Many entrepreneurs try to do their own accounting when they first start out to save money. On the other hand, keeping track of every penny of income, expenses, taxes, and vendor payments is difficult and time-consuming. It’s easy to make mistakes, and they can cost your business a lot of money.
So, to help you avoid financial mistakes, here are some of the most common accounting errors or mistakes made by business owners, as well as how to avoid them.
Wrong Record Keeping:
The majority of accountants become complacent and fails to maintain proper accounting records. As a result, you fall behind the dates, causing the entire document to be ruined. For smooth tax audits and recording business expenses, accurate bookkeeping is essential. You can’t verify financial statements unless you have total receipts records.
On the other hand, a proper bookkeeping record keeps the financial situation clear and protects the company from future frauds.
How to Avoid it?
It is advised to invest in the automated Project management tool for accounting. Get the one where you can create templates and automate them. You will simply enter the information and save the record for as long as you need. And you can also share it with other people. Also, add multiple accountants to enter the relevant information and keep all the bookkeeping processes smooth and safe.
Ignoring Small Transactions:
Yes, it is all too easy to lose track of that small thank-you gift you sent a client or the bunch of printed papers you picked up on your way home. Every transaction should be documented and accompanied by a receipt, no matter how minor. You’ll need to be able to show the IRS all of your business expenses, even minor ones if you’re facing a tax audit.
How to Avoid it?
Manage the tracks of your transactions using a Collaboration tool for accounting. It can help you with all the tracking, monitoring even management of the significant information. If you choose the right Project management tool for an accounting firm, you will be able to manage all the transaction records smoothly and even report them back to the senior management.
Not Organizing the Team of Accountants:
Yes, one of the major mistakes small businesses make is avoiding having a team. They try to work on everything on their own. It may seem great in the beginning. But eventually, you will start feeling exhaustion.
Yes, we understand that you also fear that accountants will make mistakes, or maybe their lack of communication will fail your organization. Well, with this approach, you are not going anywhere either. In fact, you may get in trouble more due to unattended mistakes.
How to Avoid it?
Hire more accountants to keep your accounts organized. More than one person working as a team can help you ensure that your accounts are accurate. They can communicate properly and collaborate with each other to check the mistakes and correct the errors if there are some.
Besides, you will expand your business later in the future; a team familiar with your accounts will be more helpful in carrying the right financial policies for you. The only way to keep them aware of your organizational policies is to keep track, and a project management tool for business can be a great help.
Poor Communication with Your Bookkeeper:
Is your bookkeeper up to date on what’s going on in your company? Your company must keep complete records of its transactions and that this information is clearly communicated to bookkeeping.
Purchases of products or services—especially those with monthly recurring costs—and failing to report them to your bookkeeper can lead to serious problems and a lot of extra work later down the road.
Maintaining a paper record of all transactions, whether digitized or not, makes it easier to track all of your income and expenses, in addition to clearly communicating with your bookkeeper.
How to Avoid it?
Make sure you have all the right communication modes in your organization just like accounting project management software. Keep your bookkeeper in touch. Share all the transactions and other relevant detail. Use software to have active and live communication when needed. They can review the files, have meetings with other team members and ultimately manage records with better and improved efficiency.
Poor Management of Resources:
Lack of management is the biggest flaw where your accounts fail. If you are not clear about the amount of budget you need to assign to a certain project or resources, you have a huge financial crisis coming your way. Failure to budget effectively also makes it difficult to control a project that has clearly cost your company more than it should. This could lead to your company squandering its limited resources on projects that don’t pay off.
As your company grows, you’ll gain a better understanding of how much money it needs to stay in business. This makes it simple to set project budgets that are large enough to ensure success while not being excessive or wasteful.
How to Avoid it?
Organize your teams and departments in a way that they remain in touch when it’s time to collaborate. Give them resources to have organized reporting, communication, sorting of documentation, and everything else is always at one place with real-time access.
Bottom Line
All in all, you need the best and right Collaboration tool for accounting growth. Collaboration and management are must-have attributes for effective accounts management throughout the projects. Keep them in a loop and do not compromise on collaboration while managing the projects.
One of the best project management tools for accounting is TeamingWay; it has all the features you need to enhance your company’s growth and take it in the right direction. Using it right, you will never have to look back to check the mistakes in accounting.
