4 Small Business Bookkeeping Errors your Business Should Avoid
Bookkeeping is an essential part in running your small business smoothly. However, with limited resources, some small business owners choose to cut corners and settle with mediocre processes while others even choose to do their bookkeeping on their own.
This may lead to irreversible damages, especially if the business owner does not have sufficient knowledge and time in keeping the books updated. Here are the small business bookkeeping errors you should avoid and tips on how you can avoid them:
1. The Do-It-Yourself Mentality
Working through your critical business numbers is a tedious task. For SMEs, it is relatively manageable for the owner of the business to do the company’s bookkeeping and accounting operations. But as the company grows and the books that need to be organized become more complex, there comes a greater need to seek bookkeeping and accounting assistance from professionals.
2. Losing track of minor purchase receipts
There are times when business owners fail to keep receipts and invoices of simple transactions. While these may seem negligible at first, there is still the possibility that such spending will pile up, leading to a large sum of cash. Keeping these unaccounted can bring a significant lapse in your books.
3. Neglecting hard copies
The security features of various cloud accounting platforms may urge you to ignore hard copies of your financial reports. Note that you should still keep hard copies at hand in case the party you are doing transactions with has not yet shifted to the cloud. This will also double your efforts in data security.
4. Miscalculating your taxes
One of the more complex tasks assigned to accountants is to conform to UK's taxation laws during the tax season. However, if you are preparing your taxes on your own and you have made miscalculations, this is likely to cause an issue at the tax office and, chances are, you may even be reprimanded for non-compliance to UK tax laws.
This article was first posted 22 April 2015 and edited 12 January 2020.