What Are The Top Accounting Mistakes You Should Avoid As A Business Owner?

 As entrepreneurs begin their businesses, they often try to manage their accounting to save on costs. Keeping track of every penny of revenue, expense, tax, and vendor payment is difficult and time-consuming. It's easy to make business mistakes, costing you a lot of money. 

 

This article is provided to help you prevent these mistakes, including accounts receivable and payable, which business owners are most likely to make, and, more importantly, how to avoid them. Here are some of the most common accounting mistakes business owners make in their day-to-day operations. 

 

1. Lack of organizational skills 

A great deal of organization is needed when it comes to bookkeeping. You must record all purchases, save or digitize receipts for future references, and calculate taxes, among others. The danger that you will miss an important transaction or lose a receipt if you're not tracking and storing information properly is that you may run into trouble with the IFRS during tax season. 

 

2. Failure to follow a regular accounting schedule 

When you run a business, you have a lot of obligations, and updating your books and managing accounts receivable may be the last thing on your mind. Setting a regular schedule is the key to adding current income and expenses. Even though it is ideal for entering your transactions in the database daily, you should at least enter them weekly. 

 

3. Failing to reconcile the accounts regularly 

If you are recording cash flow in your accounting books, you will want to ensure that that balance is reflected in your bank account while recording it in your books. There is likely a discrepancy between the two, and the issue must be corrected immediately to prevent it from worsening. It is also beneficial to conduct periodic reviews of your business' bank accounts versus your books so that you can catch any fraudulent activities that may have taken place. 

 

It doesn't matter if you are handling your accounts or if you have your accounting handled by a specialist. Accounting errors in processes like accounts payable can cause severe issues for your business. This is a problem that should be addressed before it grows worse.