Compared to large corporations, small businesses have limited resources. As such, the manager or owner ends up wearing many hats, one of them being bookkeeping. At first glance, bookkeeping might seem straightforward, but it’s quite a complex task. Without a firm grip on accounting concepts, you are likely to make many mistakes. The smallest accounting mistakes could have serious repercussions on your business, so in this blog post, we’ll look at five common accounting mistakes you could make at work.
1. Doing All The Bookkeeping By Yourself
There is a reason why you take your car to the mechanic for servicing. A mechanic is a professional, and they understand the ins and outs of vehicle repair. Similarly, accountants are well versed in tax laws and have the required knowledge to analyse financial data and create financial reports. Hiring a professional will help ensure that you’re always compliant with tax laws, especially since these rules are updated periodically. It will also give you a better understanding of where your money is going, allowing you to plan for business growth.
2. Not Keeping Track of Small Amounts
Business owners are keen on recording big expenses but forget to track small purchases. Eventually, small amounts mount up to a large sum of unaccounted expenditure. Tracking your spending, no matter how small, is crucial for bookkeeping. Ensure that you keep a record of them or save the receipts in a special box.
3. Poor Communication
If you hire a bookkeeper to help you with accounting, communication and transparency are of utmost importance. A bookkeeper is only as good as the information you give them, so if they aren’t fully informed, they will not deliver good results. Keep them in the loop about all your expenses, including small purchases and bonus payments, both of which often fall through the cracks.
4. Forgetting To Take Off VAT
Failing to deduct sales VAT from the total sales amount is a common but costly mistake. Also, with tax laws constantly changing, it is much more difficult for businesses owners to remain compliant with the law. A professional bookkeeper/accountant well versed in tax laws, will be able to deal with tax issues for you, so you can concentrate on growing your business.
5. Doing It On The Cheap
As a small business owner, it is your responsibility to save money where possible, but on the other hand, cheap services can be expensive long-term, in terms of penalties and interest being charged by HMRC. Compromising on quality, especially when hiring an accountant, will cost you more money in the long run.
To avoid these accounting pitfalls, hire a professional bookkeeper and qualified accountant to help you with all your needs. Contact Apple by Mall today for more information about our accountancy services.