Back office accounting, cash flow management and payroll are time-consuming and tedious tasks for most small business owners who always perform one-person show. Errors tend to happen easily especially when you have to manage different departments while keeping track of bookkeeping for a company. It will create false financial data about the organization’s finances which can lead to wrong business decision being made. This problem can be even more serious when the bookkeeping tasks are piled up over the time resulting in failure of a company in keeping their finance up to date. Bookkeeping is actually the biggest secret weapon for your business management and growth. Hence, it is important to know how to perform accurate and consistent measurement of a company’s financials in order to manage and expand your business effectively.
Here are the common mistakes that business owners make when they carry out their own bookkeeping.
1. Waiting until last minute
The toughest part to deal with bookkeeping is when small but abundant tasks are accumulated and unsettled over the time. Tackling all tasks in one shot can cause one to be stressful and anxious which can eventually lead to more significant mistakes in your books. This can be a common habit practiced by some business owners when the deadline to complete the financial reports is around the corner. The hectic of bookkeeping can be reduced remarkably by allocating some time at least once per month for your accounting when the monthly bank statements are received. Another benefit to complete your books throughout the years is to familiarize with your finances for making better business decision.
2. Mixing business and personal
It seems providing much convenience to business owners of a new business especially if it is under a sole proprietorship entity when business and personal finances are mixed together. However, this is a wrong concept, as it could cause chaos to both of your business and personal finances when you fail to identify the expenses spent in your business. Separated bookkeeping for both business and personal can avoid Inaccurate and misleading information that could expose you to the risk of being audited.
3. Hiring a bookkeeper that does not meet your needs
Hiring a bookkeeper which does not suit your need can be an expensive mistake, as an unexperienced bookkeepers can mess up your finances which cost you more to redo your books. Aside from the bookkeeping knowledge, a bookkeeper plays a vital role in growing your business. It is not easy to hire a bookkeeper that has relevant accounting education and industry experience as well as knowing your business as intimately as you do.
4. Lack of Multiple File Backup Methods
Many business owners started to practice paperless idea by performing bookkeeping offline in their own computer. However, accidents could happen on any time and most of them are unexpected and unavoidable. There is always a chance that something could happen to your data when issues arise out of sudden. Hence, using cloud accounting software such as Treezsoft can back up your data systematically to avoid potential loss, as things in cloud can never be erased.
5. Erroneous Financial Reporting
Inaccuracy in recording assets and expenses can always lead to mistakes within financial reports. Choosing the appropriate accounting method is very essential for allocating the cash flow of your company correctly. The most commonly used method are cash method and accrual method. The cash method is relatively simple and it indicates the actual distribution of cash into different channels. On the other hand, the accrual method takes income and expenses into account instantly even the cash is not exchanged yet. Treezsoft is able to enhance the accuracy of your financial reports, as it provides a variety of accounting method based on the business models of a company.
Why wait for bookeepers when you can do all your booking yourself? Get real time access to your sales report, P&L, balance sheet etc!
TreezSoft is a cloud accounting software for Small and Medium-sized Enterprises (SMEs). It allows you to access your financial information anytime, anywhere. It also allows you to have unlimited users for FREE for your account in TreezSoft. Our aim is to help reduce our clients' time spent on accounting mainly by using our automated processes and integration to help increase their company effeciency at a minimum costs. SMEs can use TreezSoft to keep track their expenses, accounts, daily operation e.g. Point of Sales (namely QPOS) system and etc.
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