Accounting Mistakes That Increase Risk
Posted On: 24/06/21 - 0

Accounting Mistakes Can Cost Your Business

Firstly, mistakes can happen from time to time in your business.  But, if those accounting mistakes are not fixed quickly, they can cause big problems in your business. Many entrepreneurs are too busy to check and record every transaction daily. Because there are so  many other things that need to be handled on a daily basis. Incorrect accounting can lead to big problems that can affect staff, owners and the well-being of the business. Let’s look at the most common mistakes of accounting that can affect your business.

Looking After The Books Yourself

As an entrepreneur, you may want to do the accounting yourself. It is really important for an entrepreneur to focus on the business. They need to manage the activities that generate income and manage the growth. Giving the accounting tasks to an accounting firm is a wise decision to make.

Not Recording Minor Transactions

Many times, accounting mistakes include an entrepreneur ignoring recording minor transactions.  Ultimately, this could become a major expense to the business in the future. Therefore, it is essential for the business owner to maintain bookkeeping and record every transaction made by the company.

Not Storing Data with Technology

Another thing to consider is that technology plays an important role when it comes to record keeping. It is difficult for many businesses to record and keep track of all transactions manually. Especially, if it is a larger business. Storing data using software can be easier, accessible, and faster without any permanent damage or loss of information.  Plus, there is an additional level of security to protect your confidential records.

Not Keeping the Books and Records Up To Date

Because entrepreneurs are too busy with daily tasks and responsibilities, it becomes challenging to record every entry. This creates another problem, you will not being up to date with important information. As a business owner, if you fail to keep the books regularly, it may lead to inaccurate recording of data.

Poor Communication with the Accountant/Bookkeeper

Communication is the primary key to transfer your information or message to another. Communicating with your accountant is essential to track your finances. An entrepreneur should always report minor transactions made to the  accountant/bookkeeper as it helps to track incomes and expenses.

No Systematic Monitoring of Cash Flow

Every business needs to have a strong positive cash flow as it enables the company to handle debts and payments. Cash flow indicates an ongoing ability to generate and use cash which really helps the business financially and allows you to save those credit cards for “rainy days”.

Not Meeting Tax Deadlines

Finally, The various tax deadlines are difficult for any entrepreneur to remember with so many day-to-day matters. Meeting the tax deadlines is essential for a business to prevent experiencing unnecessary problems and possible interest and penalties with the C.R.A..

The financial side can make or break any business, especially a start-up in those early years. To save money, many entrepreneurs try to do the accounting and bookkeeping themselves, which has the potential of generating accounting mistakes.  For small to medium businesses, outsourcing accounting processes is a very time efficient and in the long run cost effective alternative.

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