Running your own business can be a fulfilling experience for your life. Seeing your ideas become a reality will always give you pleasure. Moreover, as a business owner, you will become your own boss, schedule your office hours, and get the chance to provide services to the community.
However, one should also not forget that it can be very stressful at the same time because owning a business is more than manufacturing products and marketing. Although it is vital to improve the product quality and promote your brand among your customers, you should never forget the job of keeping track of the expenditures so that your business finances are perfectly in order. Many business owners neglect this side and face the consequences later.
There are many bookkeepers Perth who can provide you with the necessary help, and so it will be better to leave the job of recording account books to them. This blog discusses the common bookkeeping mistakes small businesses should avoid.
Lack of Proper Business Plan
Like any other endeavour, having a proper plan is a crucial part of starting a company. Having a strong business plan before launching it will make sure your company will be prepared for operation. Unfortunately, a large number of business owners focus on increasing their inventories without any well-designed plan.
In your business plan, you must include your bookkeeping process and financial goals. Also, it should have a structured schedule and a list of people appointed for different tasks. Planning will help you understand when to keep specific financial deliverables ready and who should be responsible for creating them.
Even if you start a sole trader business, having a systematic bookkeeping schedule will prevent your business from facing a financial crunch.
Poor Organisational Skills
For small businesses, problems associated with bookkeeping are not uncommon. Most small businesses have limited staff, so the business owner has to keep track of all expenses and receipts most often. It becomes very challenging for them to keep track of the expenses, deal with customers and staff, and keep inventory stocked, all at the same time.
Therefore, being organised can reduce your stress and save you ample time when it comes to bookkeeping. Even before launching, it will be a better idea to figure out where you should keep your receipts and when you will be keeping track of them. Sometimes, taking a picture with your mobile phone and keeping a soft copy can protect your important documents.
Not Separating Personal and Business Accounts
Most small business owners make one common mistake is that they do not separate their personal and business bank accounts. But when the accounts are audited, issues can arise for not separating the two accounts, and the whole procedure may get delayed. The ATO may ask you a lot of questions for clarification.
Read More:- The Importance Of Accounting Services
Not Having A Proper Budget Plan
While operating a small business, you will have a very limited cash flow. People who have only started their business may require significant time to make profits. Therefore, to make sure that the cash flow for your business is organised and transparent, having an organised budget plan will be essential.
It will be best to audit all your costs before you create a planned budget. Doing so will provide you with a clear picture of how much money flows within your business.
Also, when you have a budget, you will know your expenses like the back of your hand, which will help you keep track of all transactions without much effort.
Failure To Classify Employees
Bookkeeping is not just about keeping track of raw materials and inventory. As a business owner, it will be your responsibility to classify your employees to maintain the whole process of payroll. In general, most companies employ two types of employees – independent contractors and full-time companies. It will be an effective idea to keep track of the employment status of every employee because it will prevent any chance of misfiling.
Forgetting to Pay Sales Tax
Another very typical mistake that small business owners make is neglecting filing petty cash. This error can cost your business a large amount of money as it results in hefty penalties and fines that a small business may not be able to afford.
Therefore, before launching your business, you must familiarise yourself with how different taxes work. It will help you file your taxes properly on time and save that heavy amount of money. Hiring an outsourced bookkeeping service provider will help you save money on payment while getting your job done.
Another mistake business owners make regarding petty cash is that they assume petty cash as free money, which they can use for anything related to the business. Though partly true, you should not treat it as your personal wallet. Therefore, you should also keep track of transactions made using petty cash, which you can do using a simple cash box.
Having no backup
Bookkeeping can be challenging to several businesses, including those in the business world, for several years. If you cannot understand the technology, you may delete or miss any crucial data. That is why it will be important to keep a backup for your files. If possible, you can consider keeping a hard copy of your account books. It will help you have a backup even when your computer malfunctions.
Not Hiring a Professional Bookkeeper
You may be an expert in business dealings, but keeping books takes knowledge and lots of hard work. If you do not feel confident about your bookkeeping skills, it will be better to consult bookkeeping services for your Perth business. In this way, you can keep records of your business finances in a stress-free and cost-efficient way.
Most experts advise leaving the job of record keeping to professional bookkeepers. There are many firms based in Perth that provide excellent services. Before you start your business, you can contact them and take advice.