Company Formations & Start-ups

It’s important not to fall into bad habits when looking after the finances of your business. Many small businesses often run into complications and problems because of mistakes made, often needlessly, with their accounts.

Common Accountancy Mistakes You Should Avoid

Posted on 27/07/2017 by Janette Allen Team

c, but here at Janette Allen Accountants we want to lend a helping hand so that you don’t fall foul of the common accountancy mistakes that may be damaging your business.

Falling behind

Maintaining the day-to-day operation of your business is a time sapping endeavour, and with daily issues and problems to solve you will likely find it easy to begin neglecting things that seem less pressing or immediate. However, falling behind on your bookkeeping will only make your job harder. The longer you leave it, the harder it is to get through all the paperwork and the more daunting the whole task becomes.

Setting aside a regular period of time each week to properly do your books is recommended, so that all your records are up to date and accurate at all times. As with many challenges, breaking it down into manageable chunks instead of taking the entire thing head on can make the frightening task of bookkeeping a simple part of your routine.

Mixing business and personal finances

Smaller business owners might be tempted not to engage in the hassle of managing two bank accounts, but mixing your business and personal finances is one of the worst habits you can get into.

Running a business needs discipline and to be taken seriously. Keeping your business and personal finances distinctly separate will provide you with far more accurate and easy to understand records. You will be able to clearly see what has been dedicated to the business and what was used for personal use, instead of having to trawl through and figure it out transaction by transaction. Anything to make the overview of your finances more informed is helpful, and sets a healthy precedent for the future.

Viewing your business as a separate entity is important; it doesn’t just make the finances easier and less stressful to manage, but it also helps establish and enhance your business mentality. Taking the step to identify separate financial flows and accepting what running a business means is a strong basis for later success, and will put you in the correct mindset when it comes to managing the finances related to your business.

Inconsistency

Using a simple, robust structure when managing your records will go a long way to making your financial management easier. Repeat transactions should be placed in the same category each time; it’s important not to look at things anew each time you’re updating your records. Keep in mind what’s come before and how you have been doing things so far.

Frequently changing the way you track accounts, clients, transactions and information will make things more hectic than they need to be, needlessly complicating things which will drastically limit the amount of time you can spend on other, more pressing matters.

Not looking at the bigger picture

The accountancy side of your business is not just a means of tracking numbers and keeping records for tax purposes. When implemented properly it provides deep insight into the past, current and future health of your business. Growth of your company is the goal, and identifying patterns and learning from your finances is a vital part of planning for the future.

Business records will provide hard analysis of the success of your strategies, how they have affected or might yet affect the profitability of your business, and will help you identify where things need to be improved or what is working well already. Recognising the power of accountancy can be the make or break decision for the prolonged success of your business.

Trying to do everything yourself

This is especially pertinent for small businesses. You might start out with the ideal goal of taking care of every aspect of your business personally. That’s understandable: it’s your business and you’re dedicating a large part of yourself to making it work. But sometimes it can just be too much, and there’s never any shame in recruiting help.

Your finances need to be dealt with care and attention, and if you find that you’re struggling to keep up with things on your own, or the growth of your business has made finance management more complicated than you anticipated – or if you realise your talents are best served elsewhere – then calling in a professional accountancy firm is likely the wisest decision. It will relieve the pressure on you and will give you the best possible opportunity to fulfill the potential of your business.

Janette Allen Accountants offer comprehensive accountancy services to a range of businesses. We are fully accredited with over 20 years of experience in providing financial services, so we are confident in our ability to offer experienced, passionate and insightful financial advice to help your business become as profitable and tax efficient as possible. To arrange a free consultation, or if you would like to know more about the services we offer, get in touch with us today and we will be more than happy to help.