Starting and sustaining a business can be challenging for most business owners - there’s a reason 60% of small businesses close their doors within the first 3 years.
One of these challenges? Operating with inaccurate or wrong bookkeeping!
With so many day-in day-out transactions to track, keeping everything up-to-date can be difficult.
Added to this all of the other things business owners need to keep up with and it’s no surprise that many business owners stumble when managing their accounts. Many end up with a pile of tremendous headaches and financial debts as a result.
All these and more are rooted in common bookkeeping mistakes that business owners unintentionally or intentionally commit.
Luckily, Maximum Business Solutions’ bookkeepers in Melbourne are here to highlight these common errors and explain how you can avoid them!
Mistake #1: mismanaged record keeping
Record keeping has long been the most fundamental task for most business owners, and it forms the basis of all bookkeeping.
Not handling your records well can make you wonder and “how much am I really making?”
Business owners who fail in this area pay for it in time - 9 times out of 10 they end up lost, disorganised and frantic.
On top of the stress of not knowing where you stand, you’ll also pay up literally too - interest and fines are just two of the consequences of losing track of your finances.
Our advice? Make sure you read up on the bookkeeping basics, so you know what the numbers tell you. Additionally, set time aside to go over your accounts and keep track of the growth of your business daily, weekly, quarterly and yearly.
This helps your business stay afloat by telling you where your business stands.
However, not all businesses have the time to do this. In these cases, it’s best to get in touch with our bookkeepers in Melbourne to take away the stress.
Mistake #2: Unmanaged debts
If you ask us, debt isn’t automatically a bad thing, provided you’re earning enough money to pay it off in a timely fashion and you keep track of it.
That’s where the problems arise, however - not all business owners can plan or manage their debts that well!
If loans keep on piling up before another loan gets paid or completed, then there’s probably something wrong. If you’re unsure whether you’re able to pay off your existing debts, then something is seriously wrong!
In order to avoid unmanaged debts, make sure to track the payment dates and minimum amounts that you will pay on a certain time. Here are some simple tips to manage your debts:
- Create a monthly bill payment calendar so you won’t miss any due dates and save on paying penalties
- Schedule which debts should you pay off first
- Be sure to have an emergency fund to back you up
Don’t have the time to do this yourself? We get it!
Professional bookkeepers in Melbourne can help! We can track your liabilities for you - we can even set you up with advanced software that does it all for you.
Mistake #3: Not assigning clear budgets
To make money, you need to spend it. But overspending without a clear budget can lead you to a financial nightmare!
Business owners who are serious about making their business succeed should keep a budget to manage their spending.
Knowing your budget lessens the stress of spending considerable amounts on things that are not yet helpful in the business yet.
Not assigning clear budgets can lead to decisions that are downright wrong. Many businesses fold due to bad financial decisions and spending themselves into a hole they can’t climb out of.
Start by listing income and expenditures each month.
Once you know how much money you’re bringing in on average, set hard spending limits on non-essentials - you never know when that extra cash might be needed!
Mistake #4: Not reconciling books to bank accounts
“But it’s only a few dollars off,” you say as you dismiss the discrepancy between your books and your bank statement.
While “a few dollars” might be small, repeated small errors add up.
Unreconciled bank accounts can potentially lead to major discrepancies between your books to that of your accounts. Not to mention, you might receive a hefty fine for such a mistake!
Frequently checking your account balance to that of listed on your books is the best and safest way to avoid any financial discrepancies.
A professional Melbourne bookkeeper can help you clean up your accounts, no matter how small or big the mistakes are.
Mistake #5: not making a Melbourne bookkeeper part of your business!
Some business owners think they can take on the challenge of self-managed books. Some are afraid to spend money to get someone to do the work for them. Others simply don’t care!
Unless you’re a trained bookkeeper as well as a business owner, we strongly recommend against doing your own books.
While this may work for some time, it’s easy for this to be lost amidst your other responsibilities. It’s even easier to go into procrastination mode, especially if you’re not a big fan of numbers-work.
And we haven’t even started on the potential for mistakes either!
By outsourcing their finances to professional and qualified Melbourne bookkeepers, business owners can avoid the headaches and stress that come with incorrect numbers.
Not to mention, it also means more time to spend on other areas of your business, which means the opportunity to spend more time at home, with your family.
Need a professional bookkeeping service in Melbourne?
Reach out to Maximum Business Solutions!
As a small business specialist, Maximum Business Solutions helps you get your head out of your books and redirect your focus towards growing and managing your business better.
We offer a range of different bookkeeping services in Melbourne, including:
- Payroll and superannuation solutions
- Invoicing and debt collection
- Balance sheets
- Cloud software implementation
- Consultation and audit preparation
- Business Activity Statements (BAS)/ Income Activity Statement (IAS)