Like it or not, accounting is the main focus for companies of any size. Thanks to the wide variety of bookkeeping applications obtainable for today’s small and medium-sized businesses, it’s easier than ever to keep a precise record of where your company’s money is going. Though accounting software has made bookkeeping easier for small businesses, it’s also made errors and accounting mistakes—from inaccurately classifying a transaction to doing all accounting yourself, which is much more common.
Some accounting mistakes are slight, inconsequential, and easy to correct when someone within your business unsurprisingly detects them. But others are more severe and could have a substantial consequence on your company’s financial health. Over time, poor accounting practices can falsify the genuineness of your business’s economic health. In severe circumstances, recurrent bookkeeping mistakes and bad accounting practices can lead your business to bankruptcy or company failure.
Here, we will discuss the most typical small business accounting errors that can produce problems, both small and essential, for your business.
Data entry errors
Some accounting methods are more trustworthy than others – you could use:
- a) An elaborate automated database
- b) An Excel worksheet
- c) A handwritten record book
No matter what method you use, attention to detail is vital. The most typical data entry error is caused by transposition: keying in 85 instead of 58. Less common are transcription errors or simply striking the wrong key by fault. These mistakes often go unobserved because the individual entering the numbers is in haste. Consecrating adequate, distraction-free time to the job will lower the prospective for costly blunders.
Not taking accounting seriously enough
The key to operational accounting is recording everything. From small transactions to considerable expenses for customers and clients, it’s essential to ensure that everything is logged and classified correctly in your accounts.
No matter how small your business might be, taking bookkeeping seriously gives you a precise, consistent picture of your corporation’s health, allowing you to regulate precisely how well (or poorly) you’ve achieved your goals in a given period.
Managing all of your accounting in-house
When you run a small business with limited income, it can be alluring to lower expenses by independently handling your bookkeeping. While taking care of your accounting yourself might seem like a great way to save cash, it could be costing your company money. An accountant will have more significant charges than managing your accounts by yourself and saving you money.
Failing to reconcile books with bank accounts
Your company must merge its accounts regularly. Reconciling is the procedure of inspecting that an account balance, as listed on your books, is exact and accurate, confirming that it equals your bank account’s real balance.
Forgetting to record small transactions
Poor communication with your accountant
It’s essential to communicate with your bookkeeper clearly. Keeping a paper record of all transactions, whether the record is digitized or otherwise, makes it easier to monitor all of your income and spending.
Not allocating clear budgets to each development
Going into a venture without knowing how much it could end up costing your business is an easy way to end up outlaying far more than you planned. Failing to effectually budget also makes it problematic for you to rein in a venture that has cost you more than it should have. This can cause your business to expand its limited funds on developments that won’t produce a return on investment.
The best way to prevent these kinds of errors is to create an organization system that keeps everything in order. Avoiding accounting errors are nowhere nearly as difficult as it may seem. It merely takes a skilled hand and a careful approach. Double and even triple-checking your work is always a good idea before committing it to your archives.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.