Probably out of ignorance or in an attempt to save money, some business owners try to handle the bookkeeping function themselves but by so doing they make mistakes which come to haunt them later. While there are plenty of bookkeeping functions that can be done in-house (either by the business owner or by designated accounting staff), there are functions that are best handled by pros who dedicate all their time to this important function. What are some of the most common mistakes that you could make when you carry out this function in-house?
Failing to back-up documents
Some companies have huge amounts of documents in paper form and some fail to create a back up for such documents. Should an accident (such as a fire) happen, you risk losing all your documents and your accounts will be in disarray if you do not have a back up. Today, it would be unfortunate for a business to find itself in this kind of situation as there are many ways to backup documents including cloud bookkeeping.
Failing to track cash expenses
Businesses pay for expenses through a myriad of ways including checks, debit cards, credit cards as well as cash. Expenses settled through check or cards are usually easy to track but cash expenses are easily overlooked. Unless a business develops a system track cash expenses, the entries in its books will be incorrect.
If you are a business owner who has finally decided to outsource your bookkeeping services, what do you need to take into account when choosing the firm that will carry out this critical task? While outsourcing comes with great benefits, it can also put your business at great risk if you do not get the right firm.
Safety of business info
We live in a dangerous world where cyber criminals are wreaking havoc on businesses. When you outsource, you are giving critical business info to people outside your company and this could be very dangerous if you are dealing with a non-professional service provider. Such a provider could leak critical business info to your competitors and this could ruin your business. Before hiring a firm therefore, it is important to confirm that it has a foolproof cyber security system in place and the firm should give you a document detailing the measures it takes to ensure data integrity.
Qualifications and reputation
The accounting firm you outsource your bookkeeping services to should be beyond reproach. You need to ensure that the firm has the required capacity to provide you with a great service by confirming that the firm’s employees have attained the necessary qualifications. Every reputable firm prides itself in displaying the qualifications of its staff and anybody who is reluctant to prove this should be treated with suspicion.
A good indicator that the firm you choose will provide great service is the number of current or past clients it has served. It helps if the firm you choose has had clients in your industry. If possible contact such clients and find out how they rate the company. Conducting an online search of the company could also provide useful info especially if the firm has been involved in malpractices.
Establish clear lines of communication
At the very outset, it is important to know the exact scope of the work that the accounting firm will do. Since you can outsource part or the whole of the bookkeeping work, let it be clear what your responsibilities and those of the accountant will be. Since there are documents or figures that you’ll need to provide on a monthly or quarterly basis, let the accountant clarify what these documents or figures are and the exact dates when they need to be provided.
On top of writing your books, find out if the accounting firm has room for face to face meetings and how frequently. A good firm should not only be willing to facilitate such meetings but should also be ready to meet urgently should the need arise.
bUnless you are an accountant, bookkeeping can prove not only utterly boring but could also take away much of your precious time. Even scarier is the fact that the hectic nature of some people’s lives might make them forget to make their tax returns in time and the consequences could be catastrophic. Whether yours is a sole proprietorship, a small business or even a large corporation, bookkeeping can take plenty of your time. Even when you have employed staff to do this task, the fact is that you did not set up the business to do accounting and the staff you employ to do this could be better employed performing tasks that are core to your business. Bookkeeping errors can be costly in various ways and all attempts should be made to avoid them. For starters, such errors make you fail to fully understand the direction in which your business is going with the result that you could end up losing money. Bookkeeping mistakes could get even costlier if you were to get in trouble with the tax authorities. Penalties for such mistakes vary but in some cases they might lead to imprisonment. When the service is outsourced, the risk of errors and mistakes is virtually non-existent and should any mistakes be made they fall squarely on the accountant. Tax authorities are generally in favor of outsourcing bookkeeping services. The reasoning by such authorities is that since the people conducting the services are independent contractors, there is little risk of doctoring records as sometimes happens when this service is carried out in-house. Moreover, outsourcing saves the business money since this service is an accepted tax deductable expense. When the service is conducted in-house, it is not an allowable expense and it therefore increases your tax liability. Perhaps the main reason that should make business owners outsource their bookkeeping services is the fact that it is very easy to forget the dates when specific returns are due. Should you find out that the time is almost due, you might find yourself doing the accounts in a hurry thereby increasing the risk of making costly errors. When the service is outsourced, there is no such risk – the accounting firm you have contracted does bookkeeping as a full-time job and have a thorough understanding of the due dates of all returns. Remember also that changes in legislation tend to be rather frequent and people outside the accounting profession might be unable to keep up with all the changes. Bookkeeping could be challenging for non-professionals and rather than let it waste your valuable time it is best to outsource it to the professionals.
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Whether you like it or not, the months from March to April are the busiest times for us Tax Preparers. Even after the 15th of April we can’t help but stay pretty busy for our customers who pay us to do daily book-keeping and hundreds and hundreds of Payroll. It’s quite a relaxing moment unlike the busy tax season months; however, it’s also kind of busy enough to make that short staycation really short. If you are a true Bookkeeper, you will definitely be looking forward to a sweet day at the beach knowing that the busy season is only 8 months away.
During a busy tax season, as Tax people, we constantly have to deal with never ending tax returns and scheduling partnerships or S Corporations to start an individual return on a daily basis. This kind of task usually leaves us Tax Preparers in a tight spot because we will have to wait for the partnership’s return due date until the 15th of April is the same with the individual return’s due date so that it would match. By altering the due dates of the returns, it would be easier to clean up the process of preparing and filing the same returns and the same due dates. We wouldn’t be experiencing headaches if our customers would just file for an extension on their returns. But our customers usually think that this will lead to more problems because most people hate extending their returns. Furthermore, the Congress makes it a little bit harder for us to understand the returns.
Okay, let’s not get too over complicated around here folks. Simply put, taxes are just taxes and they can’t do you harm unless you do something really messed up. If you try your best not to cheat the system, then you’re in good hands. I’m not scaring and stressing you out just because I’m terribly stressed out too. No, there’s no need for you to worry about it at all. Actually, all I want to do at this moment is thank our HVAC maintenance company for doing a great job in making sure that our Air Cooling and heating systems doesn’t bog down especially when it comes to peak busy seasons. Having a well ventilated work place keeps us work in a fast pace, and enables us to keep up with the demands of the hectic Tax Season. I have actually seen days where I experienced hardships when our Heating System in the office screwed up. Thankfully, we we have a reliable heating and repair company to go too. They’re only a call away when you want them to check up your heating system. Checking in for regular maintenance saves you a lot of trouble. And if there is really a need to fix a damaged heating machine, you’ll be surprised at how quickly they are able to get things up and running. This is why I still find it convenient to work despite the busy, stressful tax preparation months. If you’re interested in how to find them just do an online search, something like this: “Furnace Repair Spokane” or “Air Conditioning Spokane”
Then write their number down for the next emergency.