Here are some of the common mistakes that small businesses should avoid:
- Unable to balance your bank account to your records
It is very important for businesses to reconcile all financial records to your bank statement, this will ensure that all of the necessary data are included in your accounts. If you are unable to balance your books to your bank accounts then your accountant or bookkeeper might have to do a lot work and this would mean another cost for you. Another factor is that you might be paying more tax then the desired amount, because there are missing expenses that your tax cannot cover. So practice to balance or reconcile your records every month.
- Not keeping your books updated
Bookkeeping is a process where in it would take a day for you to record all the financial data. To save time and effort, you can practice doing your bookkeeping chores regularly, in this way it would be easier on your part to keep track of all the details that occurred in a day. If you have no time for it, consider outsource to a professional accounting services provider.
- Cash payments which are not recorded
Most of the small business owners are paying their bills out of their pocket, and not recording this practice is not a good habit for your business. This can result to thousands of money spent for tax deductions. So better yet keep an envelope as a strategic place for you to keep all cash receipts and enter it on your records from time to time.
- Unable to record necessary information about transactions
Many small business owners are forgetting to record small cash receipts to their bank statements. So experts recommend that when everything else is fresh, better record it on time to prevent lacking information about financial transactions. You can also save time on this kind of process and your working environment will be stress free, especially during tax inspections.
- Using an accounting software which is beyond your expertise
First of all using an accounting software is often expensive. It will also require proper training before owners can use it. Using an accounting software will also require high level of patience and understanding. So it is recommended to start with the basic applications before going to complex ones. This will prove you that all records are important in managing your business, and it will also help your accountant in preparing for tax returns.