Small business owners usually do not put much effort into the bookkeeping process. All entrepreneurs have a bookkeeping system. However, they typically do not ensure that it is updated. There may be some business owners who do not maintain their books for months as the process can be tedious, and it is quite time-consuming.
Nevertheless, most entrepreneurs do not realise the fact that bookkeeping is the most powerful weapon they may use when they handle their company and help it develop. For the growth of a business, keeping all financial records frequently and regularly is of the utmost importance. You may employ accounting services Johor Bahru if you desire to outsource your accounting tasks and acquire professional skills for the needs of your business. It is crucial to consider doing so when it comes to bookkeeping, since you may be charged to the court due to some minor oversights or mistakes (Also see Importance of Managerial Accounting).
Below are the bookkeeping errors that you have to prevent yourself from committing them:
Improper Records
Most entrepreneurs commit this mistake since they always fail to remember to file the receipt or misplace it. Sometimes, these receipts may seem to be minor, yet eventually, they can turn up to be a mistake in your books. If you keep your records consistently, you can save a lot of time, as well as money on your income tax. When an auditor audits your firm, having accurate and well-managed reports are vital. If your reports are incorrect or imprecise, you may find yourself dealing with a few thousand dollars in fine.
Using the Same Account for Business and Individual Use
If you are using the same account for both your business activities and your own use, you may encounter some problems when you are being audited. You may use a different bank account, or make sure that you have made all the documents properly arranged as well as not overlapped. Moreover, don’t forget to manage your bank statements properly monthly to ensure that you have all the particulars and deals on paper by doing periodic bank reconciliation statement.
No Backups
In the world of modern technology, people would save everything digitally and in hard drives. However, you should not forget to keep a copy in another backup just in case. You can’t deny the fact that your data may be lost anytime. Taking precautions is safer for you so that you do not have to face any consequences.
Poor Classification
Your accountant must be familiar with the formal bookkeeping process, including journal posting. However, you may be in hot soup if you do not know how to categorise your revenue and expenditures well. Monitoring the profit and spending of your firm can ensure precise calculation of income. If you know the correct way of dealing with the revenue and expenditures categorically, you can save from your taxes notably.
Not Managing Your Loose Cash Properly
It can be tedious and challenging for company owners to track their small cash amounts (Also see How to Handle the Cash Flow of Your Business?). Since they don’t know the correct way of monitoring it, an excellent approach would be by keeping a money lockbox as well as getting receipts for all their payments or distributions.
Ignoring Sales Tax
Accounting and reporting sales tax is not a common practice among people. They usually neglect the fact that keeping the records for sales tax is vital and failing to do so can easily bring about hefty fines and penalties. Also, inaccurate data entry brings to a higher total, and this causes the sales tax to be higher than the exact amount you should pay.
Not Listing Employees Appropriately
Numerous businesses have employees who work for the firm as full time or freelance staff. Ensure that you have categorised them appropriately if you want to stay clear of additional taxes.
These are some common bookkeeping errors among entrepreneurs that might required audit adjustments by the auditors. If you do the same, look for an excellent tax accountant for yourself. If you want to look for an accounting firm in Johor Bahru, consider those who are budget-friendly and reputable.