Bookkeeping plays an essential role in ensuring your business succeeds, but is often a task that gets overlooked
Accurate bookkeeping is essential in business for everything from regulatory compliance to making informed decisions backed by data.
Bookkeeping mistakes can have a range of serious consequences for your business, from a loss of revenue to fines and penalties if you fail to stay compliant with relevant tax laws.
In this guide, we’ll cover some common bookkeeping mistakes to avoid to prevent any unnecessary stress and to ensure your books are in order.
Let’s get started.
Common bookkeeping mistakes to avoid include, but are not limited to:
- Failing to keep accurate records
- Not separating personal and business expenses
- Losing receipts
- Not backing up financial data
- Not outsourcing bookkeeping
1. Failing To Keep Up To Date & Accurate Records
A common bookkeeping mistake is failing to keep up to date and accurate records.
Although it might not be your priority as a business owner, as there are often more pressing matters, it’s crucial that you make sure every transaction is recorded in a timely and organised manner.
Keeping accurate records is essential for monitoring the financial health of your business, filing tax returns, and more.
Considering ‘82% of small businesses fail due to cash flow problems’, the importance of keeping your records accurate cannot be understated.
Keeping up to date records ensures that you’re operating with up to date information and know exactly where your business stands financially.
Accurate bookkeeping is essential in business for everything from regulatory compliance to making informed decisions backed by data.
2. Not Separating Personal & Business Expenses
When it comes to claiming expenses, it’s essential that they are valid business expenses, as including personal expenses can distort financial results, meaning you can’t rely on the numbers.
When you’re preparing your accounts and your tax return, mixing your personal and business expenses will create more work for you and your accountant in the long run, so it’s important to avoid this.
Opening a business bank account can help to keep personal and business expenses separate and your records accurate.
3. Losing Receipts
Any business owner knows that receipts play an important role in the bookkeeping process, but a common bookkeeping mistake is losing receipts.
Keeping your receipts in a single location will help you keep track of your expenses.
Or, better still, a digitised record system can ensure that you no longer have to worry about losing paper receipts, can help you save space, and remain organised.
Do you need support with bookkeeping? Lumin Accountancy’s bookkeeping service can help.
As we’re partners with Xero and QuickBooks, our team uses cloud accounting software to streamline the bookkeeping process and produce regular and accurate monthly results without issue.
With these results, you’ll be able to see how your business is performing on key metrics, allowing you to remain agile.
Get in touch with a member of our team today to learn more.
A digitised record system can ensure that you no longer have to worry about losing paper receipts, can help you save space, and remain organised.
4. Not Backing Up Financial Data
A common bookkeeping mistake to avoid is not backing up financial data.
HMRC require businesses to keep records for at least 5 years after the 31st of January submission deadline of the relevant tax year.
Paper bookkeeping records are at greater risk of being lost or damaged, so it’s important to digitally back them up on a regular basis.
This will ensure that your financial records are safe and secure should something happen to your original accounts.
5. Not Outsourcing Bookkeeping
As we’ve already mentioned above, bookkeeping is a time-consuming yet essential process.
Its accuracy is crucial for businesses to be able to make informed business decisions based on reliable information.
However, this can be a significant drain on your resources if you don’t have the right expertise on board and you’re not outsourcing your bookkeeping to trusted accountants.
The Benefits Of Outsourcing Bookkeeping
The benefits of outsourcing bookkeeping to an accountant include, but are not limited to:
- It reduces the risks of costly financial mistakes – Accountants are highly trained in an array of services, including bookkeeping, helping your business to remain compliant while you focus on what you do best.
- It streamlines business operations – By outsourcing bookkeeping, you free up valuable time to concentrate on other areas, including growing your business.
- They’re bookkeeping experts – With years of experience in bookkeeping, you can rest assured that this critical task is being taken care of by highly trained professionals.
Outsourcing your bookkeeping can save a significant amount of time.
How We Can Help
Are you looking for a reliable bookkeeping service? Our team at Lumin Accountancy is here to help.
We recognise how time-consuming bookkeeping can be and aim to simplify and streamline the bookkeeping process.
Our experienced team are highly trained bookkeepers, qualified to produce outputs of the highest calibre, allowing you to focus on growing your business.
Contact our team today to explore how our bookkeeping services and service packages can support you.
