Ten common bookkeeping mistakes
| Posted by: lauren | No Comments
Starting your own business is both an exciting move and a massive step for you – well done! For many new business owner, priorities lie in bringing in money and driving the new business forward. Often bookkeeping and paperwork can get neglected. Here we look at the ten most common bookkeeping mistakes made by new business owners.
Leaving it and letting things build up
We have all done it – put all our receipts into a shoe box and left them until there is so many you don’t know where to start. Set aside an hour a week to sort your paperwork instead of trying to find a day a month to sit down and do it.
Not using software
At the very least, use Excel to keep track of your income and expenditure. There are plenty of free accounting software packages out there, but Excel as a minimum will enable you to keep ample records of your transactions. Don’t over complicate the spreadsheet either as this won’t make your life any easier.
Open a business bank account
Most banks offer a free business bank account for 12 or 18 months (this can vary so check with your bank when opening your account). If you mix your personal and business transactions, you will not only make your life harder, but also your accountants. This should be a key priority after deciding on a company name.
File you bank statements in order
There is nothing worse than receiving clients records only to discover there is a page of a bank statement missing. Make sure you sort your bank statements into a file in date order and before you hand them to your accountant, check they are all there for the year you are handing in.
Paying by cheque or cash
If you pay by cheque or cash, it is much harder for your accountant to tie things back. Paying by card or bank transfer gives you a permanent records of your payments through your bank statements. Pay as much as you can where possible this way and your accountants life will be so much easier.
Not numbering sales invoices sequentially
I often see clients numbering invoices per supplier, for example ROG001, ROG002, ROG003 for one supplier then SMI001, SMI002, SMI003 for another. Keep things simple and have a sequential numbering system – 000001, 000002, 000003 etc. Filing is simpler, and chasing overdue invoices is much easier too.
Keep a record of your purchase invoices
Every purchase invoice should be filed in a separate file from your receipts. You can do things one of two ways – have one file and make each one as paid as and when you pay it. Or keep two files, ones that are due to be paid and one for invoices that have been paid. How you file them is up to you, however I recommend you stamp each one in number sequence with a stamp similar to this. Record this number in your accounting records and if you ever need to find one it is very easy to do so.
Not keeping receipts
Everything you buy for your business should be accounted for. Whether this be a purchase of goods, stationery for the office or delivery charges. Keep all receipts for all cash, bank and card purchases. Buy an expanding file and store them in month order. If you have time to split them out into bank and cash purchases, then all the better. But most importantly, keep everything.
Not having a space set aside for you to do your paperwork
There are over 4 million people in the UK who now work from home. If you are one of these people, make sure you have a desk set aside away form the distractions of the TV and family members. Doing this means you will more than likely get more done and are less likely to make a mistake.
Not being organised and up to date
Keeping things up to date lets you know what is going on in your business at all times. If you are running a business and it is not doing well, you should know this instead of burying your head in the sand. Keep on top of things, and if you don’t have time to do this, pay an accountant/bookkeeper to do this for you – the time you will spend could be better spent elsewhere.
Hello Accountancy can help you with your bookkeeping if you don’t have the time. For more information please call 0800 8654330, 07857 380805 or email lauren@helloaccountancy.co.uk
Leave a Comment