Bookkeeping and accounting are not just tasks for big businesses. You will need accounting for eCommerce businesses of any size. It may be even more challenging to work on bookkeeping if you are a small business and have to handle this task by yourself. It is a time-intensive task requiring you to record your financial activities daily.
You may need to handle the following bookkeeping tasks on your own:
Bank reconciliation
Budgeting
Payroll
Invoicing
Tax submissions
If you don’t hire a professional accountant to do this for you, it is typical for bookkeeping errors to occur. Here are some common bookkeeping errors you should avoid:
Lacking Organisation
A disorganised bookkeeping system may result in making bookkeeping errors. When you don’t have a proper system in place, it is more likely that you will make avoidable mistakes. You may not be able to track your expenses or retrieve financial information when you need it.
You will need to archive your entries chronologically and with proper categorisation. This information should also be backed up to protect your company from loss or theft. You will need to keep every transaction and keep your books up to date.
Missing Entries
The most common bookkeeping error is simply forgetting to record transactions. This may not be a big deal for one transaction. If you are making a lot of bookkeeping errors, it could add up to a significant amount of money.
These small expenses may take a massive chunk out of your profit as a small business. It is vital to invest in a professional bookkeeper to ensure that your costs are on track and within budget.
Putting the Wrong Classification
The type of transaction you make is recorded by its classification. These classifications should be categorised appropriately and kept consistently. When your bookkeeping entries are inconsistent, you may have problems identifying your expenses.
Instead of putting an expense under accounts payable, you may indicate it under accounts receivable. You may end up making an income into an expenditure or any other classification.
As a result, you will have difficulty calculating your profits and filing your taxes. You may end up paying more taxes than you should be paying.
Improper Cash Management
Cash is a company’s lifeblood, so it’s crucial to have a sound cash management system in place. If you manage your cash incorrectly, you may end up being out of cash at the end of the day. You may end up spending more than your revenue when you don’t have effective cash management. You will also miss out on many opportunities to acquire new business.
Lacking Tax Planning
Although tax season happens every year, the preparation for filing your taxes goes well before and beyond the tax season. You may not have the time to handle these preparations if you are too busy managing your operations.
It is common for small businesses to miss out on deductions and overpay their taxes. This can result in significant expenses for your company. Hiring a professional accountant can get this all sorted out for you.
Conclusion
When handling your bookkeeping, you will likely make some bookkeeping errors. The above examples can help you identify some of the bookkeeping errors you should avoid.
Bookkeeping is a time-intensive task. If you don’t have the time to do it, you can hire a professional accountant to do it for you. Hiring an experienced accountant can help you prevent errors and save you time and money.
If you can’t afford to hire one, there are also online accountants at a fraction of the price. They can work for you remotely and ensure that you have all your bookkeeping sorted out.
Are you looking for accounting for eCommerce in Australia? The Ecommerce Accountant has years of experience in accounting for online businesses. Book a meeting with us today!