The 5 Bad Habits of Bookkeeping You Need to Avoid
Are your finances lagging behind? Do your organisational skills leave a lot to be desired? Are you missing important deadlines? You may have picked up some seriously bad bookkeeping habits which could be harming your business and cash flow.
Here are some common examples of bad bookkeeping habits that you need to work on straight away, given by Pandle.
A bad filing system
A box file that is bursting at the seams with paperwork or a desk strewn with important documents that have been abandoned, in no particular order is one of the most common bad habits of bookkeeping. Consider transitioning to a paperless accounting software to make organisation simple and stress-free.
Dodging your deadlines and due dates
Being your own boss is great - you can clock off at 4 pm on a Friday and take extended lunch breaks whenever you want. However, the same benefits don’t really apply when it comes to tax returns and bookkeeping.
If you’re being lax in this department too, you could be putting your business at serious risk of huge fines or penalties. Make sure you’re meeting the deadlines you, your accountant and most importantly, HMRC are setting.
Not staying on top of your invoices
Right now you might be thinking: ‘Well, my filing system is shipshape and I never miss my tax return deadlines’ - but bookkeeping doesn’t just stop at great organisation and timely submissions. Your accounts might be in order but if you’re not chasing outstanding payments and ensuring your invoices are paid within the agreed terms, your cash flow and bottom line of business will suffer.
Enlisting the help of a not-so-expert expert
As a business owner or sole trader, you’re automatically programmed to spot opportunities to cut costs and save money. However, there are some things in life that are worth investing that little bit of extra cash into and a top quality accountant is one of them. If you’ve decided to scrimp on somebody less experienced or are putting up with an unsatisfactory service in a bid to keep your costs down, this could be doing more damage than you realise.
Not sweating the small stuff
You head out for an impromptu meeting with a client who has something they need to discuss with you urgently; drinks are on you. You meet at a coffee shop walking distance away and all you order between you is an espresso and a small Americano.
You don’t bother with a receipt as you’ve spent less than £5 – but this is where you’re going wrong. When it comes to expenses, every little count and needs to be accounted for so make sure you’re documenting every outgoing, no matter how menial they seem.