Good bookkeeping is essential for every small business. The best bookkeeping practices rely on professional expertise mixed with good communication skills, attention to detail, organisation and efficiency. Business owners need to beware of bad bookkeeping habits, which can creep in over the course of time and jeopardise the effectiveness of a company’s accounting and auditing services. Here are five bookkeeping bad habits that should be avoided.
1. Not tracking down outstanding payments
In business, every single transaction needs to be tracked and every one, large or small, is important. This also includes tracking down invoices and bills that have not yet been paid. Failing to do this will affect your bottom line and may compromise your operational capacity. Good bookkeeping includes actively chasing customer bills which have not been paid, not simply recording those that have.
2. Poor filing systems
Organisation is the key to good bookkeeping. One of the bad habits that so many small businesses fall into is ignoring the value of a good filing system. Bulging box files and documents unaccounted for can quickly make life difficult when it comes to accounts and auditing services. Most bookkeepers now rely on paperless accounting to help keep things under control.
3. Failing to hit deadlines
Effective bookkeeping will make it easier to file timely tax and VAT returns. Failure to hit all your financial deadlines could result in penalties,–a scenario businesses will be desperate to avoid in today’s challenging economic climate. Failing to keep track of invoices and bookkeeping could leave you facing a bigger job when those tax or VAT return dates are looming.
4. Not stopping to analyse your books
It can be easy to think the business is performing as expected because you are keeping neat, timely and accurate books. However, you also need to take time to actually analyse what is happening in your books too. While bookkeeping and accountancy may be separate parts of the equation, they are clearly linked. Reviewing your accounts regularly and taking the time to analyse them will help you properly assess how your business is doing.
5. Not seeking professional accounting and auditing services
Bookkeeping is an area of business that can quickly spiral out of control if things are not managed properly. Some businesses that attempt to deal with bookkeeping in-house may not have the proficiency or expertise to handle it. It is often best to call in the experts who can take the stress of bookkeeping away from you.
Looking for an accounting service provider in Northamptonshire?
Banishing these five bookkeeping bad habits will do wonders for your business and will allow you to thoroughly assess its financial health, setting goals and targets for the future. But there are many other bookkeeping bad habits not listed here that can also affect your business. These include not backing up data properly, neglecting smaller transactions and forgetting key dates and deadlines. One of the easiest ways to avoid this for your business is to call in the help of the professionals. Jervis & Partners, a leading accounting service provider in Northamptonshire that can help you with all aspects of accountancy and auditing, including bookkeeping and VAT returns.
