For a business manager, accounting is usually not very exciting. You have to do your billing, pay your employees, pay your taxes and make your instalments. For many, these steps are handled by an accounting technician or by the entrepreneur himself.

How do you know if your accounting is in order? Often, when clients come to us, everything is wrong. The bookkeeping is late, they don’t have access to information and their credit line is toped. How did this happen?

Here are the 8 most common accounting mistakes

 

1. Not Focusing on Accounting

Taking time to analyze your financial performance can make a big difference. It’s always easier to think you’ll do better next month. However, it is important to understand what the numbers are made up of to ensure that the results are reliable. Too often we see errors in data entry such as duplicate expenses and payment entry errors. These things create a bias that can lead to poor decisions.

 

2. Not Keeping Administrative Documents and Receipts 

Entrepreneurs often forget to keep receipts of their business related expenses, yet these expenses are eligible for reimbursement 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 Establishing a Defined Budget 

Small businesses or self-employed people often don’t establish a budget in advance. However, this is a mistake to avoid at all costs. Planning your budget will allow you to limit your expenses and set 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. Even if you can’t prevent this type of error from happening 100% of the time, there are tools you can use to improve your processes and ensure that these errors are corrected on time. 

Accounting software such as Zoho Books and Quickbooks provide real-time access to your financial data. Click here to find out how Zoho Books will save you money and time. 

 

5. Not Doing Your Accounting Regularly

Many entrepreneurs do their bookkeeping when it’s time to do their taxes. However, memory is a forgetful faculty, so if you wait until the last minute to record your financial transactions and update your accounting journal, you will forget essential information. You’ll probably be missing receipts and looking for how to allocate the receipts or disbursements in your bank account. You may even have forgotten to invoice certain clients… 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 your accounting? They can also 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 ensure the quality of their work!

 

7. Not Having Documentation of the Work to be Done

It is recommended to define who does what to prevent certain tasks from not being completed within the agreed-upon timeframe. Critical processes should also be documented and a password manager should be implemented. 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 that each person carries out their tasks rigorously. Many times, when an employee leaves, there can be big problems because you simply don’t know what they were doing or how they were doing it. 

 

8. Not Being Up to Date on Legislation and Your Obligations

Accounting and tax laws are constantly changing and it is your obligation to comply with them. You must always make sure you are up to date. That’s why using a reliable accounting software that offers automatic updates is a solution to consider. 

 

How to Proceed with the Correction of Accounting Errors? 

1. Using Procedures for Correcting Accounting Errors

There are several general accounting techniques to correct errors such as zeroing, reversal, negative adjustment and transfer.

2. Use a Reliable Accounting Software 

A 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 get a clear view of your company’s financial health. 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 will automate the necessary modules of Zoho Books for your business to save you valuable time and money! 

3. Work with a Team of Accounting Experts 

If you have difficulties analyzing your financial situation and need help with your accounting organization (balance sheet, expense accounts, income statement, etc.), don’t worry, Cofinia is there to help you. Many clients come to us because they can’t find qualified accountants. At Cofinia, we have the expertise to take over the financial management of your company. 

Choose Cofinia for your accounting needs and you’ll have peace of mind. Here are some of the advantages of working with us: 

  • We will optimize your processes so that you can make informed decisions 
  • We will train you to increase your productivity and ensure that your team develops key skills
  • Your accounting tasks will be completed on time and according to standards
  • We have all three levels of resources; technicians, accountants and CFO, 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 to better plan your expenses according to your revenues

Do not hesitate to contact Cofinia if you have any questions regarding your accounting. It will be our pleasure to evaluate your needs and answer your questions!

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