6 Bookkeeping Mistakes You Should Avoid!
ACCOUNTANTS IN MANCHESTER
It's exciting working for yourself isn't it? Well, most of the time that is, don't you agree? For sure there are certain aspects of running your own business that are amazing, but the financial side of the business is often not the most exciting, and can sometimes be downright disheartening.
It’s so easy to focus on the more enjoyable aspects of running your business, but letting the financial side pile up, and ignoring the bookkeeping is really going to cause you issues down the line.
Good bookkeeping and accurate records are vital to making sure your business is in the best health it can be. So take a look below at our list of the 6 bookkeeping mistakes to avoid, and see if there’s anywhere you can improve. If you don't want to improve, then throw in the towel and hand your bookkeeping over to us!
1. Don't leave it until the last minute!
Putting bookkeeping off is one of the biggest, and easiest, mistakes you can make.
We all have those tasks we know we need to do, and it plays on our mind, yet we put it off day after day, letting it eat away at us. With bookkeeping, though, the workload piles up and it can quickly get to the point where you don’t have the time or energy to catch up on it all.
Spending a little time each day on your bookkeeping means you’ll stay on top of it all, and it will also allow you to develop a better understanding of your day-to-day accounts. This lets you spot potential problems (like consistently late payers) early. It also helps you stay on top of your financial deadlines.
If you have somebody else who does your books, spend some time each week getting your records and receipts organised to make life easier for them (which can be us!)
2. Failing to keep good records
Whether it’s bad filing or not keeping hold of your receipts, if you don’t have a system for keeping track of your expenses and cash flow, you won’t have your eye on the health of your business. You should keep and record receipts for the smallest of things, even the coffee you buy clients at a last-minute meeting. Luckily there are digital platforms you can now use to instantly upload your receipts as and when you acquire them, such as Xero and Quickbooks.
If you’re claiming back business expenses to keep your tax liability low, HMRC may ask for evidence of your receipts. Keeping good records will help you account for everything and avoid any disputes.
Plus, you should be recording and numbering your invoices and making sure they’re all in sequential order. Have a system for bills to make sure you’re paying them on time. Honestly, if this is too much on top of your general day-to-day, get a bookkeeping quote from us.
3. Paying in cash
A good start when it comes to keeping good records is making sure you pay using your card or electronic transfer. This is because your bank records the date, amount and the recipient’s name – saving you time from entering this information into a spreadsheet.
4. Making it easy to be distracted
Set aside a specific time to work on your books, preferably in a room where you know you can’t be distracted. It should help you get your work done quicker, with fewer mistakes made along the way. And once it's done, you'll feel pretty good about yourself!
5. Not reconciling your accounts each month
If you’re not doing this each month, it’ll cause headaches for you down the line. Reconciling your accounting system with your financial accounts is essential, making sure your own record of your income and expenditure matches up with your financial statements.
If you don’t make sure your income and expenditure matches up with your financial statements, it's going to give you a headache later down the line. Try to do this at least once a month, it’ll be easier to account for any discrepancies or weaknesses in your process if you do this regularly.
6. Mixing business spending with personal spending
While those starting out might find it easier to mix personal and business spending, it costs time and money in the long run. We just don't recommend this at all! You can speak to us about Business Start-Ups and we'll talk you through everything and answer any questions you may have.
When it comes to your tax return, keeping your transactions separate helps to minimise errors. With all the right income and costs in your accounting, you should end up paying the right amount of tax.
WE'RE ACCOUNTANTS IN MANCHESTER - GET IN TOUCH FOR A FREE CONSULTATION
We’re here to provide you with the best accounting and financial support you need as business owner, especially so during the Coronavirus Pandemic.
Reach out to our professional and friendly team at Parker Whitwood Accountants in Manchester using the contact information below.