Correct bookkeeping is crucial.
You may get current management information on the performance of your organisation via good bookkeeping. One of a small business’s strongest weapons is good bookkeeping, which can tell you what margin or profit you are producing and show you warning indications that some costs are spiralling out of hand.
Avoid these 5 pitfalls if you are a small business owner who manages your own books:
1. Improper VAT Handling
The foundation of the VAT returns that you submit to the Revenue Commissioners will be your weekly/monthly bookkeeping. It can take a lot of effort and be complex to keep up with all the advances in VAT legislation, which is always changing.
In order to prevent receiving the dreaded Revenue audit notice, you must make sure that you handle each invoice in accordance with the most recent VAT regulations.
2. Not recording minor receipts or failing to keep track of expenses
Often, as we go about our daily routine, we can pick up tiny incidentals for the company. A box of paper for the office printer or supplies for the cafeteria could be included.
Throughout the course of the fiscal year, small business owners can frequently pay for goods out of their own pockets. It is crucial to keep track of all of the money that the company owes the owner in return for these services. This is crucial in the case of limited firms since the owner of the business can get the money tax-free.
3. Skipping the monthly bank reconciliation.
Monthly bank statement and bookkeeping reconciliation is a crucial component of bookkeeping. However, because of ignorance or a lack of time, this step is frequently disregarded.
The first few years of a new company are incredibly stressful, but if your books aren’t up to date, you run the danger of missing some crucial warning signs regarding the viability of your company’s finances. You can overlook possible problems with cash flow or a big increase in supplier costs that would have an impact on the profitability of your goods.
4. A Communication Deficit
The effectiveness of having someone handle bookkeeping depends on how well they are informed on and kept current on all financial transactions.
Any transactions that could have an impact on the monthly reporting, such as giving bonuses to employees, paying suppliers with personal funds, or collecting cash from clients and using it to buy supplies, must be communicated to your bookkeeper.
Take the time to make sure that you are keeping track of all activities in your organisation because the strength of your bookkeeping system depends on the data you feed it.
5. Giving staff members excessive access
While giving your bookkeeping to a knowledgeable employee within the company is a good idea, it isn’t always a smart idea to give them full access to company records without a system of checks and balances in place.
We can help.
To avoid falling into any of these pitfalls, many small firms outsource their bookkeeping. Additionally, it provides business owners some time back so they may focus on expanding their enterprise.
Bookkeeping services are offered by TAS Consulting Accountants to SMEs all around the nation. We can provide our customers with very user-friendly accounting software that keeps you in charge of your numbers around-the-clock, no matter where you are.
To schedule your free initial consultation and learn how we can help, contact us right away.