The Major 9 Errors in DIY Bookkeeping
It can seem at times that bookkeeping is a task left in the ‘to do’ basket until the last minute, raising the probability of errors. Many small to medium business owners are often juggling quite a lot of responsibilities from managing staff and business developments through to hands on work.
However, basic bookkeeping errors may cost a small business hard earned money, money better seen on the bottom line. These errors can also expose the business to weighty fines if uncovered by a Tax Office audit.
Below are among the common errors of DIY Bookkeeping.
1. Using software programs which can be too difficult to your degree of accounting expertise. Some applications are too perplexing for most small business owners who don’t understand double entry accounting.
2. Short-changing yourself by not claiming valid tax deductions. Typically this can be a simple oversight including not keeping accurate records of cash expenditure.
3. Three common and basic errors in terms of GST which are easy to get caught in, but also quite easy to avoid are:
– Claiming GST credits without valid tax invoices
– Claiming GST credits for full amount of purchase when goods are used partially for private purposes
– Claiming GST credits where supplier is not registered for GST
4. Not invoicing quickly and letting debtors fall considerably overdue. Too little time can often mean that business owners take weeks or simply months before getting their invoices out to their customers. This sends an implied message to customers that you don’t care about getting your money.
5. Also, make certain you have appropriate systems ready to keep tabs on debtors and follow through on payments due. Allowing outstanding debtors can put tremendous strain on your cashflow.
6. Paying incorrect employee super contributions. With the Superannuation Guarantee Legislation, employers are required to pay 9.25% of an employee’s ordinary time earnings as superannuation but many employers are unclear just what comprises ordinary time earnings.
7. Missing deadlines for PAYG or BAS, a common yet avoidable error that can have costly consequences.
8. Failing to check records using the bank to guarantee accuracy. This goes without having to say, but is frequently overlooked.
9. Neglecting to keep back-up records. Many small business owners really need to show more vigilance in ensuring back-up copies and systems are in place to secure their financial files in case of a technical breakdown.
If you can identify with any of these errors, why not consider outsourcing your bookkeeping to ensure your accounts and the recording of are correctly implemented . One less thing you need to worry about.
Call Irena’s Bookkeeping today to discuss how we can help you (02) 9011 5337