Accounting errors can hold up your business’s development and shake its foundations. Sadly, errors are easy to make, particularly among start – ups.
Error #1: Fail to successfully manage the receivables
Every time you issue an invoice, a certain receivable is logged, reminding you that one of your clients owes you a certain amount of money. When you are eventually paid by your client, the receivable should be erased from your list or marked as paid. Evidently, this is the tricky part, not because it’s so difficult, but mostly due to lack of time during the day or the week. Such negligence, however, could cause serious trouble.
The businessman finds himself during the tax period overwhelmed by numerous client deposits and a list of receivables that need some serious thinkingin order to be reconciled. As a result, you spendwhole daysstriving to understand what goes where, overpaying your taxes and testing your patience.
The solution? Make a habit of staying on top of your receivables by applyingcustomer deposits to invoices every single week, or at least every month.
Error #2: fail to properly order your receipts
That’s a rather common mistake that often leads to variety of tax, accounting, and cash flow trouble. Did you ever find yourself checking your bank account statement and not have the foggiest idea what that 50.00Euros were all about? Without the corresponding receipt with all the necessary information about your purchase, a false tax expenses report and a subsequent a high tax bill is more than possible.
The solution is simple: make a habit of savingevery single receipt, irrespectiveof the sum. It may seem kind of irritating, but you can make it easier and faster by
- using your business bank or credit card solely for your business purchases;
- having always with you have an envelope for storing all your business receipts rather thantossing them in your drawer, wallet, or even worse, in your bin;
- every month or week, devote some time to check the receipts in your envelope and file them in a respective folder or savethem in digitized form in your cloud.
Error #3: fail to log cash expenses
Monitoring all expenses related to their business’s operation is essential for the owner, becauseall that money should be subtracted from their overall income at the end of the year. In addition, that habit will help the owner geta better understanding of the company’s annual profits.
It’s not difficult to missseveral expenses paid with cash. Sadly, quite often these expenses are never loggedand, hence, are easily forgotten. That leads to overstated income when tax time comes.
Therefore, make sure you find a way to recordsuch purchases in cash.
Error #4: not getting some professional help
Small business owners frequentlystrive to cut off expenses by doing their taxes just by themselves. However, without some professional help, problems are unavoidable. For example, you’ll probably losenumerous deductions you are eligible for, or underpay your taxes — something that always results to getting fined.
Asking a tax professional to help ensures expert accounting and tax services and wise guidance that are invaluable for your small business. Several agencies specialize in small business accounting services. They will properly inform you about any changes regarding taxationand tell how to avoid possible tax hikes.
Getting some professional tax and accounting services will also reduce your overall accounting services costs. Also having a second, and more experienced, look in your books is always prudent, particularly regarding taxation.
Error #5: fail to understand what on earth your accountant means
That’s another common problem. Your accountant uses words and phrases you have never heard of and you feel too embarrassed to make any questions.
You are a businessman and not an accountant.Hence, you are not required to know all these accounting and tax services terminology. If you knew all that, why hire a professional bookkeeper in the first place? Explaining all these buzzwords in simple terms is part of his work.
In short, only when you and your finance professional fully understand each other you are considered partners.
Lastly, it’s important to consult professional accountants that have the essential experience and knowledge to help your business. Don’t limit your options in your country only. Make sure you explore opportunities in different countries that can offer more lucrative benefits. A great example is the island of Cyprus which is well-known for its high quality accounting services and trustworthy consultants. Find out more about accounting and business consultancy in Cyprus.