With a little bit of care and attention, small businesses can save time and money by avoiding these 6 common mistakes.
1. Save receipts for small amounts They may not be required by law, but receipts for small amounts can provide backup for the many tax deductions you aim to claim. Keep an ordered folder of such receipts, or use accounting software to scan them. With the right app you can even photograph and store them using a smart phone.
2. Reconcile the books with the bank statement The foundation of good bookkeeping is making sure the books reconcile with the bank statement at least every month. Electronic banking makes it easier, particularly now it can be integrated with online accounting software.
3. Advantage of cloud bookkeeping software If you use software, the system will be designed to replicate best practice and help you operate efficiently. The best software is easy to use, but do invest time in reading the manual or get training. It could save prevent costly mistakes creeping in.
4. Back up files If your office computers are unexpectedly damaged, the cloud version of your records will help you get back up and running fast.
5. Separate Personal and business accounts Lots of people set up successful businesses from their kitchen, but you need to draw a line between business and personal accounts. To be tax efficient, you’ll need to claim all of the legitimate business expenses you can think of
6. Timely bookkeeping The longer you leave it, the worse it will get. Not only that, your accounting will become increasingly out of date.If something is going wrong you won’t know about it.
Proactive accounting helps solve problems before they occur, but you can only do it if you’re on top of the books. Now the software is easier to use, and accessible on smart phones and tablets via the cloud, so no excuse for failing to keep the accounts current.
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