A couple of months ago, we wrote about some of the mistakes business owners make when doing their own bookkeeping.
It turns out that mixing your personal and business accounts, forgetting receipts, and not reconciling regularly aren’t the only mistakes small business owners make. Our team came up with even more issues we’ve seen in our client accounts.
Here are three more costly mistakes you could be making by doing your own bookkeeping:
1. Not dealing properly with employees
How are your employees classified? Are they contractors, consultants, freelancers, or staff? Each type of worker has different tax obligations, which cover how you deduct tax, what type of tax to deduct, how kiwisaver deductions are handle and even how they invoice you. Making mistakes here can cost you big in the long-run.
2. No backup for your bookkeeping files
We see it all the time – business owners coming to us in a frantic state because their computer crashed or their office burned down, destroying all their bookkeeping files and making it impossible for them to accurately file their taxes this year.
If disaster strikes, you make an already stressful situation worse on yourself by not having your files backed up.
That’s why, at Change, we love the cloud. When using Xero, all your data is stored in real-time. This means you get the most up-to-date information about your finances. If your device is lost, damaged, or crashes, you can log in from any other internet-connected device and pick up right where you left off.
3. Hiring the wrong accounts person
We’ve beaten you over the head about the benefits of hiring someone to deal with your accounts, in order to help you free up your time for more important tasks. Many business owners totally get this, which is why their first hire is often someone to do the accounts.
That’s great. However, too many business owners keen to bootstrap take the first family member or Facebook friend who says, “I can do bookkeeping!” In theory this is a great idea – you get your books done for cheap and help out a friend or family member.
Hint: it’s not a great idea.
Unless this person is a professional bookkeeper or accountant, they’re likely to miss things and make mistakes. There are lots of tax rules and tricky problems that require specialist knowledge to navigate. Even if they do have experience, they might not be knowledgeable enough about your industry to get everything 100% correct.
It’s one thing to mess up your taxes yourself, but it's another thing entirely to believe you’ve got it covered and find out otherwise.
Don’t mess around with your business. Use a professional bookkeeper who knows what they’re doing in your industry.
In business, everyone makes mistakes. We’ve made our fair share over the years as we got Change up-and-running. Mistakes can be fixed, and it’s best to fix them before they cost you thousands in unpaid tax and fines. Don’t risk your business. Get a professional bookkeeper.
At Change, our philosophy is “humans where you need them. Software for everything else.” We’ll give you a monthly update on the facts and show you what to do to improve your financial health. We give you step-by-step answers to your financial questions, and we provide you with that year-round visibility that’s so key to entrepreneurial success. Go on, book a meeting to talk to the team at Change about your business needs.