Bookkeeping Mistakes That Small Businesses Make And How To Avoid Them
Talk about necessary evils and bookkeeping might just be one of them among small business owners. Around 40% of small business owners say that bookkeeping and accounting are the worst aspects of running a company. From one-person businesses to industry giants, no entity can escape the mundane task of account bookkeeping. Even though the job is far from being glamorous, the health of your business largely depends on the accuracy of your finance books.
Why outsource bookkeeping services?
The right financial records let you make the right business decision going forward. With so many tasks on your plate, maintaining your books every day can be exhausting. This may lead to regular procrastination, ultimately putting the job on the back burner until the tax season approaches.
Outsourcing bookkeeping services can be of great help throughout the financial year and also when you need to get ready for tax filing. Why outsource bookkeeping services ahead of the tax season? Read our blog for a detailed discussion – 5 ways bookkeepers can get your books on track for tax season
Account bookkeeping requires a keen eye for detail and undivided attention. With so much going on, you might not be able to focus all your energy on something as mundane as bookkeeping. When you partner with outsourcing firms for bookkeeping and accounting services, you can be assured of accuracy, all the while saving time and money.
When you outsource bookkeeping services for small businesses, you can avoid the common mistakes that most business owners make without any effort of your own. Here are 5 such mistakes that you cannot risk making:
1.Failure in Tracking Reimbursable Expenses:
Without a detailed knowledge about tax returns, government regulations, and compliance issues, it can be difficult to track reimbursable expenses of your business. Most small business owners are often not familiar with the concept of tax deductions. This ultimately leads to businesses losing considerable amounts of money due to their neglect.
The primary job of outsourcing firms that provide bookkeeping services to businesses is to be up to date with tax regulations and educate business owners about the best practices related to tax savings and reimbursements.
2. Neglecting to reconcile bank statements:
Small business bookkeepers often make the mistake of neglecting the reconciliation of bank statements. The fundamental aspect of the financial health of your business depends on you reconciling your books with the bank statement. It allows companies to identify discrepancies and making amends to create a clearer picture of the records.
Firms that outsource bookkeeping services for small businesses provide businesses with a clear statement of their financial records following reconciliation of all bank accounts. This also involves updating your account books with bank statement records.
3. Ignoring petty cash receipts:
Sometimes, business owners fail to recognize that small expenses add up fast. When you make a business purchase of even an amount as nominal as 50$, it is important to save the receipt. This comes in handy when bookkeeping services providers need to come up with tax-saving solutions, claim reimbursements or get a general idea of the cash flow of your business. These receipts also serve as documentation in case of an audit.
4. Disregarding the importance of backing up important financial records and calculations:
In the digital age, cloud storage is the new attraction for businesses that need to store a load of financial data. When you outsource bookkeeping and accounting services, the firms are mostly equipped with the latest technology that is needed to keep your transactions secure and private. But in certain cases, if the records are compromised, you might lose all your important business data.
To avoid such mistakes, you need to ask bookkeeping services firms to pull out hard copies of all important financial documents periodically. This includes bank statements, bookkeeping records, business reports and other critical documents that contain confidential and crucial financial data.
5. Over categorization or erroneous categorization of expenses:
Account bookkeeping is no easy task. Even when you are fully committed to the task, you may fail to do it correctly if you do not have any proper training in bookkeeping and accounting services. Most business owners who attempt to do the task themselves often end up creating too many expense categories and then failing to recognize the right category when adding expenses.
A well-organized and clear chart of business expenses is necessary for accurate bookkeeping. An experienced bookkeeper who deals with numbers and figures on a daily basis can help you clean up the expense charts and categorize them in a standardized manner.
Bookkeeping Services in Singapore
As a growing number of businesses move to Singapore because of its booming startup culture and favorable business environment, the number of firms that provide bookkeeping services is also increasing. Read our blog to know more about Singapore’s welcoming approach towards foreign businesses: 7 Reasons To Launch Your Company In Singapore: The City’s Thriving Business Culture
Choosing the right outsourcing firm for your account bookkeeping is another critical factor determining the success of your business. In the wrong hands, your critical financial data can be compromised. With PikoHANA, be assured of the safety of your data and get reliable bookkeeping services in Singapore. Advanced software, seasoned bookkeepers and committed approach set PikoHANA apart from the crowd of bookkeeping services providers in Singapore.
These tiny bookkeeping mistakes can slow down business growth, contribute to tax penalties or add to the many woes of the tax season when it approaches. Outsourcing bookkeeping services have significantly helped businesses manage their records and make informed business decisions.
Learn more about the importance of outsourcing bookkeeping services in Singapore for small businesses: In-House Vs Outsourced Bookkeeping: What Works Best For Small Businesses?
Your business bookkeeping is the heart of your company. All important investment and purchase decisions depend on the financial health of your business. Greater visibility empowers business owners with the capacity to assess the money trail, tackle mismanagement and plan a better business roadmap.