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4 Common Accounting Mistakes
For most startups and small businesses, the bookkeeping is a really time-consuming task. Many small companies are one person firms or have really limited staff, so there is a high chance that someone with no experience in accounting will end up being in charge of the companies bookkeeping.
Unfortunately, this way there is a high probability that mistakes will be made, especially if the accounting responsibilities are not considered a priority. Let’s have a look at a top of 4 of the most common accounting mistakes made by small businesses.
Many small companies decide to do the bookkeeping in house, to save money. We understand that for small businesses saving costs are an important issue, you have to consider other resources that are being used as well. Also, if you do the bookkeeping in-house, there is a much higher possibility to make mistakes. Just consider the fact that for a really small fee, you may hire an intern or an accounting firm to take care of your bookkeeping. Also, you have the possibility to reconcile the accounts quarterly, this way you will end up saving costs since it will be cheaper than on a monthly basis, but you can also be sure of the accounts accuracy.
Lack of backup
Papers have a tendency to get lost if you don’t pay the right attention and if you fail to backup. Bills or statements can easily bet lost, but a common solution is to input all your data into a software program. This is a really useful solution, but you have to make sure you always backup the data that is stored into your software. Just because the data is loaded into an electronic support, it doesn’t automatically mean it’s safe; you always have to make a copy in case of a computer failure or any other technical problem that may appear.
Improper handling of deductible expenses
Small businesses can be allowed to take many tax deductions, especially the ones considered personal businesses. But you must remember to keep all the receipts in order to receive the tax deductions, and many small business owners fail to remember this procedure.
Many small businesses tend to keep far too many accounts, more than they actually need. If you try to be overly organized, making a large number of too specific accounts, the books can become really cluttered. This way it van be difficult to find a specific transaction in order to produce clear financial statements.
Always remember that even if at first it may seem that by doing your own accounting you can save money, you have to think on the long run and, if possible, outsource this job. This way you can prevent most of the common mistakes small business make when doing their bookkeeping.