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Accounting plays an essential role in running your business as it tracks income and expenditure, ensures that you’re meeting all statutory requirements, and allows you to provide management and investors with precise financial information – needed to make future business decisions.

Accounting also gives you the details of how well your business is doing and guides you into planning a sound strategy for your finance and your budget. Having a smart system of tracking for your transactions leads to informed decisions based on past performance.

Poor accounting practices can really affect the running of your business and eventually lead to insolvency and closure. See some common accounting mistakes business owners make here…

Falling behind on paperwork

Delays in billing can result in cheques that bounce, invoices that are hard to prove, and increased debt. Not filing reports at the right time is one of the main reasons that penalties are incurred – resulting in costly mistakes.

Failing to take bookkeeping seriously

Knowing that accurate accounting is vital for the health of your business why not consider hiring a business accountant? Outsourced accounting services will help you with entering data and processing invoices, expenses, bills, and cash receipts. And preparation of any financial documents such as balance sheet reconciliation and debtor and creditor reports will all be done for you.

By having good communications with your accountant it’ll prevent you from making any wrong decisions as to what transactions you need to record, and you’ll easily be able to manage your books ongoing as your company expands. Keeping paper trails will make it easier to monitor all of your income and spending whether your records are digitalised or not.

Lacking in accounting software knowledge

Learning how to set up your bookkeeping software correctly will ensure you don’t miss out on functionality. Incomplete information will only lead to more problems with reporting capabilities resulting in bad business choices. Accounting software is a positive and accurate way of recording finances but if used wrongly can make errors and accounting mistakes much more common.

With the right software controller, you’ll also be able to set up a recovery programme that backs up all of your financial information. This is another area that your business accountant will help and advise you on.

Not training employees fully

Everyone that works for you should understand the importance of organisation including keeping receipts for all expenditures, and using the business credit cards for expenses. Recording petty cash separately, and not mixing personal and business finances are all key.

Basic maths errors and entering data incorrectly will be prevented if staff are conversant with your business rules. Accounting mistakes can lead to unpaid taxes and sometimes fraud or theft, so comprehensive training is a must.

Being reluctant to delegate

Your business growth depends on letting professionals help you with additional jobs so that you can focus on doing yours. When you need expert advice with maximising income and minimising taxes you should talk to an accounting expert. You could actually be costing your business money by not realising any applicable tax deductions or other opportunities to save your business money ongoing.