Advivo shares 5 bookkeeping mistakes that you may be making and how you can avoid them with a professional bookkeeping service.
Bookkeeping is an important task for any business big or small. But it is the small and medium business owners that are often taking on multiple roles within their business, one often being accounting. As a result of being spread so thin, mistakes can happen, and whilst these mistakes may seem trivial at the time, they can cause problems down the line. What are these common mistakes, and how can professional bookkeeping services help you get it right from the get-go?
1. Not noting down reimbursable expenses
Reimbursable expenses are expenses that a business incurs on behalf of a client and can include travel expenses, delivery fees, office expenses, and business calls among others. Although these expenses are paid back by the client, some small or medium business owners neglect to note them down. It’s important to take note of these expenses otherwise you risk losing out on tax deductions. Keeping track of these expenses also helps you keep track of events which can be especially important in the case of an audit.
2. Using one account for personal and business expenses
You may start out your business using your personal bank account or card for business transactions, but it’s good practice to keep your personal and business expenses separate.
The best mode of action is to open a dedicated business account to track your business transactions. This way you won’t be losing out on tax deductions for business expenses, and you won’t be spending business funds on personal expenses.
If you have been using a personal bank account, a bookkeeper can help you differentiate your personal and business transactions, and then advise you on opening a business account.
3. No record of smaller purchases
Small purchases like stationery or coffee for the office may seem like trivial expenses, but they can stack up. It’s best to keep a record of these purchases for many reasons; you don’t want to lose out on tax deductions for these purchases, or if you do deduct these costs, you want to keep track of expenses in case your business is audited.
Keeping track of smaller purchases also makes it easier to deal with larger purchases, and as your business grows and your number of transactions increases, a bookkeeper can help you categorise these purchases appropriately and keep track of your business transactions.
Not sure on what to do? Check out our Bookkeeping and Payroll Services here.
4. No backups of your records
Although going paperless is a good way to save on paper and storage space, cloud-based accounting software can have technical issues. A simple error can be the reason for a loss in critical data.
To avoid this, it’s best to keep physical records of your cash flow or even multiple digital backups of your online bookkeeping.
5. Not reconciling regularly
Account reconciliation is when you compare your monthly bank statement to your books. This is essential to know how much cash you have on hand and to catch any errors that the bank may have made.
Reconciling regularly will help you gauge your business’s financial situation and allow you to plan your expenses accordingly.
Advivo’s bookkeeping services can help
It’s important to get your bookkeeping right the first time otherwise fixing it later can be costly and may attract penalties from the ATO. The professional bookkeepers at Advivo can help you avoid these simple and even critical mistakes; our Bookkeeping and Payroll Services are made to ensure your bookkeeping is in order and that you are meeting all legislative requirements for payroll processing.
