7 Bookkeeping Mistakes Business Owners Should Avoid

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Statistics reveal that about half of all small businesses fail within the first 2-5 years. The main cause of business failure is poor financial planning and management. Accurate bookkeeping is essential to know how your business is operating and to be able to make informed decisions which affect the success of your business

Some of the common mistakes are:

Doing your own books

Some business owners think that doing their own bookkeeping is saving costs. However, is this as cost effective as you may think? If you don’t have the required basic accounting and tax knowledge, the cost to have your Accountant “fix” the accounts later may in the long run cost you much more than employing a professional,  qualified bookkeeper.

Not reconciling accounts

One of the key elements of proper bookkeeping is to ensure that your accounts are reconciled against Bank statements regularly. Some business owners fail to do this, or do not complete this exercise fully each month which can lead to a misunderstanding of your true cash flow position.

Incorrectly tracking expenses

Without formal knowledge of bookkeeping practices, it is likely that transactions may be coded to the wrong categories. Entering transactions to the correct category is vital for proper reporting and analysis of the business and for GST purposes. A profit and loss report should also be reviewed on a monthly basis.

Incorrectly recording GST

Many businesses don’t report the correct amount of GST on a BAS due to incorrect data and unfamiliarity with GST law. Oversight of this can lead to significant fines and penalties.

Cash flow not effectively monitored

As part of the bookkeeping process and reconciling bank accounts, entering of supplier bills, customer invoices and payments should be regularly completed. This allows the business owner to be able to forecast their cash requirements. A professional, qualified bookkeeper can assist the business owner to manage the cash flow position and advise on further business growth.

Invoicing/Debt collection

Business owners are sometimes too busy to invoice customers regularly and follow up customers for payment which in turn affects cash flow, which in turn reduces funds coming into the business and could stifle opportunities. A professional, qualified bookkeeper can assist in this process and set up an effective system to improve cash flow.

Compliance obligations

Business owners are sometimes not aware of all the compliance obligations that they are required to meet. Using the services of a professional, qualified bookkeeper will give you peace of mind as they will keep your records up to date and lodge all forms on time, and avoid fines and penalties.

And there are many more!

If you need more time and focus on growing your business and make sure that your bookkeeping and financial obligations are being met, please contact Tony Lewis at Jaguar Bookkeeping  on 08 8212 0217 or tonyl@jaguargroup.com.au who will be happy to assist.




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