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4 Common Accounting Mistakes for Small Businesses

Sunday, May 19, 2019

Although software has simplified many accounting and bookkeeping tasks for small businesses, there are still a number of errors and mistakes that you need to be aware of when you are handling your financials on your own.

When running a business, you are supposed to take on many roles, and booking is definitely the least pleasant one. What is certain, you are smart enough to handle your bookkeeping as long as you are running your business, but what may cause you to ask yourself why codes do not match?

Despite the fact that hiring an expert will guarantee the soundness of your reports, hiring an accountant costs too much for small business owners and start-ups and on the other hand, relying too much on your accounting software would not solve all your fiscal problems.

 

Mistakes and errors generally sourced from:

  1. Mistakes in data entry.
  2. Irregular recording of reports and transactions.
  3. Minor bookkeeping errors which lead to incorrect calculation.

Lack of attention to any of the above-mentioned issues will make you prone to lose track of your financials and keep you away from performing well. Now the question is: how can you sidestep these errors?
The best way is to get to know the errors in order to stay away from the consequences and make a turnback if it happened to you.

  1. Relying too much on your accounting software

Yes, it is true that your accounts software will save loads of your time and money and keep you notified of your financial data, but what you need to know is that there is not a simple way to get away with the right accounting. Even with the best software, the software alone won’t fix accounting problems, you need to have the basic knowledge of accounting and bookkeeping. Bear in mind that you should take advisory and consultation every now and then from an expert, the one who understands the concept of your business and learn how to manage your accounts and categorise them in a way that has the least ambiguity or opacity.
 

  1. Not paying enough attention to bookkeeping

Not having enough time to record the expenses and receipts? Normally business owners struggle with bookkeeping more than any other accounting task. Without precise bookkeeping, you won’t be able to know how your business is doing and make smart business decisions to move forward. If you feel like you do not have enough time to do the books on a regular basis, hire an expert. Many businesses prefer to hire an amateur to take care of their bookkeeping as they do not consider it as an essential part of their accounting. By having the right bookkeeping, you will have the opportunity to stay on top of your expenses. Forgetting to update costs and incomes regularly will put you in a situation that you don’t know which way to go along with.
Ensure that you record every single transaction from day one. No matter how small it is, as they are going to demonstrate your business’ condition and help you with the future footsteps.
 

  1. Not paying attention to the assigned budget

As your business grows, your knowledge in setting a budget for potentially successful projects will grow. Setting a budget at the beginning of a fiscal year or a project will help you cut down on your unnecessary expenditures.
 

  1. Analysing reports

A well-balanced analysis comes with thorough planning and consultation. You need to analyse your reports with an accountant to know what do numbers interpret and how to make decisions based on them. True reports do not only include spent and received money, but they also contain the loans and other liabilities and all your business owes. Realistic report of your asset, liabilities and other main parts of your financials guarantee the progress of your business and enable you to take action in this regard.
 
Having these simple accounting issues in mind will keep you from trouble and save you from unpleasant surprises in the future.

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