LOGO 4

Small Businesses – Common Mistakes Made In Bookkeeping

We generally use Xero for keeping the books of our clients, we offer them the choice, we do the bookkeeping or you can do it.

What we generally find is most clients think they can do it but realistically they can’t and we have to pick it up after they have usually made some fundamental errors.

Here is a list of the most common one:

Incorrect Chart of Accounts: Failing to set up or utilize the appropriate chart of accounts can result in misclassification of transactions and inaccurate financial reporting.

Improper Bank Reconciliation: Neglecting to reconcile bank statements with Xero can lead to discrepancies between the recorded transactions and actual bank balances.

Missing or Inaccurate Data Entry: Entering incorrect or incomplete information, such as transaction dates, amounts, or descriptions, can result in inaccurate financial records.

Failure to Categorize Transaction correctly: Neglecting to assign the correct account codes or categories to transactions can lead to misrepresentation of income, expenses, and overall financial performance.

Ignoring Duplicate Transactions: Accidentally duplicating transactions without detecting and reconciling them can result in overstated revenue or expenses, distorting financial statements.

Incorrect VAT treatment: Misunderstanding or mishandling VAT settings in Xero can lead to incorrect calculations, resulting in inaccurate tax reporting and potential penalties.

Neglecting to Reconcile Receivables and Payables to statements: Failing to reconcile accounts receivable and accounts payable can result in unpaid invoices or unrecorded expenses, leading to inaccurate financial reports.

Mishandling Bank Transfers: Improperly recording bank transfers between accounts can result in incorrect cash balances and reconciliation discrepancies.

Overlooking Bank Feeds: Neglecting to regularly review and categorize bank feeds in Xero can result in delayed or missed transactions, leading to incomplete financial records. It’s important to actually check Xero against the bank statements.

It’s important to note that these errors can be avoided or minimized through proper training or better still get a qualified bookkeeper to do it, it will save you a lot of time that you could be spending getting customers and running your business.

There are also alot of article in Xero that can help you.

https://central.xero.com/s/topiccatalog

Disclaimer: Paul Stankiewicz is the owner and principal at Paul Marks & Co Chartered Accountants which is the trading name of Paul Marks Ltd a Limited Company registered in England and Wales (registered number 4487645).This article is designed for the information of readers only and is the opinion of the author only. Readers should not act on any of the information contained in this article without seeking professional advice. Nothing in this article constitutes advice, nor does the transmission, downloading or sending of any information or the Material create any contractual relationship. Links to third party websites are provided as a convenience to the reader, Paul Marks Ltd does not control and is not responsible for any of those websites or their content. Paul Stankiewicz and Paul Marks Ltd accepts no liability or responsibility whatsoever for any loss or damage suffered by any user of the information contained on or accessed through this article or the Material downloaded.