Starting out as a small business owner is hard enough without the worry of rectifying accounting errors.
That’s why we’ve prepared this handy list of four common accounting errors to avoid:
1. Confusing cash-flow and profit
Mixing these up can jeopardise the development of your business by leaving you unexpectedly short of cash.
Cash-flow covers both your incomings and outgoings (overheads, supplier payments etc.), while profit is the surplus after all expenses have been deducted from your revenue.
2. Not reconciling books with bank account
If your business payment log book doesn’t match with your bank account, something’s gone wrong and it could take hours to untangle.
3. Forgetting to log expenses and small transactions
Not recording receipts for expenses and other small transactions will waste time when submitting your Self-Assessment tax return.
Use accountancy software to record receipts digitally using your smartphone, log all the financial details in one place and add to your tax return with one click.
4. Failing to track and chase payments
Invoicing is rarely simple, especially when it comes to admin and chasing late payments.
With advanced accounting software, you can set up invoices and payment reminders to go out automatically.
These invoices provide convenient ways to pay, and your account will be automatically adjusted to reflect any client payments.
Avoid these four common accounting errors to keep your small business running smoothly.
Get more expert small business accountancy advice by calling on 3 Wise Bears.