When you start a business, you find yourself learning all kinds of new skills that you never needed to have before. You suddenly have to do all the things, including your bookkeeping. If you’ve been winging it so far, you might think it’s all going well, but are you spending more time on your accounts than you need to? Could you even be making a mistake that’s costing you money? Here are the 5 bookkeeping mistakes we see most often and how to avoid them.
Not keeping all the receipts
When you make a big purchase, keeping the receipt is a no brainer. You’re not legally obliged to keep receipts for smaller amounts, but it’s still worth doing. For one thing, they help you to get a clearer picture of where your money’s going. If your networking budget is being overinflated by inviting clients to meet in coffee shops, putting a figure on it will help you to come up with an alternative plan. In some cases, these receipts could also support claims for tax deductions.
Not reconciling your receipts with your bank statement
This might sound like we’re trying to add to your workload rather than save you time. However, making sure your records match the bank statement will help you to pick up mistakes. If you’re a sole trader you might accidentally pay a personal expense with your business debit card or vice versa. Banks aren’t immune from making errors either, so it’s a good idea to make sure that everything matches.
Are you using your accounting software properly?
If you haven’t signed up for accounting software yet, it’s worth remembering that the right software will help you to organise and categorise your finances, make payments and make your tax returns easier (that makes it worth doing on its own, right?). If you already have it, it’s always worth reading the manual or getting training as your software has lots of different features and getting the most out of them will help you to keep your books up to date more efficiently.
Procrastinating over your bookkeeping
We know that bookkeeping is probably the least exciting task you do. If you do it little and often it becomes much less of a chore. You won’t end up with figures all over the place and you’ll find it easier to spot mistakes. If you let your receipts build up into an enormous pile, you’re much less likely to want to do anything with them. Then, before you know it, it’s time to do your tax return and you have no idea where anything is.
Trying to do everything yourself
If you’re already paying an accountant to do your tax return and final accounts, you might wonder why you need a bookkeeper as well. Surely you can just pack up the receipts and let your accountant deal with it all? The truth is that bookkeepers put your books together exactly how accountants like them. This is good news for you because it means that your accountants have more time to give you advice on tax planning and business growth so you get more for your money.
Anyone can make mistakes, but we can help you get your books back into shape. We’d love to answer any questions you have about this topic and anything else relating to your business finances. You can get in touch on our contact page or drop us a message on Facebook.