7 Accounting Mistakes You Should Avoid

In the hustle and bustle of running a business it is easy to make mistakes – we all know this because we have all done it. Often we don’t even know we are making a mistake until it is too late, and other times we are not fully aware of the consequences. This applies to accounting as much as anything else. So, to help you become more efficient, and to save you money, here are seven accounting mistakes you should avoid.

accounting mistakes

  1. Falling Behind In Reconciliations

 

How often does reconciling your books and bank statements make it to the top of your priority list? For many businesses the answer to that is never, so they put off and put off completing the task. This makes the job even more difficult to complete when you actually do get around to doing it, and makes it more likely that discrepancies will occur. Doing your reconciliations is therefore a task that should be kept up-to-date.

 

  1. Not Properly Understanding Your Accounting Software

 

Getting to know accounting software takes time. This is something that most business owners don’t have so they get to know the basics and work from there. That can lead to mistakes in some situations, but it can also mean that you are not getting as much from your accounting software as you should be. In other words, you are paying for something that you are not using.

 

  1. Mixing Business And Personal Finances

 

Blurring the lines between your business and personal finances almost always leads to difficulties. It becomes very difficult to remember whether an expense was for personal use or for the company. This can lead to you having an inaccurate picture of the financial state of your business, and it can have tax and regulatory implications. You should always keep your business and personal finances clearly separated.

 

  1. Throwing Receipts In The Bin

 

Paper trails are important in accounting, as is being able to justify an expense. That’s why receipts are so important, even for small and inexpensive items. In the modern age you don’t need to keep lots of little bits of paper – you can digitise your receipt collection, but don’t throw them away.

 

  1. Looking Only Short Term

 

When you only look short term you run the risk of missing trends or opportunities, and you might fail to identify potential dangers to your business. At the very least you will not have all the information that you should have to make decisions, and this usually leads to bad decision making. You should therefore make medium and long term forecasts and plans.

 

  1. Thinking Technology Is The Only Solution

 

Accounting technology – from accounting software to tools to apps – has developed dramatically over recent years. When used right it can be a real benefit to your business, making you more productive and giving you access to better information. Technology is only part of the accounting and financial solution to your business, though. Machines don’t understand nuance, they can’t predict consumer trends, and they can’t feel the beating soul of your brand. Only expert advisors can give you that.

 

  1. Not Getting Help

 

There may have been a time when you did all the accounting in your business, or you had it done by a small and close-knit team. Most businesses outgrow this pretty quickly but even when this happens, owners try to continue going it alone. Bringing in professional help might initially look like an additional cost to your business, but it will save you money.

 

If you would like to get professional accounting help for your business you should contact a member of the Gilroy Gannon team today.

Posted in Accounting, Small Business, Tips.