Your accounting system is the key to understanding what is going on inside your business. It is also important to manage your taxes and other government obligations. This is why it is so important to get everything right.
If you handle your business finances on your own, there are many ways you can make mistakes. Having a personal accountant in Lake Mary, FL can help you avoid such errors and focus on growing your business.
Common accounting mistakes made by inexperienced people
- Improper record-keeping.
No one likes paperwork and filing. Digital technologies have made it easier to sort folders and eliminated the use of paper. However, that does not mean you should stop record-keeping and record management completely. You must manage your digital records as you would manage the paper files.
- Data entry errors.
Data entry errors refer to mistakes where you input incorrect information in the incorrect places in your accounting system. Some common data entry blunders include:
- Leaving out or adding a digit or a decimal place.
- Entering items in the wrong account.
- Treating expenses as income or vice versa.
- Omitting or duplicating an entry.
- Transposing numbers.
- Not following a regular accounting schedule.
When you own a business, you have a thousand responsibilities throughout the day. It can be easy to forget about accounting or skip the task for the next day between so much work. However, it is important to record your income and expenses every day. It helps you stay up-to-date with what is happening inside your business. Daily updates are ideal, but if you do not have time, then you should try to do them on at least a weekly basis.
- The error of omission.
The error of omission simply refers to the mistake of forgetting to record an item. Of course, this mistake is a mistake and not something done intentionally. For example, one of your invoices is paid, but you forget to record it. Or, you purchase a new phone but forget to add it to the accounting system. This happens when you misplace a receipt or do not record your items regularly.
- Ignoring small transactions.
It is easy to ignore small transactions like a gift you bought for a friend or something you bought on your way home from work. No matter how small the transaction may be, it is important to get a receipt and keep a record. In the event of a tax audit in Lake Mary, FL, you will be required to present all the business expenses, including the small ones.
