Common Bookkeeping Mistakes
Running a profitable business includes keeping track of receipts and records that present the financial health of your enterprise. However, maintaining accurate books can be a challenge if you’re unfamiliar with the process.
Consequently, if mistakes get made while processing financial statements, you could face unnecessary financial woes, which could hurt your bottom line.
So, to help you avoid some basic errors that could prove to be costly, The Tax Shop Inc. has put together a list of the most common bookkeeping mistakes.
1. Incorrectly recording GST/HST.
If you make too little payments of harmonized sales tax (HST) and goods and service tax (GST), then you could end up paying a penalty, including arrears interest. On the other hand, if you have overpaid, you will have to wait to receive a refund which eats into your capital.
2. Not balancing the bank accounts.
It’s imperative to balance your bank accounts to manage cash flow. If you have insufficient funds and issue too many cheques, then you will end up overdrawn. Also, sometimes there are banking charges which get easily overlooked.
3. Worrying too much about taxes.
If you spend too much time thinking about taxes, you will have less time to allocate to other vital business areas like sales, marketing, and operations. Remember, the purpose of your enterprise is to make money, so ensure that you are spending every minute wisely.
4. Mixing personal and business items.
It’s crucial to separate personal and business expenses for tax reasons and to protect assets. Some fringe benefits can get claimed as tax deductions, which are best explained by a professional.
5. Not hiring professional assistance.
Poring over balance sheets and accounting ratios can be tedious. Therefore, if accounting is not your forte, it’s best to leave it to a professional, enabling you to get back to doing what you love best.
To avoid these and other mistakes, reach out to the accounting experts at The Tax Shop Inc. in Brampton, Ontario. We specialize in responding to the needs of small and medium-sized businesses by offering quality services.
Our services include accounting, bookkeeping, and payroll. We also provide tax preparation, strategies, and monitoring for clients.