Small businesses usually have fewer resources at their disposal compared to larger companies, which often leads to managers or owners assuming the role of bookkeeper and accountant. Initially this could seem like a feasible strategy, however, without the comprehensive knowledge of an experienced accountant or VAT consultant, mistakes are prone to happen.
To avoid poor accounting practices, major and minor errors, unpaid tax issues, fraud, theft or even embezzlement, your firm needs the help of a professional. We’ve compiled a list of the main 5 accounting mistakes small firms should avoid, to help you better understand the risks you should be avoiding.
1.Lack of organization
In the world of accounting and bookkeeping, being highly organized is a must. From keeping your books up to date to keeping all the receipts of your expenses, both credit card and cash payments, you need to have everything organized to avoid possible errors. Furthermore, you have to be extra careful not to mix up your personal and business finances or to forget to record small transactions—these can also cause harm to your bookkeeping efforts.
Paying your taxes on time is also crucial, and Dubai tax consultant company Level is the best choice if you want the help of professionals.
Small businesses sometimes put off doing the books until the very last moment, then proceed to rush and try to do everything at once within a short amount of time. This is a very risky approach, and attending to your financial statements, reports, and tax payments last minute may lead to errors. Consequently, attending to these issues should be a priority, and it should be done in a timely and organized manner.
Delayed billing can also sometimes result in bounced checks, heightened debt that will never
be paid, and invoice errors that will be difficult to prove later on. These could all lead you to be liable for penalties, so enlisting the help of an audit firm or VAT consultant could save you a lot of trouble.
3.No clear budget
Not assigning clear budgets for each project might end up costing your business in the long-run. You can easily end up overspending, which can lead to a smaller return on an investment or project. A specialized audit firm or VAT consultant can help you define your budget and make sure you stay within your projected spending goals. As a business owner, you’ll save yourself a lot of time that you can invest in growing your business and tending to clients.
4.Not separating cash flow and income
As a business owner or entrepreneur, you have to be extra careful with these two aspects. If your firm just closed a three-month, $10,000 deal and the cost of doing business is $4,000, the initial reaction is to assume $6,000 is profit. This may very well be the case, however, you have to consider the possibility that issues might occur and three months could turn into four or five.
Resist the temptation of writing each deal as income as soon as it happens. This can often lead your company to appear healthier than it really is, which might cause problems when it comes to paying your taxes or going through financial audits.
5.Not hiring an experienced finance professional
Managing your books by yourself can be extremely risky, and you should avoid doing everything in-house. Hiring an accountant to manage your books is fundamental for your small business. This will automatically minimize potential errors and take care of things like balancing bank accounts, paying vendors on time, and organizing payrolls.
Enlisting the aid of a licenced VAT consultant Dubai can help your business grow, as they will keep track of every financial transaction and assist with tax planning, freeing up your time.
Level.ae is a team of professional tax consultants in Dubai, dedicated to providing top quality support and assistance, including audit & accounting, accurate VAT implementations, and much more, for local and international businesses.