Running a small business may be enjoyable for some, but several things behind the scene can make the process unbearable. Enterprises, regardless of their size, are bound to follow various regulations to ensure they don’t launder money and properly pay their taxes and other accountabilities. It can be overwhelming, especially if the owner is also doing the paperwork.
The process of filing, recording and balancing accounts can be taxing as the work is quite burdensome. Some business owners would rather hire a third-party professional to take care of their books, especially during the tax season. Some entrepreneurs retain the services of professionals to ensure that their businesses remain above board. If you’re looking for reputable accountants in Central London, you can click here to find out how they can help you and your business.
Meanwhile, here are some tips to prevent common accounting mistakes.
Always save receipts and documents
One of the most common mistakes entrepreneurs make is throwing away receipts and other supporting documents. While you may want to keep your desks and files as uncluttered as possible, you must remember that anything you spend using your business accounts must have a paper trail in case someone audits your company. Always save receipts if you wish to avoid being grilled because of one questionable entry with no supporting documents. You can also digitise the copies, so you always have a backup if you throw the paper away. Digital copies can still be valuable as auditors will have something to work with.
Keep your books updated
This is a no-brainer. One of the things you have to do consistently is update your business accounts. Whether you do it manually or digitally, always ensure that at the end of the day, every transaction is recorded properly in the books and the necessary paperwork has been filed and secured. Make it a daily routine.
Reconcile your records
Everyone makes mistakes. But in the realm of accounting, a small mistake can prove costly. Business owners can prevent such instances if they regularly conduct account reconciliation. This is the process of checking the numbers on your books with a third-party statement such as a bank statement. Then, you can look at the data and see if they tally. If you see any inconsistency, it should raise a red flag that you must correct immediately.
Keep separate personal and business accounts
Another common mistake is an intermingling of funds. While for some entrepreneurs, the line between business and pleasure can sometimes be blurred enough, the distinction has to be as clear as day in accounting. For example, you cannot charge a personal expense to your business account and vice versa. Accountants and auditors are strictly instructed to follow regulations, and it will be best to keep accounts separate to avoid disorganisation and confusion.
As a business owner, you must always see that your accounts are organised to prevent fines from being levied by the government. Avoid the common mistakes listed above to ensure that your books are above board.