Making errors in your Accounting Bookkeeping Service business might cause your finances to be distorted and lead to erroneous reports. If you wish to avoid this, here are some typical bookkeeping blunders to avoid.
Directly Entering Transactions From Bank Feeds:
According to Accounting Bookkeeping Service, You risk committing coding and Tax problems if you enter items into your system directly from bank feeds rather than bills or receipts. Consider your vehicle registration payment, which consists of a combination of insurance (subject to 10% GST), registration charge (not subject to GST), and stamp duty (no GST). This demonstrates how entering a payment directly from your bank feed might result in major mistakes.
Failure to Keep Business and Personal Belongings Separate:
Personal purchases should always be kept separate from company purchases. The best method to accomplish this is to use different accounts or cards for personal and corporate spending. But, if you do make a personal purchase using your business account (for example, filling up your work vehicle and purchasing snacks with the same card), make sure to explicitly identify it on your receipt before it is processed into your accounting system.
Failure to Reconcile Bank Feeds With Bank Statements:
You should not just assume that your Accounting Bookkeeping Service software system’s bank feeds are correct. As useful as bank feeds are, there are times when transactions are missing, duplicated, or delayed. This implies that you should always compare your bank feeds to your actual bank statement to ensure that everything is recorded. Any missing things can be manually added, and duplicate items can be erased.
Failure to Reconcile Control and Clearance Accounts:
Control accounts (for creditors, debtors, and stock, for example) indicate the total of several subsidiary accounts and should be reconciled on a regular basis to assure correctness. Clearing accounts (for example, payroll clearing) should also be reconciled because they are temporary holding accounts that should always have a zero balance. A suspenseful story is a prime example of this. When a company doesn’t know what else to do with an item, it may place it in the suspense account and then keep it there, which can lead to compounding problems!
Mismatching Assets and Expenses:
While the majority of business purchases are likely to be deductible expenses, some may be capital investments as well. If you get this wrong, your financial statements will be distorted. For example, if you record a capital purchase as a cost, it will appear wrongly on your Profit & Loss report, as well as on your balance sheet.
GST Omissions:
It is simple to automatically record 10% GST on all transactions. However, numerous things are exempt from GST, including fresh food, municipal rates, some bank fees, leases, gifts, gift cards, and many others. Imports, used products, and insurance bills are often a source of confusion. As a result, it is critical to ensure that all transactions are correctly coded in terms of GST.
Claiming all Entertainment Expenses as Business Expenses:
The ATO has rigorous regulations about what is and isn’t tax-deductible entertainment. This means that, while your company party might be deductible, bringing your employees out for a night on the town might not be. Hence, before claiming stuff under ‘entertainment,’ be sure your scenario meets the requirements.
Collaboration With Professionals:
Working with a professional bookkeeping company is one of the greatest ways to assure bookkeeping accuracy. Bookit provides each client with a dedicated account manager who is available 52 weeks out of the year. Contact us to see how we can assist you with Accounting Bookkeeping Services up to date and accurately.
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