1. The shoebox approach
This is the most common mistake, book keeping is best done as you go along. On the plus side you should have all the paperwork you need to give your bookkeeper but you will have no real idea of how your business is actually doing unless you turn it into something useful. If you have a box of receipts lurking somewhere then gvive it to me and I will happily convert it into a set of figures you can use to figure out how well your business is doing.
2. Not keeping receipts
Many businesses don’t claim all the expenses they are entitled to as they lose receipts, especially for small amounts. Over time this can add up to significant amounts meaning that your accounts may not truly reflect expenditure and therefore profitability.
3. Not reconciling
It is vital that you reconcile your bank accounts to your cash book on a regular basis. If you don’t you may fail to record all of your income and expenses. Bank reconciliation is all part of the service from Simply Balanced Solutions meaning you will always have an up-to-date picture of your business finances.
4. Mixing business and personal expenses
Whilst there is no legal requirement to have a separate business bank account unless you are a limited company it is advisable to do so. If you mix up business and personal bank accounts, or don’t even have a business bank account, this can cause errors and often means that a sole trader will either claim too many expenses or too few.
5. Using the wrong accounting system
Each business has its own requirements. For some businesses a manual cash book and records are fine but for many accounting software will be needed to keep track of debtors, creditors and VAT. Make sure you understand your accounting system and operate it correctly. Simply Balanced Solutions can help you choose the right software for your business or design spreadsheets for you to use.
Whether you are guilty or some, all or none of the above Simply Balanced Solutions can help you avoid the pitfalls that many small business encounter when running their finances. Get in touch for a free no obligation chat and quote to see how we can make your life easier and more profitable.