It may be perceived as a ‘backroom’ task, but bookkeeping can make or break a business. Effective bookkeeping enables companies to thrive and grow; when responsibilities such as VAT accounting or keeping track of petty cash are shunted to the back of the queue, you could be storing up costly problems for the future.
Here at AMR Bookkeeping Solutions we’re dedicated to supporting our clients and helping them get the best out of their businesses. We’ve come up with a list of common mistakes that companies make, and how to avoid them . . .
• Poor record keeping: Failing to keep track of receipts or small expenses may not seem important, but maintaining accurate records can save you money on income tax. Keep abreast of all your incomings and outgoings on a monthly basis, using a proper filing system. If you’re subject to a tax inspection, you’ll need to produce up-to-date records.
• No back-up: The days of manual bookkeeping are in the past. These days all businesses rely on technology to update their accounts. But make sure you’re prepared in the event of technical problems. Always back up data and ensure you have a good IT system in place.
• Lack of funds: We know it’s hard to set aside funds to pay your VAT liability when an invoice gets paid – but remember the 20% VAT you charge on your invoices is actually HMRC’s money, not yours! Put it aside in a separate account as you go along to avoid shocks when a hefty bill lands on your desk.
• Mixing up accounts: It’s all too tempting for smaller business owners to use personal bank account cards for company purposes – it cuts paperwork and may cost less. But when you’re claiming for business expenses it’s difficult to separate them from personal expenditure. Keep transactions separate to avoid trouble with tax issues further down the line.
• Bad petty cash management: Many business owners make the mistake of failing to properly record petty cash outgoings. It’s important to set up a system to track all cash used for small outgoings. Make sure you get receipts for all payments and if you’re a small business, it makes sense to buy a lockable petty cash box.
At AMR, we’re here to advise and support you on all your bookkeeping needs, whether you’re a start-up business or a large established company. For information about our services, please get in touch via our contact page, or call us to speak to a member of our friendly team on 01892 559480.
