Common Mistakes People Make When Managing Their Accounts

Bookkeeping Bizz |

Accounting and bookkeeping is a critical part of any business, and while everyone makes mistakes, accounting mistakes usually cannot be reconciled with an apology. In most cases, a simple accounting oversight can cost a business money, time, and even a visit from the CRA.

Investing your time and money in finding the right people and accounting solutions to build a strong and lasting base for your business is a great idea. However, if you’ve decided to do it yourself, chances are you may end up making some costly mistakes. 

To help you avoid these expensive errors, here’s a list of the most common mistakes people make when handling their accounts.

1. Combining business and personal finances. Mixing business and personal accounts is a bad idea, and you should maintain these accounts separately. Doing so will let you provide a more precise accounting record of what was used for business and what was personal. Separate business and personal accounts will also make doing your tax easier.

2. Concentrating only on the short-term. Most people are preoccupied with the short-term and completely forget about the future. Bookkeeping, though, is not just keeping track of today’s statistics, but it’s also about estimating future growth and recognizing any financial risk from current financial decisions you make or a result of your actions.

3. Not keeping a record of receipts. Receipts are something all businesses and individuals need to keep track of. Keeping a record of your receipts will help you get an estimate of your growth and progress. Receipts help you keep tabs on your expenditures and provide solutions to any mistakes or gaps in bookkeeping records, and many offer supplementary deduction opportunities come tax time.

4. Not updating entries and reconciliation. While handling your accounts and bookkeeping, months can go by without you making any entries in the books or reconciling any business checking statements, credit card statements, sales tax accounts or other types of financial accounts. This results in financial statements and reports not being current, which can cause a major lapse. Without up-to-date information, it becomes challenging to make sound business decisions. To prevent this, hire a professional accountant who will ensure that everything is updated and in order.

5. Not seeking help when needed. The costs of hiring the services of an accounting expert will pale in comparison to the amount of money you can make by focusing on growing your business. Accounting requires a keen eye and experience, and it’s best for your business if you outsource managing of your finances to a professional accountant or bookkeeper.

6. Hiring the wrong person. Hiring a family member or inexperienced bookkeeper can unknowingly create financial problems that go beyond just making uninformed decisions. It could also lead to more significant issues that could affect your business in the future. Besides, the wrong person handling your books could lead to you having to pay penalties or getting audited by the Canada Revenue Agency (CRA).

To avoid these and other mistakes, reach out to the experts at Bookkeeping Bizz. As the best business accounting and tax services in North York, Toronto, ON, we provide expert solutions for accounting, bookkeeping, tax advisory, business consultancy and payroll services across Oakville, Brampton, Mississauga, Vaughan, and Richmond Hill, Toronto. Our company is based on three essential aspects namely, integrity, accuracy, and commitment. For a complete list of our services, please click here. If you have any questions about accounting and bookkeeping, we’d love to hear from you. Please contact us here.