Most Common Mistakes People Make By Not Hiring A Bookkeeper

Infinite Accounting Solutions |

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Regardless of the size of a company, bookkeeping is an essential part of a business. However, managing ledgers, journals, financial statements, income tax records, and more could get quite overwhelming for business owners. As they focus on company growth, the practice of bookkeeping is neglected which in return negatively affects businesses.

Bad management of finances could lead to a failing business. Proper bookkeeping helps you monitor cash flow and can help you make better decisions. It also ensures that your financial records are up to date and there is no last-minute scramble to find all that paperwork to file year-end taxes.

Often, business owners choose to ignore the benefits of hiring professional bookkeepers and decide to maintain the books themselves. Inadvertently, they commit some costly mistakes which begin to affect their businesses and are forced to approach professionals who may charge extra to rectify the problems.

As an experienced accounting firm, at Infinite Accounting Solutions, we want you to avoid facing hard times, and to help you prevent any accounting issues, here’s a list of the most common mistakes business owners should avoid making when managing their books.

1. Assuming bookkeeping is easy. Bookkeeping can be easy, but proper knowledge of what is required by industry regulators and tax authorities is an essential element to running a successful business. Without this knowledge, you will not be able to keep accurate accounts on your own. Discussing with a bookkeeper or accountant before starting a company will make a world of difference in doing the books yourself.

2. Not understanding the requirements of a business startup. People start businesses because they see profit in what they are good at doing or producing but don’t realize that it is imperative to have an understanding of that industry. Do you need to be GST registered? Is a business license required? What about WorkSafe BC? Having these discussions with an accounting professional will help you set up your business venture with confidence.

3. Using your personal account. When starting a business, it may seem like a wise idea to use your personal credit card or bank account for business transactions, but as the company grows, this can complicate your bookkeeping. Using your personal account will make it difficult to segregate personal and business expenses for tax purposes. If opening a business account is not a viable option then open a personal account and use it strictly for business purposes.

4. Data entry errors. Accounting software will accept errors, so owners making entries in their books must be diligent in realizing these errors and have the knowledge to fix them. Some of the common data entry errors are as follows: entering incorrect dates for transactions, applying full payment for an invoice when only a partial payment has been received, applying a payment to the wrong invoice, selecting the wrong bank account, etc. Having a professional bookkeeper ensure that all the accounts are entered accurately, will prevent errors like these from throwing your company’s accounts off.

5. Not understanding what a business write-off is. It is vital for one to completely comprehend what can be added as a business write off and what can’t. For example, when you have a meal with a client, only a portion of that bill can be used as a business write off but buying a car for your family will not be classified as a business write off. An accounting professional can handle all this for you, and ensure that you're operating by Canada Revenue Agency standards.

If you are a business owner and haven’t hired a bookkeeper, avoid mistakes like these by reaching out to the experts at Infinite Accounting Solutions. As a renowned accounting firm in Langley, BC, bookkeeping solutions are what we excel at. We also specialize in employee procedures, business manual creation, human resources processes, cost reduction analysis, and recommendations. For a complete list of our services, please click here. If you have any questions about bookkeeping, we’d love to hear from you. Please contact us here.