Accounts Navigator
Bookkeeping might not be a core task in your business – but it is certainly an essential one to keep your organisation compliant, profitable, and performing up to standards. At the same time, for most proprietors, accounting is one of the most time- and effort-consuming tasks they have to face – and, less than 30% of business owners feel confident in the accuracy of their books!
So, what are the most common pitfalls small businesses face? In this guide by Accounts Navigator, you’ll find some of the top bookkeeping mistakes to watch out for.
Not Keeping Good Records
As a business owner, it is essential to keep an eye on performance indicators and records that can tell you a lot about the financial health of your organisation. Some of the most important documents you should know about and understand include your balance sheet, cash flow statement, and income statement. Even if you work with an in-house bookkeeping team, you should be aware of these reports to make better-informed decisions about your business’s future.
Not Knowing Your Deductible Expenses
Understanding your deductible expenses can help you make the most of the tax breaks dedicated to your business, field, or industry. However, most business owners end up leaving thousands of pounds on the table because of their limited understanding of what deductible expenses can be extracted from their taxable income.
- Top tip – no matter how small an expense might seem, make sure to keep the receipt! Your accountant will know if a certain expense can be deductible – but it is only so if you have proof of it!
Not Reconciling Your Books
Reconciling your books is essential to avoid common bookkeeping mistakes, including discrepancies in your accounts or incorrectly reported amounts. Even a small difference between your records can lead to significant losses – and mistakes that can trigger an audit!
Not Drawing Boundaries Between Personal and Businesses Spending
For small, local, and family-run businesses, in particular, it is easy to combine personal and business spending. However, not keeping these finances separated prevents you from understanding how your business is performing and how healthy your family finances are.
Instead, consider dividing the accounts and looking at your business’s books as the finances of a separate entity.
Not Using All The Resources At Your Disposal
New research shows that most businesses don’t take advantage of the tech resources available to them. In bookkeeping, using an Excel sheet might be a great starting point. However, new accounting software can help you reduce human error, track your spending, and automatically generate reports. These systems can also save you more than one headache if your business gets audited!
Not Working With a Specialised Accountant
If you are a business owner, the chances are that you are used to wearing many hats during your time at work. And undoubtedly, you have a valuable skill set. However, not all aspects of a business can be successfully dealt with without the help of a specialist.
While it might seem like a DIY approach might save you money at first, it can cause you costly mistakes that can affect your chances of success in the long run.
A specialised accountant will review your needs and goals, create an ad hoc tax strategy, and protect your margins. Unsure how to get started? Book your initial consultation at Accounts Navigator and start working towards better bookkeeping!
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Knowing how to take control of your business finances to maximise profits can be difficult, especially with the current climate. Knowing the common mistakes to avoid can be difficult and can leave you feeling unsure.
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