8 Bookkeeping Mistakes Small Businesses in Australia Make
As an Australian small business owner, you have a lot to do on your list. Even though bookkeeping is one of the most important ones that can make or break your business, it’s not a surprise for many business owners to focus on other things and make bookkeeping mistakes. All of these mistakes cause trouble, some small and some big. After working with lots of small business owners across Australia, we brought together some common bookkeeping mistakes that Australian small business owners make.
Not Separating Business and Personal Spending
Keeping business and personal finances separate at all times is crucial. Some small business owners continue using their personal bank accounts after starting a new business. Keeping track of your expenses, income and business goals gets complicated without a separate business account. If you want to avoid any headaches during the tax seasons or clearly see your profits, the first thing you should do is open a business account.
Failing to Track Receipts & Expenses (Especially for Small Purchases)
You can change things if you can track them. That’s why you need to be fully aware of your financial situation if you want to run a successful business. Are you making profits? What are the main expenses that stop you from being profitable? Is electricity a big item in your expenses? If you don’t track your expenses you wouldn’t be able to answer such questions.
By the way, tracking your expenses means tracking every purchase. One huge mistake many Australian small business bookkeeping mistakes is failing to track minor purchases. Those small purchases you make and forget to save the receipts can add up to big money. These expense could be handy when tax time rolls around.
Missing Deadlines
Failing to meet BAS, PAYG and Superannuation deadlines will result in payment penalties by ATO. Missing Workers Compensation Insurance payments and declaration deadlines will result in higher premiums to pay. So, write down the due dates for PAYG, BAS, Superannuation and Workers Compensation Insurance You can also check the due dates for paying your BAS on the ATO website.
Not Performing Account Reconciliation
Sometimes there might be discrepancies between your books and bank account statements. For business owners who do perform account reconciliation, these discrepancies might cause problems in the future. So, make it a habit to compare your books with your bank statements once a month. Get in touch with your bank to get it resolved if there are any errors.
Failing to Back Up Your Data
If you are an experienced business owner, you are probably keeping scanned receipts, invoices etc. on your computer as well as the hard copies. Unfortunately, that might not be enough. Laptops can break, computers can fail. If you are only keeping records on your hard drive, that might cause a problem. That’s why, it’s always a good idea to back up your records more than once. A good bookkeeping software with fail-safe data back up features is great for keeping extra copies of your records. Just in case, keep one in your hard drive as well.
Failing to Handle Payroll Accurately
Payroll handling can be a huge problem if you have employees. From setting up the system to handling payments and taxes, Australian payroll is a complicated issue that can put your business at risk if not handled accurately. You don’t want to pay fines or even lose your valuable employees because of that. Some common payroll mistakes Australian business owners make are:
a. Failing to collect the right payroll data (check out the free template for payroll data collection we created)
b. Not paying in a timely manner
c. Missing deadlines
d. Submitting wrong payroll taxes
e. Miscalculations
f. Incorrect record keeping
g. Data handling
Not Staying up to Date
As an Australian small business owner, you need to stay up to date all the time. We are not talking about the way your run your business, keep your clients happy, bring in new products or services. Those are a must for sure, but you also need to stay up to date with your financial records, tax exemptions, changes in requirements and other subjects. Many businesses fail to realize their books are suffering when everything looks good on the surface. Such mistakes can be costly when you don’t bring on a professional hand which brings us to another bookkeeping mistake many business owners make.
Doing Bookkeeping By Yourself
We understand that you want to do everything on your own as a business owner. But, your time and resources are limited. The “Bookkeeping” hat is the one that you should avoid wearing unless you are a trained Australian bookkeeper.
You can still read those DIY bookkeeping articles and learn more about the way things are done. But to avoid bookkeeping mistakes that can break your business, you need a specialist who can get the complex and technical bookkeeping work done. Otherwise, you might end up with some tax penalties. We had many business owners who got in touch with us to clean up their books with our bookkeeping rescue services. Almost all of them decided to get our professional Australian small business bookkeeping services after we cleaned up their records.
If you are having problems with your books, you can get in touch with us at (04) 2709 8710 and book a free no-obligation appointment by filling the form below to see how we can help you.