Unless you’re a fully qualified accountant or practising bookkeeper, as a busy small business owner, you will make simple accounting mistakes. As small business accountants, we have encountered every possible accounting mistake a small business can make, from the highly complex errors to simple administration issues. In this article, we divulge the top mistakes ruining your small business accounting efforts, and explain why DIY bookkeeping isn’t always the best option.
- Failing to utilise a bookkeeping system
Most first-time small business owners don’t develop or implement an easy to use bookkeeping system from their inception. What they are usually lacking is a clear list of necessary accounting activities that require completion and when; nor do they possess the simple software that allows them to manage their accounts accurately. Without proper systems in place, any DIY bookkeeping efforts are doomed from the onset.
- Failing to reconcile transactions regularly
Bookkeeping isn’t a quarterly or annual task, as most small business owners assume. Reconciling purchase and sales transactions, managing cash flow, and filing receipts need completion weekly, if not daily. Despite how simple these bookkeeping tasks are, they can quickly build to an unmanageable load, making them harder to complete. What business owners want to avoid is playing catch up, as this method usually leads to less accuracy and missing details.
- Utilising software outside of your needs or skill level
As we mentioned in mistake one, bookkeeping management software is essential to acquire in the initial set-up phase. However, any software a small business owner chooses must suit their skill level and business needs. Choosing the wrong software type will only hurt their ability to reconcile accounts or keep up with accounting demands. Business owners are best to shop around for accounting software options first, ensuring they understand how it works and that it adequately suits the needs of their business type.
- Failing to seek help
When the demands of any small business grow, and basics tasks like bookkeeping fall by the wayside, don’t make the mistake of neglecting help. Professional bookkeeping and small business accountants are there to ease the burden, so you don’t fall behind or make critical errors under pressure.
Are you making accounting and bookkeeping mistakes in your business? We can help transform your financial management through support and knowledge; reach out today to get started!