It does not matter what type of business you run, one thing you need to keep on top of is your accounts. Financial mistakes can be extremely costly. Keeping that in mind, read on to discover some of the most common accounting mistakes you need to avoid, from not hiring accountants in London, to not focussing on the long term goals.
- Falling behind – One thing business owners do not have on their side is time. Because of this, it is not uncommon for them to fall behind on bookkeeping or reconciling any sales tax accounts, credit card statements, and other financial accounts. The issue is that without this information it is extremely difficult to make effective business decisions. This is why it is imperative that everything is kept up to date.
- Not accepting outside assistance – A lot of business owners refuse to hire London accountants because they view it as an unnecessary expense. However, if you can’t keep up with your books, you need someone that can. Moreover, when you use the services of professional accountants in London, you can have peace of mind that everything is being handled properly and profitably. Narrow down your search to those offering fixed fee accountancy, as this makes the cost a lot easier to manage.
- Hiring the wrong person – When we say you need to seek outside assistance, we mean from a professional. Far too many people hire a family member or a friend to take care of the accounts for them and someone who is not experienced can end up causing monetary problems for your business. You may want to help a friend out, but this is not an area you can afford to cut corners.Search for chartered accountants in London that have the experience to really look after your interests.
- Focusing on the short term – It is easy to fixate yourself on the here and now, and forget about the future. However, you need to plan ahead if your business is to be a success. Accounting is about identifying any potential financial risks for the future while also forecasting potential growth. If you only keep track of today’s numbers, you will soon find yourself in trouble.
- Throwing receipts in the bin – You need to keep track of everything. If you throw your receipts away you will not have an audit trial. This will make it challenging when dealing with taxes while it can also lead to gaps or mistakes in accounting records that you will not be able to fix.
- Mixing personal and business finances – Last but not least, this is undoubtedly one of the biggest errors made by business owners. You should never mix business and personal finances. Instead, have an account for both and make sure you are strict regarding usage. It’s easy to use your business account for a personal purchase and then say you will move the money over late. But, it is also easy to forget to do this.
So there you have it – some of the common business accounting errors made today. If you can avoid these, you have a good starting point for managing your accounts effectively and ensuring all your books are in order.