Businesses have to deal with hundreds, if not thousands of transactions every year. And most businesses get by without much of a hitch. However, there is a small, but growing minority who are making the same accounting errors over and over again. And it costs them a lot of money in the long run. In this post, we’re going to investigate some of the common accounting errors firms are making. So let’s get going.
Failing To Record Your Accounts Receivable
You want to get paid, right? So why are your accounts receivable such a mess? Your accounts receivable record all the money that your customers owe you but haven’t yet paid. It’s a way of keeping track of your financial position, even when you don’t have all the money you are owed in the bank.
If you don’t keep your accounts receivable up to date, you risk not knowing who has paid you and who hasn’t. When it comes to tax time, it’s a mad dash to check through your accounts to see who did pay. Don’t do things this way around. As soon as you receive payment from a customer, check them off your accounts receivable.
Failing To Keep A Record Of Expenses
Failing to maintain a record of expenses is the number one way businesses waste money when it comes to taxes. There’s an easy way to keep track of your expenses. And there’s a hard way. The easy way is to scan all your receipts and integrate them into accounting software immediately. The hard way is to go through your bank statement at the end of the year wondering whether a particular payment was an expense or not.
Accountancy firms advise that businesses keep both hard and digital copies of their receipts. They should also mark each transaction as an expense on their accounts before doing anything else. It’s a 1-minute job and saves you hours of fuss when the time comes to file your taxes.
Failing To Hire An Accountant
Accountancy firms know a thing or two about how to manage business accounts. In fact, hiring a professional is often the very best way for your business to save both time and money. Yes, you’ll have to pay a fee. But skilled accountants can often save you a sum of money many times what you pay in fees. Put their expertise to use and get them to think carefully about how you can save money, given what your business does. You want to make sure that you are operating in a manner that is as tax-efficient as possible. And you want to be kept up to date with any changes in the tax laws.
Communication Between Accountant And Business Breaks Down
Lastly, there’s the problem of communication breakdown between accountant and business. It’s all well and good having an accountant that knows their stuff. But you also want to have an accountant who can communicate with you in a language you understand. Like most professionals, accountants have developed their own vocabulary. This makes it easier for them to talk to each other. But it can get in the way of communicating with people who aren’t professionals. And this, in turn, can damage businesses if owners and their accountants aren’t on the same page.