Trying to save money by doing the bookkeeping yourself can be very costly. We’ve identified 10 danger items to be aware of.
Simple bookkeeping mistakes can become very costly, not only by incorrect allocations, but also in the time that’s spent tracking down the source of the errors.
Bookkeeping is a task that many business owners hate doing, and is often rushed, left to the last minute, or carried out late at night after a hard day at the office or on site. It’s time like that when the mistakes are made, and incorrect bookkeeping can expose owners to substantial fines if discovered by a Tax Office audit.
Here’s a list of ten common mistakes made by small business owners in DIY bookkeeping
This is still an area of confusion particularly for start-up businessess. We often see sole traders charging GST without being GST registered.
2. Claiming GST credits without realising that your supplier is not registered fo GST
3. Claiming GST without valid tax invoices
4. Not understanding the accounting software package
As accounting software packages are simplified by programmers, they seem to get more complicated for the end user. Many of the functions are confusing for the business owner who may have no understanding of double entry bookkeeping. This can lead to business owners doubling their work in an effort to create the desired reports, and therefore producing inaccurate bookkeeping records.
5. Incorrectly allocating the data entry can result in missing valid tax deductions that should rightfully be claimed. Your accountant will generally not have time to go through each item, and may not fully understand your business. So if you’ve allocated data incorrectly, you r accountant may also miss those claimable items
6. Missing deadlines for Business Activity Statement (BAS) and PAYG lodgements
You could be subject to fines and penalty payments
7. Superannuation contributions -
Under the Superannuation Guarantee legislation, you are required to pay 9% of an employees ordinary time earnings – many small business owners are unsure what constitutes ordinary time
8. Bank reconciliations – many businesses do not understand the purpose of, or how to reconcile the bank account with the data entry – causing room for errors
9. Failing to issue invoices regularly
This can badly effect your cash flow, as well as leaving your business wide open to overdue debtors being overlooked
10. Backing Up your records
We’ve all experienced an inexplicable failing of our computer, be it a power surge or the hard drive just crashing – or even the computer being stolen. Where would you be if you’ve got no back up of your accounts?
You should make it a habit to back up every night, every week, and every month
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