How SMEs can avoid the most common accounting mistakes

Business books become vulnerable to accounting mistakes for different reasons. It can be because of manipulation and fraud by the accountant or bookkeeper; unintentional misentry or because the owner is too trusting or remiss. Whatever the cause is, things like this, or at least most of it, can be circumvented.

Facts first; a lot of business owners hate doing accounting because let’s face it; numbers really aren’t our metier, right? The fact that Accounting or Mathematics per se is our waterloo isn’t enough reason to be careless with financial computations. This is where accounting mistakes usually root from. When entrepreneurs become complacent, they lose sight of little things that eventually grow into something too big to ignore. To know how you can salvage your assets from accounting mistakes, read our tips below:

1. Follow a systematic accounting procedure.

Things get easier and more functional when they’re organized. Follow a standard routine for accounting and bookkeeping procedures. All things you encode in your accounting software should be consistent and on point.

2. Set a realistic budget for reference.

Your budget will be your basis in knowing whether you overspent or if you didn’t reach your target for a certain month or quarter. This will give your restraint and will help you be smart on expenses.

3. Make regular bank reconciliations.

Scheduled reconciliations with your bank help you detect data entry errors so they get fixed. Budget-to-actual variances are also essential to find potential revenue or expense errors. Questionable transactions shouldn’t be overlooked as well.

accounting mistakes4. Back Up your Accounting Software.

The great news is there are great accounting software like Sage 50, QuickBooks Online and MYOB, that won’t leave you hanging with lost and irretrievable data. Whichever software you’re currently using, your need to keep in mind that having a duplicate set of your files is highly necessary.

5. Categorize everything accurately.

Don’t get income mixed up with costs and expenses. Take time to do detailed recordings because these things need meticulousness and careful thought. Double-check your transactions to make sure details are correct.

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