5 Common bookkeeping mistakes

Technology can't replace the human brain and reliance cannot be placed entirely on the software 'to get it right'

The world of fintech is moving at a very fast pace and digital accounting solutions like Xero are enabling people who are not trained accountants or bookkeepers to maintain their basic records themselves.

However, technology can’t replace the human brain and reliance cannot be placed entirely on the software ‘to get it right’.

Below are the 5 most common bookkeeping mistakes we come across:

1. Picking the wrong accounting package and add-ons. It is important to pick the package and add-ons that are right for you and suitable for your business. There is no point going on a friend’s recommendation alone as whilst it might be suitable for them, it might not be for you. Engage with your accountant to help you pick the right software.
2. Lack of training – whilst a lot of the accounting softwares are intuitive, it is worth getting your accountant to spend a couple of hours with you to ensure you are using the software not only correctly but in the most efficient manner.
3. Selecting the wrong VAT schemes – there are different VAT schemes and people often pick the default one provided by the software they are using. This may not always be the best scheme for you.
4. Claiming VAT on ineligible expenses – there are certain expenses on which VAT cannot be claimed. Often, people rely on software to calculate the VAT on invoices but occasionally this may have to be overwritten.
5. Not finishing the quarter end for VAT on the software correctly. Regardless of what software you are using, housekeeping for VAT needs to be done – in Sage, click the ‘reconcile’ button; on Xero, click the ‘file now’ button. This will ensure any late invoices entered for that quarter get picked up on the next VAT return.

We can provide the whole outsourced accounting service to clients if they want it but we also appreciate that sometimes it is more practical and efficient to be sourced internally. In such instances, we engage with clients and help; from picking the right solution for them, to ensuring it is implemented properly. We often provide bespoke training to our clients as well. Ultimately, the initial investment you make in ‘getting it right’ saves you from a potentially expensive and time consuming exercise further down the line. Essentially it is about ensuring you can focus on growing and running your business without having to worry if your back office operations are running smoothly. It is also about making sure the management reports that are provided are reliable.

If you have any questions about outsourcing or how it could help you in your business, then please feel free to get in touch with me, Dipali Buch

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