How to avoid five common bookkeeping mistakes

Bookkeeping is an essential business function that allows you to track your income and expenditure, forecast your future financial position, plan for investment and maintain regulatory compliance.

These mistakes, though, could land you in hot water.

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1. Not keeping accurate records.

It is crucial for your business’ success that you record every transaction accurately. If you don’t, you will be unable to submit accurate VAT returns and may end up paying too much or too little tax.

2. Not separating your personal and business expenses.

When operating as a sole trader, it can be very tricky to work out retrospectively what expenses were personal and which were legitimate business expenses, so either keeping two separate bank accounts or operating as a limited company can help in this respect.

3. Losing your receipts.

Your receipts are proof of your spending so they must be safely stored and submitted as part of your VAT return. Many Stroud accountants such as www.randall-payne.co.uk/services/accountancy/stroud-accountants/ use a digitised system, allowing you to store your receipts safely, ready for them to process.

4. Not backing up your financial data.

HMRC requires businesses to keep 5 years’ worth of financial records, so backing up your data in an electronic format is a wise move to prevent losses and enable easy access when needed.

5. Trying to do everything yourself.

Some tasks are best outsourced to experts, and outsourcing bookkeeping gives you peace of mind that everything is being handled appropriately and you will have more time to devote to the day-to-day running of your business.