Every tax season we come across a range of bookkeeping techniques; from the organised professional to just downright mess!
It’s really important to have your accounts in order; not only to make it easier for you to keep an eye on what you do, but also to make the accounting process simpler and cheaper!
So here are our top 5 common mistakes collected from years of completing tax returns with questionable bookkeeping!
- Undervalue the importance of bookkeeping
We are all guilty of putting areas of our business in important and non-important categories. Whilst accounting (end of year assessments and benefits related) are seen as important, sadly often the importance of bookkeeping is undervalued. Seen as unessential or not-as-important, bookkeeping should be firmly in the important category of your business as a standalone business practice.
- Misinformed business plans
You spend all year chucking receipts in a drawer ready for your end of year accounts, but then what?! Well kept bookkeeping can be used to inform business plans as they give you an idea of seasonal incoming/ outgoing, remind you of pricing (to help inform increases and sourcing suppliers), and easily show the financial position of your business. Don’t make the mistake of making big business decisions based on misinformation. Keep your bookkeeping up to date and neat and have a constant record to refer to and inform decisions.
- Use an unqualified bookkeeper
Similarly, to undervaluing bookkeeping, when you do not attribute an importance to the task, you do not outsource to the right people. Not just anyone can do bookkeeping. Qualified bookkeepers have been trained to know exactly what is needed for accounts, how the information should be presented and have the industry expertise and knowledge to recognise errors, problems or information that could be costly down the line. Hiring a qualified bookkeeper enables you to rest assured that your bookkeeping is being done to a standard that will ensure your accounts process is seamless (and therefore cheaper).
- Not understanding the relationship between accounts and bookkeeping
We always compare the relationship between accounts and bookkeeping to a painting. The painting is the end product; but the process that goes into making it is essential and will directly influence what the end product looks like. From what paints are used, techniques, materials, focus; everything done to create that painting is important.
There is no difference between accounts and bookkeeping. Your accounts are your end product. But how you do your bookkeeping directly influences your accounts. The software used, accuracy of filing, evidence, and so much more, will affect how your accounts end up.
We have sadly had many clients who were overpaying on their tax bills because of how their bookkeeping had been done.
- Doing it all by yourself
It’s a timeless mistake and one we see year after year. If you cannot keep your books in the way that will help the accounts process, then outsource the work. Find a qualified bookkeeper who can manage this important task, and stop trying to do it all by yourself.
We offer fully qualified bookkeeping and accountancy management services at Surrey Accountancy Limited for all industries. If you would like to discuss your bookkeeping or accounting process please do contact us HERE.
