8 Common Accounting Mistakes to Avoid
For a business leader, accounting is generally nothing exciting. We have to invoice, pay our employees, remit our taxes, pay our installments. For many, these steps are done by an accounting technician or by the entrepreneur himself.
How to know if the accounting is in order? Too often, when clients come to us, nothing goes right. The accounting is late, they don’t have access to the information and the line of credit is “in the piton” as they say. How did we get there?
Here are the 8 most common accounting mistakes :
1. Not giving importance to accounting
Taking the time to analyze your financial performance can make a big difference. It’s always easier to think that things will be better next month. However, one must understand what the numbers are made up of to ensure that the results are reliable. Too often there are errors in the entry of data such as duplicate expenses and payment entry errors. These elements lead to a distortion that can lead to bad decisions.
2. Not keeping administrative documents and receipts
Often contractors do not keep all receipts for their business expenses. Yet these expenses are reimbursable and by misplacing them, you could lose important tax deductions. We recommend that you keep your receipts and categorize them by date and type of expense. You should keep your accounting records for at least 10 years.
3. Not setting a set budget
It often happens that small businesses or self-employed people do not establish a budget in advance. However, this is a mistake to be avoided at all times. Planning your budget will allow you to limit your expenses and establish your financial goals.
4. Not using accounting software
Data entry errors are one of the most common errors in accounting and unfortunately they result in significant loss of money. Although you can’t prevent this type of error 100%, there are tools you can use to improve your procedures and ensure that errors are corrected in a timely manner.
5. Not doing your accounting regularly
Many entrepreneurs do their accounting when it comes time to remit taxes. However, memory is a faculty that forgets, so if you wait until the last minute to record your financial transactions and update your accounting journal, you will forget essential information. Indeed, you will probably miss receipts and you will look for what to attribute the entries or exits in your bank account. You may even have forgotten to invoice certain customers… That’s why it’s best to keep your accounting book up to date to avoid errors!
6. Trusting blindly
Do you have an accounting technician or an accountant who takes care of the accounting? He too can make mistakes due to a lack of knowledge, rigor or time. If you don’t take the time to analyze and verify your financial results, you won’t be able to be sure of the quality of his work!
7. Not having documentation of the work to be done
It is recommended to define who does what to avoid that certain tasks are not completed within the agreed deadlines. You also need to document critical processes and have a password manager. A good work plan makes it possible to establish the tasks to be carried out and to set deadlines. It serves as a basis for setting up controls and ensuring the rigor of everyone in carrying out their tasks. Very often, the departure of an employee leads to big problems because we simply do not know what she did or how she did it.
8. Not being up to date with legislation and your obligations
Accounting and tax laws are constantly changing and it is your obligation to comply with them. You should always make sure you are up to date. This is why the use of reliable accounting software offering automatic updates is a solution to consider.
How do I correct accounting errors?
1. Use procedures for correcting accounting errors
There are several general accounting techniques to correct errors such as zero’s complement, reversal, negative correction and transfer.
2. Use reliable accounting software
Reliable accounting software is the basis for optimizing and simplifying your financial management and headaches. A good software such as Zoho Books will allow you to record all the necessary information in a simple way in order to obtain a clear vision of the financial health of your company. This tool is essential to manage your bookkeeping and monitor your costs and revenues in order to maximize your profit margins.
With the help of Cofinia, you can learn how to use this software to your advantage. Our experts take care of automating the necessary Zoho Books modules for your business to save you valuable time and money!
3. Work with a team of accounting experts
If you have difficulty analyzing your financial situation and you need help with your accounting organization (balance sheet accounts, expense accounts, income statement, etc.), don’t worry, Cofinia is here to help . help you. Many clients come to us because they can’t find qualified accounting staff. At Cofinia, we have the necessary expertise to take charge of the financial management of your company.
Do business with Cofinia for your accounting and you will have peace of mind. Here are some benefits of working with us:
- We will optimize your processes so you can make informed decisions
- We will train you in order to increase your productivity and that your team develops key skills
- Your accounting tasks will be carried out on time and according to standards.
- We have all three levels of resources; technicians, accountants and CFOs, no more recruitment and training headaches.
- We will establish a work schedule with deadlines
- We will help you with your payroll processing
- We will help you better plan your expenses according to your income
Do not hesitate to contact Cofinia if you have any questions concerning your accounts . It will be our pleasure to assess your needs and answer your questions!
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