Common Bookkeeping Mistakes That Can Hurt Your Business

Bookkeeping is a big part of small business. It is so essential to keep an accurate account of your finances to ensure your business performance is recorded correctly.

If you’re not ready to hire an in-house bookkeeper for your business, outsourcing your bookkeeping services is the way to go!

Accurate data entry, payroll and on-time ATO lodgements not only help you keep your business working well, these practices also assist in avoiding the following mistakes that have the potential to hurt your business:

1. Errors in Reconciling and Payroll 

Manual accounting errors are very common, especially if you are not savvy with financial protocols. A small error in entering incorrect information, or coding to the wrong account could result in incorrect lodgements with the ATO.

It is best to either outsource these services or receive training in best bookkeeping practices. Bookkeepers use cautionary measures and automated systems to track your business finances efficiently and correctly.

2. Failure to maintain receipts

Maintaining receipts is very important when keeping up with your business finances. If you lose a particular receipt, you may have difficulty explaining the expense to the tax office.

An external bookkeeper can help you track all your receipts through automated systems that are easy to maintain. We can also help you determine what expenses can be claimed.

3. Failure to pursue late payments

As a small business owner, you may face late payments from your clients, which can heavily impact your cashflow.

With multiple clients it can be easy to lose track of late payments. However, using Xero combined with outsourcing your bookkeeping can help you keep on track of your debtors. Xero has automated payment reminders and easy to use online payment services for your clients. Learn more here.

4. Combining any personal expenses with business financials

Often as a small business owner, you may be inclined to use a personal account for your business needs. This could affect your overall accounting strategy, as it is difficult to segregate personal and business expenses. We recommend always using a separate, dedicated business account for all income and expenses for the business. A bookkeeper can help you track all the business expenses while you take care of your personal expenses, ensuring the two worlds don’t collapse into each other.

Empire Bookkeeping can help you track all your business finances and maintain a profitable business. Our services help prevent various errors in bookkeeping while complying with ATO guidelines. Contact us today for a free quote!