You may be excellent at what you do, but are you holding your business back with simple accounting mistakes? We’re not talking about mathematical errors. There are several missed opportunities within accounting that prevent businesses from running smoothly and limit their growth. Accounting mistakes make processes more complicated and time-consuming than necessary.
Fortunately, most business owners make these mistakes out of ignorance or misunderstanding. Once you’re aware of these problems, changing course becomes much easier than facing the consequences of a simple mistake. Here are five top accounting mistakes that can hurt your business
Doing Everything In-House
Unless you’re an accountant yourself, you shouldn’t do all your accounting in-house. People have the misplaced belief that a DIY (do-it-yourself) approach to business will be the most cost-effective. While DIY accounting looks good for your budget, don’t forget the cost you pay in time.
Spending too much time on tasks that are non-essential to your business only limits potential growth. As a cliché as the phrase is, it still rings true: time is money. This is especially true for small businesses with limited manpower.
Outsourcing can help you focus on the most important components of your business. Focus on what you, and only you, can do best by passing the extra work on to an expert. Remember, accounting professionals are better equipped with more knowledge and resources because the task you’re entrusting to them is what they do best.
Resisting Cloud-Based Software
It’s natural to be resistant to new technology. In fact, evidence shows being a first adopter isn’t always the best move and that holding back can be wise. But that’s only relevant for new technology. At this point, cloud software and storage is well-established and trusted technology.
Cloud-based software has a range of benefits to streamline and standardize your accounting processes. With automation, cloud software can prevent duplicate entries and incorrect information. It allows multiple users to access and input data, according to your permissions. You’ll also save space (physical and digital) by storing your data online. When data is stored in the cloud, it’s automatically backed up to at least one other location to prevent data loss. In the event that a cloud server crashes, a copy of your data still exists at another location. Cloud-based accounting software is only improving in efficiency and security. More businesses than ever recognize the value of transitioning to the cloud.
Irregular or Inconsistent Reporting
Errors or negligence in reporting are unintentional, but really set your business back. We all get busy and forget to enter new data or update records promptly. Yet mistakes add up and can create large disparities by the end of the year. Instead, you need to have clear expectations for when and how employees should input data, or hire a Bookkeeper or Accountant to do it for you to keep entries up to date. By doing so you will be able to streamline the reporting process and have a clear picture of your financials on any given day.
Not Categorizing Expenses and Income Correctly
Bookkeeping doesn’t seem difficult, as long as you use a system that your employees understand, right? Unfortunately, categorizing expenses incorrectly leads to unnecessary headaches during tax season or any other time you may be required to submit to an audit. In a best-case scenario, you’ll have to spend time re-categorizing your records before completing your taxes. In the worst case scenario, you risk filing your taxes incorrectly and facing a penalty. Accurate bookkeeping also gives you an accurate picture of your company’s current state, including any challenges you may face with cash flow or lead generation.
No Time Tracking Software
Time Tracking software is another area of business tech that has become second nature. Rather than relying on old systems prone to human error, time tracking software and apps guarantee higher accuracy and accessibility. Employees can input time from multiple devices, from desktops to tablets and smartphones. They can also view their information as often as needed without needing to bog down HR with basic requests.
Using software like Time Tracker from eBillity can help your business keep records in order. Maintain a high level of accuracy without any additional headaches and integrate it into other systems like Invoice Tracker. For more information on time tracking software, contact our experts at eBillity today.