Most Common Bookkeeping Mistakes To Avoid To Have Successful Business In Dubai
Bookkeeping is the platform for maintaining the track of financials, and it act an integral part of the accounting process. The accounting process includes purchases, sales, receipts, and payments by an individual or an organization. In this era of business revolution, it is necessary to maintain systematic bookkeeping structures. From recording to analysis, it act as a tool for management to anticipate business performance.
Modern world often uses the term bookstagrams and in accounting this bookstagrams are maintained by highly qualified bookkeepers. Without bookkeepers, companies would not be aware of their current financial position, as well as the transactions that occur within the company and liquidity of the company. So for any company a key element in starting and growing a business, is bookkeeping and accounting. Bookkeeping presents the past financial performance of your company along with future considerations for better understanding. The bookkeeping cycle starts from the 1st day of the month to the last day of the month, and repeats every month. This goes on for 12 months until the end of the financial year when all the data is sent to a chartered accountant for internal audit.
Bookkeeping services includes:
- Accounts receivable services.
- Accounts payable services.
- Petty cash transaction services.
- Bank account reconciliation.
- Invoicing Processing Services.
- Manual Journal Entry Services.
- VAT returns.
- Inventory Management
- General ledger maintenance.
- Assets / equipment ledger maintenance.
Bookkeeping pursues the owner to make smart, informed business decisions. As an ongoing process it should be performed to save time and the headache associated with it.During bookkeeping there is a high chance of occurring mistakes. Sometimes these mistakes can be prevented, other times not. If a mistake is discovered, the error is reversed and corrected.
The common bookkeeping mistakes are:
- Not Hiring/Recruiting The Right Candidate
- Not Using The Right Application
- Overlooking The Small Expenses
- Mixing Personal And Company Expenses
- Not Backing Up Data
- Not Saving Invoices/Receipts
These are the common errors affected by bookkeeping.
Improper or poor record keeping:
Sometimes bookkeeping ignores the small expenses therefore it is easy to lose receipts or forget about those small expenses that seem insignificant. And itis a recipe for legal problems, especially when unpaid or late filing of your tax returns and inaccurate deductions are involved. Through proper book keeping, you will be able to bring full control of your income, payroll taxes, and sales, as well as deducting expenses correctly.
Not properly categorizing your expense:
Improper categorizing of expenses means that Mixing Personal and Business Expenses. It Is More Than a Tax-Time Headache.Billing personal expenses to your business account (or vice-versa) can lead to incorrect assumptions about the financial health of your business. Accurate tracking of income and expenses in the exact categories ensures proper measurement of profitability.
Not reconciling your bank account:
Not having separate bank accounts for personal and business activities can create a dilemma. Reconciliation is the process of ensuring the two sets of records agree with each other. Reconciliation is needed only when bank balance & cash balance disagree.
Not tracking your financial statement:
Small business owners pay for the expenses out of their personal funds. Such a situation arises due to the failure to account for these reimbursable expenses, it results in loss of money as well as lost tax deductions. Creating a policy to make the company consistently on track and to record reimbursable expenses.
Hiring an inexperienced bookkeeper:
Hiring a bookkeeper early can give you a good idea as to where your money is going and what you can do to tie up any loose ends and maximize your profits in the future. A fledgling Businesses often look for bookkeepers when they are at the peak of requirement. This bookkeeper can help to sort the inflow and outflow of cash. If the company fails to recruit the right person it adversely affects the growth of the company. By keeping all your information organized and accounted for, your bookkeeper can prevent you from enduring a CRA audit, help you avoid penalties, manage deductions and save your precious time.
Omission of petty cash transactions & credit transactions.
Petty cash is a small amount of cash which is kept to meet daily expenses. Usually petty cash transactions are made for least expensive items. Neglecting their recording in general ledger would lead to accounting mistakes down the road.
Improper allocation of expenses to balance sheet ledgers.
Sometimes improper allocation can create big issues even to throw off the financials produced. It becomes difficult to measure profitability and to file taxes if there are wrong classes. It’s necessary to record every business transaction, even seemingly insignificant ones. Organize small expenses into the appropriate accounts and keep the receipts for future reference.
Why choose CDA Audit:
Bookkeeping is important for helping the manager to maintain accurate financial records. “Poor accounting” is one of the top reasons for businesses failure. Without bookkeeping or accounting, companies cannot blindly drive your business. The solution to each mistake listed above was to hire a certified bookkeeper. Consider hiring a bookkeeper who can dedicate themselves to ensure your books are kept correctly. For the entrepreneur bookkeeping is one of the essential shades of recording and maintenance of books of accounts. It helps to track the financial position and profitability of the business. Adopting bookkeeping mechanisms and certified bookkeepers for maintaining business financial reports helps to reduce the risk of fraud, freeing up your valuable time and ensuring that your books are kept correctly by someone more experienced.
CDA is one of the most reputed accounting firms in Dubai. We offer financial assistance by providing financial services such as Internal Auditing, Tax Auditing, Management Accounting and Bookkeeping and VAT Consultancyand take a strategic approach for providing services to the customer and to withstand the competition. We provide a wide portfolio of accounting and bookkeeping services and are highly focused on workmanship and professionalism. CDA connects to give awareness about tax relaxation and maintaining financial records. Our experts are highly qualified planners with extensive experience. Through ongoing training and development, our team remains up-to-date with advancement in their fields and can integrate these advances in the work. We value our team and their importance to our client experience.