When you hear bookkeeping, it sounds like a very easy exercise. Get the numbers and put them in the right place. And it can be so easy, so long you get the puzzles correctly, and they cut rightly. Here are the top eight mistakes that companies have suffered from accuracy, completeness, and security and how to avoid them.
Failure to track petty cash
Many companies see petty cash as s fund for various expenses that really are too little to care about. Who cares about $2 to buy a new pack of staples or $10 you can give to the cleaner after tidying? Eventually, if the annual cash cost of initiating a small addition of hundreds of dollars, the ATO will Fill out petty cash receipt so your bookkeeping can follow up with every expense.
Not saving small receipts – No matter what the payment method, all receipts need to be saved or a note of the expense made in a diary. As many businesses fail to do this with small invoices as with petty cash. All those small expenses add up – to save all of your receipts.
Not tracking reimbursable expenses
Yes, all of the top three bookkeeping sins are related to failing to keep records! You should collate and submit for reimbursement any expenses paid for out of your pocket at least once a month to help prevent things being ‘lost’. To assist record keeping, you could try to make payment of all reimbursable expenses from a separate credit card (used purely for business) – that way you can identify any missing receipts from monthly credit card statement. See more.
Not reconciling books to bank statements
Any small error in bookkeeping can quickly grow out of proportion, as new calculations are based on old figures and balances. Reconciling your books to bank statement will be done automatically by the bookkeeping services; if you’re handling your own accounts, make sure you also do it.
Failing to keep a paper trail
Try to keep documentation for every step of any transaction. Any place you see a receipt slip, fill it out and take it away. If there’s an option to keep a carbon copy, do so. If you have more than one bank a/c (i.e. credit cards and cheque account).
Not backing up your company file
Most bookkeeping services will back up your company’s electronic bookkeeping records at every visit. However, if you do an entry yourself, you’ll also need to ensure you do this.
‘Abstract’ or ‘artistic’ accounting methods!
Issuing cheques out of order using creative rather than logical invoice numbering sequences writing some things down and recording others on the computer all of these eventually doom your bookkeeping to becoming completely indecipherable.
Not properly classifying employees
To the ATO, it makes a big difference whether you are paying an employee, a consultant or a contractor. It will also be central to accurate bookkeeping, so ensure you know the difference, and you agree with your payee as to their classification.
A lot of new business owners fail to understand the value of their time and think they can squeeze in the bookkeeping tasks between the many other tasks they have. This shortchanges the company and eats up a lot of time, particularly for those who are not familiar with today’s accounting software. For more information visit: http://bookkeeperco.com.au/payrollservices/