Here are the top 8 common accounting mistakes for small businesses.
- Assuming that all profits means cash flow
Having false expectations for your company can be very frustrating, most especially of you have closed a deal. Well, it may be music to most of the business owners ears but they don’t know how many months does the payment term need to be completed. This can give a distorted picture in the company’s real picture.
- bookkeeping process is not taken seriously enough
It is considered that the best process of accounting is to record every financial activities, and this is called as bookkeeping. The data consists of small transactions to large invoices from different clients and customers. So it is very important for every business to record and categorize all the activities in your accounts and save it in your accounting software if needed.
- Failure to differentiate contractors from employees
The term employees is different from contractor. This can greatly affect the accounting process of the company, and its sequences are also different. So it is vital for your business to record all the accounts accurately.
- Managing all the records in-house
Managing your business on your own may seem a great way to save money but it can actually increase your expense, from tax deductions that you do not know to financial errors that are too hard to see in your own. So for experts, it is recommended to consult with an accountant or a Accounting Services Singapore vendor to help you save more money.
- Failure to reconcile the book with your bank accounts
It is vital for a business to reconcile all the accounts frequently. This is to check all account balance on your books, if it matches with the actual balance on your bank account. This bookkeeping process will also help your company to track all the financial activities.
- Small financial transactions which are not recorded
Petty cash transactions are considered to be very important as your company’s expenses. It is essential for a business to record all expenses no matter how small the amount is.
- Lack of communication with you bookkeeper
It is important that you have enough information about your business transactions. Bookkeeping communication must be dealt seriously to avoid errors in records. Small mistakes like purchasing products and other services may ruin your financial data.
- Clear budgets are not assigned properly
Assigning a clear budget for company projects are very important. In this way you will be able to know what would be the exact costing for your company’s activities. You can also prevent yourself from spending too much more than you intend.