During the first year of operation accurate financial management is crucial to the success of your business. When running a business and faced with multiple daily tasks, bookkeeping often gets pushed to one side, resulting in a pile up of papers and bills needing to be paid. However, by avoiding some key mistakes, your business finances will be readily available for submission to an accountant.
Our top bookkeeping mistakes – take note!
- Early organisation – Top of the list is not having a bookkeeping system in place from the very beginning of business formation. It becomes an increasingly complex task once you start to fall behind on paper work, leaving you more likely to have inaccurate business records and penalties from HMRC as a result.
- Accuracy & Filing – An accurate filing system means that all receipts, invoices and other documents are filed away. Two folders, one for unpaid invoices and one for bills you have paid. Also make a note of the method of payment and the date on each of these. Once a bill has been paid, transfer this to the folder containing paid invoices.
- Outsourcing bookkeeping – Often neglecting the fact that you don’t have the skills required to do your own bookkeeping may result in greater chaos. Many business owners try to save money by doing it themselves and often end up paying an accountant to sort out the inaccuracies at the year end. There are many problems that this causes such as a waste of resources, late submission of your self-assessment tax return and further incurring a penalty. Outsourcing to a qualified bookkeeper can save you both time and money in the long term.
- Regular updates – Reconcile company books on a regular basis so that all records correspond with the relevant statements. It is easier to sort out any irregularities early on while they are fresh in your mind rather than at the end of the year.
- File everything – Keeping a record of all expenses incurred during the course of running your business means that there is less chance of reducing your overall profit. It is easy to pay for something using your personal money and forget to file the receipt. To avoid this mistake ensure that all personal receipts are filed in the businesses expenses file. Communication with your bookkeeper is vital to the production of accurate records at any time during the year.
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