You know how important bookkeeping is to keeping reliable accounting records, simplifying decision-making, and guaranteeing compliance as a business owner. Remember that bookkeeping firms are not created equal. Some might have helped your business grow and some might not give you good service which might harm the financial health of your company.
To help you maintain your company’s financial performance, we’ll discuss some often bookkeeping problems that the accounting department of your company should avoid in this post.
Inaccurate Data Entry
Accurate entry of data is one of the simplest yet important components of bookkeeping. Your financial reporting and budgeting decisions may be impacted by even little mistakes in the documentation of financial transactions. Surprisingly, data entry mistakes are still common; according to a poll by the American Institute of Professional Bookkeepers, almost 89% of organizations view data entry errors as an alarming problem.
Recommendation: To reduce the chances of data entry errors, encourage your bookkeeping firm to use strict standard control procedures, cross-check records, and use automated tools.
Failure to Reconcile Accounts Regularly
Regularly neglecting to reconcile your credit card and bank accounts might harm the rest of your financial system. According to the Association of Certified Fraud Examiners, insufficient reconciliations contributed to about 22% of financial fraud cases.
Recommendation: Tell your bookkeeping firm to give monthly reconciliations top priority so they can quickly spot and fix errors.
Mishandling Payroll
Payroll is an area of concern where mistakes could have serious consequences for both businesses and employees. According to the Small Business Administration (SBA), the Internal Revenue Service (IRS) in the United States penalizes about one out of every three companies for payroll anomalies.
Recommendation: Encourage the accounting department of your company to use dependable payroll software and to stay current on payroll laws to reduce mistakes.
Overlooking Tax Deadlines
Tax authorities might fine you, impose penalties, or even audit you if you miss a deadline for filing your taxes. The IRS estimates that 1.5 million audits were performed in 2021. Recommendation: Guarantee that your bookkeeping firm records taxes appropriately and timely and sets reminders for deadlines.
Neglecting to Backup Data
Data loss today can have serious repercussions. Surprisingly, according to the World Backup Day Survey, only 23% of businesses back up their data every day.
Recommendation: Make sure your bookkeeping firm has reliable, backup systems in place and emphasize the significance of data backups to them.
Not Utilizing Software
Although we typically glorify straining ourselves to the bone, extra effort is frequently unnecessary. When you can work more effectively, why try to work harder? Working long hours or working your workers’ long hours is not nice. You won’t become a great accountant if you drink lots of coffee, show in early and stay late, or worry about your job all the time. You won’t be able to take proper care of yourself or your clients since you’ll be too exhausted.
Traditional bookkeeping procedures can be time-consuming and error-prone. Cloud-based CRM tools for bookkeepers, on the other hand, provides effectiveness, real-time collaboration, and improved data security. Unexpectedly, a Right Networks poll revealed that 52% of accountants did not use cloud-based accounting solutions. Encourage your bookkeeping business to switch to cloud accounting tools to increase accuracy and streamline operations.
Insufficient Client Communication
Knowing your financial needs and developing bookkeeping solutions that meet them requires efficient communication between your organization and the bookkeeping firm. According to a HubSpot study, 70% of firms think that poor communication has a negative influence on initiatives.
Recommendation: Encourage open lines of communication with your bookkeeping firm and make sure they comprehend your financial objectives and expectations.
Ignoring Financial Reports
The goal of bookkeeping is to produce useful financial reports that support company decision-making, not only data entry.
Motivate the bookkeeping staff at your company to present brief, clear financial reports that offer details for smarter decision-making.
Only Paying Attention to Money
Even if you could be in business to generate money, you’ll succeed far more if you can shift your attention to other priorities. The most profitable choices we make occasionally are those that are NOT centered on money.
For instance, selecting expensive software may hurt your budget today but be advantageous for your company down the road if it increases efficiency.
Insufficient Business Marketing
Likely, you aren’t investing enough time or money in spreading the word about your company. Typically, business owners don’t. Although you’ve probably heard that word-of-mouth advertising is the most effective, gossip alone won’t cut it. Digital marketing is a need in the twenty-first century if you want your company to be successful.
Conclusion
A trustworthy bookkeeping service is essential to your company’s financial stability and success. You can make sure that your business stays on the path to profitability by avoiding typical bookkeeping mistakes. Make sure your accounting company understands the value of precise bookkeeping so that you can protect your company’s financial foundation for years to come.
