Top 10 Bookkeeping Mistakes made by Small Businesses
1. Using the wrong accounting method – should your business be “Cash” or “Accrual”?
2. Incorrect tax coding in your accounts – what is the difference between GST, FRE, N-T and GCA? It does make a difference.
3. Misclassifying workers – are your staff being paid correctly?
4. Combining personal and business finances and not keeping track of reimbursable expenses– how much does your business owe you?
5. Not performing basic account reconciliations – do you know if your accounts are really accurate?
6. Not keeping receipts – any purchase over $75 must be substantiated with a receipt in order to be deductible by law.
7. Knowing the difference between cash flow and profit.
8. DIY Bookkeeping – do you know the latest tax compliance requirements? It’s not worth the risk.
9. Getting an accountant to do your books – giving your accountant all your receipts and papers for him to work out will most likely cost you 3 times the price of a bookkeeper.
10. No back up – a paper trail, documentation or verification should always be available readily available for an audit.