You may be very excited to start your own company and find out that there are so many things to sort out, much more than you thought before. And in the rush to get off the ground, bookkeeping often gets relegated to the bottom of the start-up to-do list. For many new business owners, the main reason is there are always seemingly more important issues to consider.
However, sooner or later you will realise how important it is to keep financial records of your start-up company. Because, if you don’t do any financial records then suddenly the work will piles up in a box file and you get further and further behind, to the point where you never have time to catch up. The more you try to hide from the problem, the more it will occupy your thoughts. Bookkeeping really is one of those things where if you do a little bit every day, so you will always be in control.
These are the most common mistakes start-up companies usually make:
- Doing It By Yourself
No matter how much they hate it, many small business owners insist upon handling the books themselves. Having a competent bookkeeper coming in to handle the books can be extremely beneficial in that they have the skills to do the job quickly and efficiently and will provide a second pair of eyes to find errors and make suggestions.
- Not Having A Proper Office Space
If you work from home then you should use a room away from noise and distractions of living with others when doing your accounts. You’re likely to get your work done quicker and you’re probably less likely to make mistakes.
- Not Using Bookkeeping Software
Whatever you do, use software. Electronic bookkeeping systems are much more convenient. You could use Excel if you don’t want to pay for specialist accounting software like Xero or QuickBooks. At very least, it does the adding up for you and you have something set out in a format you can email to your accountant, which saves time and money when it comes to doing accounts or returns.
- Not Having A Separate Company Bank Account
If you mix your business and personal finances, you’re just making life more difficult, not least because you will need to separate it all out when it comes time to tax return time – or pay your accountant to do it. The first thing you should do once you have settled on a business name is sort out a bank account.
- Not Paying By Card Or Transfer
Your bank will do some of your bookkeeping for you for free. How? If you pay by electronic transfer, credit or debit card, a permanent record of the transaction is provided on the bank statement, detailing the date, amount and recipient’s name. In bookkeeping terms, that’s a great start – and probably enough if your business is small. The alternative means having to laboriously enter the same information again into a spreadsheet.
- Not Numbering Invoices Correctly
Numbering your sales invoices sequentially means you will be better organised. It also helps you to keep track of dates by which invoices should be paid, which enables you to establish an efficient system for chasing overdue invoices.
- Not Being Organised
Failing to maintain your books in a timely and accurate manner can lead to disaster. Pretty soon you begin to lose control of your business, which can ultimately lead to its failure. Having accurate and up-to-date financial information about your business enables you to judge its performance and perhaps anticipate and take steps to overcome cash flow difficulties.
- Not Reconciling The Books With The Bank Statement
One of the fundamental aspects of bookkeeping is reconciling the books and bank statements every month. Nonetheless, there are businesses that do not do this and others where errors are made by not doing it properly. Again, this is a good reason for hiring an experienced bookkeeper.
Cairdeas is a trustworthy one stop office for your accounts bookkeeping, financial reporting, social media marketing and all administration services. Cairdeas will ensure that all aspects of your business are being done properly, so you can focus on the bigger picture and ensure yourself a balanced life.