Some business owners fall into doing bookkeeping by themselves to save on cost. This may seem like a quick solution, especially for entrepreneurs who find hiring a full time bookkeeper too expensive for their business. They feel like their profits are not on the level where they can afford to hire a full time employee to maintain their books. However, DIY bookkeeping pose some danger to your business, especially when you are not trained.
Here are some common mistakes business owners encounter in DIY bookkeeping.
Insufficient Knowledge of Accounting Software
Using an accounting software can truly help you in maintaining your records, managing your books and generating financial reports, but you can only fully utilize these benefits if you have good bookkeeping knowledge. Insufficient knowledge and understanding of basic bookkeeping principles applied to a complex accounting software can lead to inaccuracies in records.
You wouldn’t want to submit documents with errors to ATO. Strict penalties are imposed for underpaying taxes and you wouldn’t want your business to land on ATO’s bad side.
A certified bookkeeper is trained to use the intricacies of accounting software. They know exactly what records should be entered into the system. With a help of a certified bookkeeper, you are most likely to avoid the costly process of rescue bookkeeping at the end of the year. You’ll also steer clear of any tax liabilities. This will help you save on cost in the long run.
Missing ATO Deadlines
Lodging your BAS and paying your taxes on time is very important for a business. When you’re too busy running your business, looking for potential clients and managing your employees on top of managing your books, there is a big chance that you’ll forget ATO deadlines. This can lead to a failure to lodge on time (FLT) penalty.
Asking a qualified bookkeeper for help will give you peace of mind. A qualified bookkeeper will surely keep your records up to date, and remind you when they require additional information to lodge your forms. All you have to think about is ensuring that the necessary information about your business is in the hands of your bookkeeper.
Incorrect Superannuation Contributions
Employers are required to pay a minimum superannuation amount of 9.5% of each eligible employee’s earning base when they are paid more than $450 a month. If you forget and fail to pay the superannuation obligation, it means non-compliance with the Australian superannuation law. This may result in penalties from the ATO. Preparing this along with the payroll every month takes a lot of the valuable time you should be spending on managing and improving your business. A certified bookkeeper has a good understanding of the superannuation laws. You can trust that they will make sure your superannuation obligations are met.
Incorrect Invoice
With too much to do and keep track with, you may make mistakes in invoicing. Giving incorrect invoices and waiting months to invoice is one of the biggest mistakes a business can make. It will put a strain in your cash flow. Reconciling an incorrect invoice will be an additional cost to your business.
Seeking the services of a certified bookkeeper will ensure that every invoice is correct and issued in a timely manner. Your bookkeeper can also remind overdue debtors, so you can focus on the task of running your business.
Incorrectly Claiming Deductibles
ATO allows claims on deductions on items purchased for business use and purpose, however, they are also strict in making sure that the deductions claimed are truly for business purpose. Unknowingly claiming a full GST credit when an item is partially being used for private purposes or claiming credits when a supplier is not registered for GST can get you in trouble.
Knowing which deductions to claim can be confusing if you are not trained for it. A professional bookkeeper, however, knows which can be claimed as deductions like the back of their hand. They are also updated with the tax laws pertaining to your industry and are in the loop with whatever tax changes there may be.
Failing to Keep Complete Records
Keeping your records helps your business prepare accurate financial statements. These includes balance sheets and profit and loss statements. These statements can help you pay the right amount of taxes and boost your credit rating. More importantly, it helps you forecast where your business is heading financially. Small errors in or lacking records can greatly affect your business.
As a business owner, you should know what records to keep and for how long these records should be kept. Recording should also be done in detail, preferably in an accounting software for easy access. You should also have a back up for your files in case your laptop or computer gets damaged or stolen.
Final Thoughts
As a business owner, your time is precious. You should be spending it in managing and growing your business instead of taking a significant amount of time on keeping records. Hand in the task of keeping your records and managing your books to certified bookkeeper. They will ensure that your records are correct and up to date, monitor your cash flow and help you reduce your tax liabilities. They are also abreast with the changes in tax legislations that may affect your business. Remember, good bookkeeping puts you in control of your business’ cash flow and help you improve your business.
Worried about the Bookkeeping Cost?
Hiring a full time bookkeeper can be costly, but thankfully, you can outsource bookkeeping services. Outsourcing can help you save money compared to hiring a full time employee to manage your books. However, we won’t advise you to outsource from the cheapest bookkeeping service provider. Cheap does not always mean good value. Evaluate the price offered and make sure that the quality provided gives you value for your money. Choose a bookkeeping provider that offers a competitive range for the kind of service they provide and a payment tern that suits your needs and budget.
ACT Bookkeeper Group is a leading provider of bookkeeper services in Canberra and the entire Australian Capital Territory. Our team of professional bookkeepers are highly committed to providing the most effective and reliable services that fit your needs. With a registered BAS agent like us; you will get accurate, meaningful information necessary for your business in a timely manner. Contact us today for a free consultation.
