bookkeeping pile up and important details get lost, while errors make it into your records. It can also turn your tax season into a confusing mess.
The best way to avoid it: Carve out time (on a regular basis) each week for updating your records so the task is not one that adds hours of work at some random point in future. Sometimes a little each day is far easier than one big catch up.
- Overlooking Tax Deadlines
Failing to submit taxes on time can lead to fines and worry. This is a pretty bad idea especially when you are busy running your business.
How to prevent it: Add important tax deadlines on your calendar and remind yourself using sticky notes or digital note pads. Look for accounting software with integrated deadline reminders.
- DIY Accounting Without Enough Knowledge
Avoid making costly errors by scratching your head instead of learning the basics! You may overlook deductible expenses, incorrectly categorise purchases or even file inaccurate tax returns.
What to do about it: Spend time educating yourself on basic accounting skills, or hire an experienced accountant. You will end up saving time and money in the long run with just a little expert help.
Final Tip:
Proper accounting is not only about minimising errors, it also means better knowing the position of your business. A few simple changes, a little support and you can take care of your finances and do what you do best!
+ There are no comments
Add yours