Ten common start-up bookkeeping mistakes. Do not make these mistakes and suffer the consequences. Get in touch with Craig Tibbs Bookkeeping 1.Not doing any – until it’s too late This is probably the most common mistake. The work then piles up – probably in a box file or shoebox – 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, you will always be in control. 2.Not using 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. 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. 3.Not having a separate 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. 4.Not filing bank statements in order It sounds simple, but you’d be amazed how many people don’t do it. What happens? You give your statements to your accountant at year-end and they phone back later to tell you a statement is missing. This means you’ve just paid your accountant (who probably charges by the hour), to organise your bank statements, when you could have saved money by doing it yourself. Now you must find the missing statement, too. If your online banking records do not cover the full year, this will mean having to spend time on the phone to the bank to get replacement statements sent out, creating unnecessary delays and a greater risk of late-filling and a fine. 5.Not having a filing system for purchase invoices There is a simple way of organising your purchase invoices: Have two files – one for paid invoices, the other for unpaid invoices. When you pay, write the date and method of payment on the invoice. Once paid, move it to the paid file. Keep both files ordered alphabetically by supplier name. 6.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. 7.Not numbering sales invoices sequentially 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. 8.Not being organised and up to date 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 cashflow difficulties. 9.Not retaining purchase receipts The result? Working out your business costs accurately over the year becomes more time-consuming. You risk failing to account for certain expenses, which means paying more tax than you need to. Even relatively modest expenses can mount up, so keep a close record of every penny your business spends. 10.Not having separate office space One for the 2.5m of you who work from home. When doing your books, use a room away from noise and distractions of living with others (eg partner, kids, flatmate, etc). You’re likely to get your work done quicker and you’re probably less likely to make mistakes.
Posted on: Sun, 27 Oct 2013 16:25:18 +0000
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