Below is a list of some of the most common mistake companies makes. As you grow the time spent on the accounts is less and less till a Bookkeeper is stepping in.
Not setting up the chart of accounts properly
If possible, try not to use what the bookkeeping software gives you as a default, as it might not be correct or relevant. It’s far more beneficial to build your own, and we can help you with our experience to set them up to suit your industry. Which will give you only the “Chart of Accounts” (codes) that are necessary to track? At the end of the Year, this will make life much more suitable to prepare your tax return. The same is applicable and also essential to make sure the GST codes are correct!
Setting up a ‘Petty Cash’ account in Assets
If you have a “Petty Cash” tin in your office for these is quite a common feature in many offices! – It is NOT an asset, so please don’t set up a “Bank Account” for it! There are more effective ways to allocate monies spent out of your pocket on business expenses.
Not setting up payroll correctly
The Payroll and Employees must be set-up accurately. Make sure you include the employee’s DOB, TFN and ensure that their penalty rates are correct. Make sure also that your linked “Chart of Accounts” are connected right (this includes superannuation, tax and many more). Let us help you and supply a checklist to follow the correct procedure.
Treating Assets or Liabilities as Expenses
You MUST know the difference between a “Balance Sheet” item and a “Profit & Loss” item and remember, your bookkeeper can help you with this. We can be explaining the Profit & Loss – what it means, what it’s telling you about your business).
Not Reconciling Property
It would include ALL bank and credit card reconciliation, BAS reconciliation, payment summaries and superannuation (Bookkeepers are EXPERTS at reconciling!)
The above are just five of the common mistakes, but in reality, there are many more. Lots are commonly made by business owners who are practising small-business bookkeeping OR sometimes offshore companies. These five, in particular, will take a lot of time and effort to fix. They also have the potential to make your bookkeeping file unusable and can cost you a lot of time and money. Especially when you need to take it to an accountant on the end of the year to have your tax returns/financials prepared, or the GST BAS return.
Now for having said that, it’s crucial to make sure you set up correctly and on track from day one. For this reason, This is why we offer training to small businesses and individuals. Depending on your chosen bookkeeping software, we specialise in Xero bookkeeping and Xero Cashbook, Myob Bookkeeping and QBO. If you think your business might benefit from bookkeeping services;
- if you someone to lodge BAS
- if you need a bookkeeping software health check
- training or assistance setting up your books