Accounting errors happen, and it can be easy to make mistakes as a small business owner when you are doing your own accounting alongside running your business.
Unfortunately, accounting mistakes can often be time consuming to correct, and can sometimes result in fines from HMRC if they are not identified and corrected before submitting tax or VAT returns.
Below we have listed some of the most common accounting mistakes to look out for so you can avoid some of the headaches that come with looking after your business’s accounts…
Not following accounting procedures
If you don’t have set bookkeeping and accounting procedures to follow, it’s very easy to make mistakes and miss important information.
It can be helpful to create standardised forms or checklists to help you to ensure that you have everything covered when creating new invoices or customer accounts, or taking on a new member of staff.
These documents can also help to ensure that other people within the business also follow the same processes.
Not having a budget
A detailed budget will help you to manage your money effectively and plan for the future.
Without a budget you are at risk of overspending, not having enough savings, and are more likely to get into debt if there are any unexpected financial surprises.
Not carrying out regular bank reconciliations
By carrying out regular reconciliations between your bank accounts and accounting statements, you can make sure that any errors are detected quickly and corrected before you get as far as compiling your tax returns. Checking your business bank account on a regular basis also helps to flag any fraudulent transactions quickly.
Not backing up your accounting software
If your accounting software offers an automated back-up, use it! If your computer breaks and you lose any financial records you may find it very difficult to recover the information. By backing up all data on a regular basis you can be confident that no records will be lost, and everything is easily accessible from any of your devices.
Not properly categorising income and expenses
All money coming in and going out of your business must be assigned to the appropriate category within your accounting software.
Having everything in the right place means you know which customers have paid and which still owe you money, as well as making life much easier when it comes to preparing your tax returns.
Not getting help with your accounts
As a business owner you have a lot to do, and leaving any accounting tasks until the last minute causes a lot of headaches and stress.
Outsourcing to an accountant means that you can get on with running your business while someone with more financial expertise can take care of your business accounting. A qualified accountant will also know where you can save money with tax relief, and be able to advise you on things like cash flow, budgeting, and payroll.
If you have any questions or would like to talk to us about managing your accounts, please feel free to get in touch with us here at Magpie Accountancy.