Accurate Bookkeeping: Avoid These Mistakes
When you first dreamt about running your own business, you probably didn’t imagine spending so much time on your books. It’s tempting to just leave them be, but accurate bookkeeping is vital to your success. Without it you won’t know things like:
- what’s happening with your finances
- who owes you money
- whether you’re making a profit
- and how much tax to pay.
This Is What Bad Bookkeeping Looks Like
It’s difficult to always be consistent and make sure your bookkeeping is accurate. Unfortunately, seemingly small bookkeeping mistakes can lead to serious financial damage in the future.
Without quality bookkeeping, you are opening your business up to unnecessary risks and potential penalties. Here’s a few bookkeeping mistakes to look out for:
- Not recording all transactions accurately and timely: This can result in inaccurate financial reports, making it difficult to make informed decisions about the business’s financial health.
- Failing to reconcile bank accounts on a regular basis: You can experience errors on your financial statements and it makes it difficult to track expenses. It can also result in overpaying suppliers or not collecting from debtors.
- Incorrectly categorizing expenses: Such as recording personal expenses as business expenses. This isn’t allowed and will lead to tax problems.
- Not separating personal and business finances: This can lead to confusion and make it difficult to track expenses and profits accurately.
- Failing to keep proper documentation for expenses: This can result in problems during tax audits with the ATO.
- Not tracking accounts receivable and payable properly: You may experience cash flow problems and it makes it difficult to keep track of money owed to the business.
- Failing to record fixed assets and depreciations correctly: This can result in inaccurate financial statements. It could also have a negative effect on your tax liabilities.
- Not backing up financial data regularly: It could lead to the loss of important financial data and make it difficult to recover financial information in the event of a system failure.
- Forgetting to adjust inventory levels: It makes it difficult to track inventory accurately and could result in overstocking or under-stocking inventory.
- Failing to keep track of sales tax obligations: This can result in tax problems.
Results of Inaccurate Bookkeeping
The consequences of bookkeeping mistakes are not just limited to financial losses. Legal issues can also arise due to inaccurate financial records.
For example, if your business is audited and it is discovered that you have failed to pay taxes, or have understated your revenue, the IRS may levy penalties, interest, or even pursue legal action. Other legal issues that can arise include breach of contract, fraud, or misrepresentation
Outsource and Enjoy Accurate Bookkeeping
Accurate bookkeeping services will be of real value to you as the business owner. You can get back to running your business while your books are taken care of.
A quality bookkeeper will ensure that all financial transactions are recorded correctly and on time. They will help to identify any discrepancies, errors, or omissions that could lead to financial losses or legal issues down the line.
Quality bookkeeping services will also help your businesses to comply with tax laws and regulations, avoiding potential fines and penalties.
At Accountex we hold the bar very high for our team. We’re proud to be known for our accurate bookkeeping services. If you’re in need of a quality bookkeeper, reach out to us today.
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