Small businesses can be put on shaky ground from accounting mistakes, sadly they are all too common for new or start up businesses so in this article we have put together some of the most common accounting mistakes to help other small businesses avoid them.
Not Staying On Top Of Invoicing
Whether it’s sending invoices late or not chasing up the payments from clients, many small businesses fall into the trap of not staying on top of the money coming into the business. This means that clients may not pay at all, they may pay late or you may forget to send their invoice. Put a plan in place to make sure invoices are sent on time and have a backup plan for when clients do not pay within the agreed time frame.
Not Keeping Expense Receipts
It’s so important to keep the receipts of your business expenses, looking at your bank account statements and seeing you have spent £10 here and £21.54 there will not mean anything at the end of the tax year so make sure you keep a track of everything to make sure you claim the right amount of tax expenses. A top tip is to keep a large envelope or a bag in your car and every time you get in the car you put the receipts in that bag or envelope. Alternatively there are some fantastic apps and programs to scan expense receipts into your files.
Not Recording Cash Expenses
Spending a few pounds here on pens and a couple of quid there on envelopes may not seem like much but when you add it all up this is money you have put into your business, therefore this is money you can claim for so make sure you keep track of your cash expenses, don’t lose those receipts.
Not Hiring A Professional
Small businesses often think it’s cheaper to do it themselves, but in the long run you could miss out on saving a lot of money. Bookkeepers and Accountants spend years learning and researching, they are experts in their field and they ensure that you claim all the deductions you qualify for. This could result in saving money in ways you never knew.
Hiring A Bookkeeper That Doesn’t Speak Your Language
So you’ve decided to do the sensible thing and use a professional bookkeeper, but do they actually speak the same language as you? You’re sittinh at the table and they’re telling you your bottom line is positive, your balance sheet is x and your retained earnings are y’ – you switch off as you have no idea what your bookkeeper is saying. Make sure you choose a bookkeeper that is on the same wavelength so you can understand the finances of your business.
If you would like to know more about what we can do for you, give us a call! Here at Chromium Bookkeeping in Peterborough we are always happy to offer support, guidance and advice.
We want to help you make your business a success.