6 Bookkeeping Frustrations for SME's
- April 24, 2017
- Posted by: Quarles Business and Financial Strategists
- Category: Business Advice
The Top 6 Bookkeeping frustrations for small business owners
No one likes to have to spend time working on their books, it’s definitely one of the most commonly dreaded parts of running a small business.
From not being able to keep track of incomings and outgoings, to trying to keep records for deductions at Tax time, there is a lot to keep on top of and if you’re not vigilant with your bookkeeping practices it can often lead to hours of frustration. Check out the Top 6 bookkeeping frustrations for small business owners, so you can learn how to avoid them and make your bookkeeping hassle free.
It takes too much time.
We all have a never-ending list of things we need to be doing and often keeping up to date with your bookkeeping falls to the end of that list. Usually the bookkeeping only ends up getting done when the end of the financial year approaches and you have to lodge your tax return.
Rather than leaving it to the last minute, which leaves yourself open to missing things and making mistakes, it’s better to dedicate a little time regularly to keep your books up to date. If your books are up to date, then it also means come Tax time it will be a lot less stressful and busy time of year for you. Check out this article: 10 Reasons to choose Xero Cloud Accounting Software for your business.
Loosing track of transactions
Have you ever forgot to follow up an invoice with a client? Lost an invoice that you thought you had paid or even just misplaced a receipt that confirmed an account had been paid? Some of these things are actually really common occurrence for small businesses when taking care of their own books.
To prevent these kinds of situations, make sure to number all invoices sequentially, have a standard follow up procedure for invoice payments that you adhere to and put a filling system in place that you use at all times. By making these small changes you will help prevent any mix ups in your accounts and make sure everything is in one organised place for you when you need it.
Data entry mistakes
It’s human nature to make mistakes and for some people data entry isn’t something that comes naturally to them. But it is something that you need to ensure is done accurately, as it can have all kinds of roll on effects when the data entered is wrong.
Make sure you take your time when entering the data, ensure you’re not distracted by other tasks and then once it is entered check and re-check your figures to make sure everything looks right. Often mistakes can be caught early on by taking a couple of seconds to review each piece of work before moving on. A little time and care now will save you a lot of headaches down the road when you are stuck trying to figure out where the error is coming from.
Calculating vehicle use
Claiming vehicle expenses is a common deduction for most small business owners, it’s also common for most business owners to use their personal vehicle for business travel as well. What is not common is actually keeping accurate track of your vehicle use when used for business.
A lot of the time people don’t keep accurate records of their vehicle usages for business use. One way to keep track of things is by keeping a logbook. You will need to keep the logbook for at least 12 weeks, note the start and finishing odometer reading of each trip and which trips are business or personal. By doing this it allows you to work out what percentage of vehicle use is business and what percent is personal.
Trying to keep things separate
If you’re running a small business it will often be as a sole trader or a partnership, which can lead to some overlap between personal finances and business finances. To help make sure your business finances are clear it is best to keep them completely separate from your personal finances.
Set up a second bank account in your business name and make sure that all incoming and outgoing expenses go through this account. Ensure this account has its own bank card and whenever making purchases for your business no matter how small, use your business bank card. Also make sure to set up a regular payment from your business to your personal account for your pay. This should be the only time personal and business finances should interact. These few steps will make keeping track of your business expenses simple and easy.
Keeping track of expenses.
Nothing is more frustrating than it coming round to July 1st and realising you have to sort through that draw where you have been chucking all the receipts throughout the year and hoping that everything is still there.
Its best practice to keep receipts for all expenses incurred on behalf of the business each year and to make sure you’re not left sorting through everything at the last minute make sure you have a filling system that you use at all times. Also keep a digital record of deductible expenses as some receipts may fade and become unreadable after a few months.
By adhering to these simple practices you can make sure your bookkeeping in Perth isn’t something that will leave you tearing your hair out and if you would like some more tips on how to make sure things run smoother, get in touch with us to learn our Business Advisory Services in Perth