Common bookkeeping errors that small businesses made
Bookkeeping can be a complex task, and when performing it, we tend to make errors. Small business owners who do bookkeeping themselves will probably feel strongly about this statement, due to their hectic lifestyles.
Here are a few common errors that small businesses made:
Let us start with this - writing off major purchases as immediate expenses.
Two scenarios to explain this heading:
a) Bought $250 worth of papers and pens
b) Bought a printer for $250
For scenario A, you can write off the purchase as “office supplies” but for scenario B, you should write it differently. A printer can be used longer than a few months so it should be an asset and that means you need to depreciate it over the estimates useful life of it. It is not the amount that matters, it is the life of the item.
These is not such thing as charitable tax deductions in businesses, it is only available for personal tax return.
If you think that you can just “softcopy” everything as it is available online all the time, you are wrong. Many banks usually only provides a records for a few months. The idea of “paperless” is good but the feeling of not being able to find the information you need for accounting purposes isn’t.
Inaccurate report sales and payroll taxes will incur you fines, which always mean extra costs. For this, it is better to leave it to the professionals and always check it over and over again.
For more information on small business bookkeeping don’t hesitate to contact us at mas accountants, the original accountants for small business, based in Sydney and Melbourne.