These are the most common bookkeeping mistakes that I have observed across my 20 year accounting career. When your accountant has to find and correct these bookkeeping errors you are paying an expensive accountant to fix something that you have already paid your bookkeeper to do. In some instances I have seen the corrections make up almost 70% of the annual accounting costs.
- Not reconciling all bank accounts at least every month.
- Only reconciling the bank account and ignoring everything else in the balance sheet.
- Incorrectly classifying a supplier as a contractor when they are really an employee. The fact someone has an ABN does NOT automatically make them a contractor. Refer to this handy tool to help you decide. Decision Tool: Employee or Contractor.
- Entering duplicated invoices from suppliers, causing profit to be wrong and often double payment to the supplier!
- Incorrectly claiming GST on certain payments or not having the correct Tax Invoice. This means the business is at risk of a fine for over claiming GST.
- GST and superannuation obligations not being paid on time. Another practice that often results in penalties and loss of tax deductions for the business.
- Personal expenses paid for by the business.
- Altering transactions after a BAS has been lodged. (this means that either too much or not enough GST has been paid, neither is a good outcome)
- Coding hire purchase payments to an expense account in the P&L – this means that the monthly profit result is wrong.
- Running multiple business ventures through the one MYOB file to try and save money.
Read our blog post. “9 Reasons Why Bookkeeping is Important to Any Business“