Tender loving care – that is what TLC means! The thing is accounting firm owners are responsible for taking care of a hundred things every day. As a result, their routine tasks such as their own bookkeeping or doing taxes often take a backseat.
That might be a bother, but unless they are well on top of it, they can face significant tax liabilities and even government scrutiny later on. This is exactly what they regularly warn their clients about.
Plus, having accounts in place is a big part of making financial decisions about their business, such as new investments or increased hiring.
Given the current socio-economic climate, it can be challenging to get on with specific accounting tasks of your own practice firm. That is why it is even more important to give your practice some TLC!
This article throws light on eight common accounting mistakes to keep an eye out for and avoid right now:
1. Not updating accounts receivables
Quite often, accounting firms are in the habit of simply depositing the invoice amounts they receive from clients without updating their records of receivables. This leads to confusion later on when revenues don’t match receivables and can affect cash flow if the firm is unclear about which of the receivables are still due. It is essential, therefore, to mark each customer deposit as paid the moment it comes through.
2. Not tracking expense receipts
Many accounting firms have the habit of not keeping their business expense receipts. While it might seem tempting to throw away that piece of paper or delete a file, it is essential to remember that you need to reconcile your expenses later and that a lack of receipts (both hard and digital copies) will make the job tougher.
Keep a designated folder for all your expense receipts and make it a habit to enter each receipt as it comes rather than accumulating it for later. Besides, try to ask for e-receipts wherever possible so that you don’t have the bother of tracking down paper receipts.
3. Not recording cash expenses
While credit/debit card or online transfer expenses have a digital record attached to them, it is easy to overlook the costs paid in cash, especially the small amounts.
However, a few pounds now could add up to thousands of unexplained expenses at the end of the year if you don’t keep records of them. Therefore, try to ask for a receipt from your client or vendor even for small expenses, or make a note of them on your smartphone so that you can enter them in the books of accounts later.
4. Not outsourcing to manage taxes
While it might seem tempting to handle everything yourself in your way, as a business owner, there are several claims upon your time. Growing your revenue, market share and profitability, and client servicing are full-time tasks of their own and should be your priority.
Day-to-day accounting tasks of your clients such as tax returns are best outsourced to a professional who can do them accurately and in a timely fashion for a competitive fee.
This not only frees you up but also improves your market standing, as your business reputation depends mainly on the accuracy and integrity of your financial records.
Plus, you can offer advisory services to your clients, such as budgeting and forecasting and help them grow at a faster rate.
5. Real value addition in every client meeting
All too often, accounting firm owners are reluctant to admit to their outsourcing partner that they do not understand the tasks being assigned to the latter.
This could lead to misunderstandings and costly mistakes later on if the accountant and the outsourced team are at cross-purposes.
Therefore, it is essential to let your outsourcing partner know whenever you don’t understand something and try to communicate transparently and frequently.
This will eliminate misunderstandings and also improve the professional relationship you share with your partner.
6. Expedite compliance and drive more growth and revenue
Tax laws can be complicated to understand and often change. Unless you are entirely in tune with how those laws work, you risk running into problems with the tax authorities by making mistakes out of ignorance. Be sure to ask your outsourcing partner to explain the laws to you as and when necessary so that you are on top of things.
7. Getting ready for MTD for income and corporation tax
Even if you outsource to an accounting partner, the onus of getting the necessary information from your clients still falls on you. Many accounting firm owners are reluctant to follow up too aggressively with their clients for fear of offending them.
However, clients are far more likely to be annoyed if their taxes are not filed accurately, so don’t hesitate to make those follow-up calls.
In addition, plan to collect all your client’s documents as far in advance of the tax deadlines as possible so that you don’t need to rush at the last minute.
8. Not making efficient use of accounting technology
Many accounting firms still rely on Excel spreadsheets to manage their bookkeeping. As a result, the process takes far more time and is more prone to errors or omissions.
Instead, it would be best if you moved to a cloud-based accounting solution that keeps your books of accounts accurate and up-to-date with minimal manual intervention.
Another option, of course, is to outsource your accounting to a third-party service provider who has all the latest tech in place to manage your records for you.
so, what do you think?
The pandemic has not made it easy for any business to function. Yet, you must strive to rise above the challenges and get help from an expert accounts outsourcing provider so that you are in a better position to tackle your clients’ accounts and tax returns and also keep your financial records up-to-date.
If you need any assistance, please don’t hesitate to give us a ring on 020 3475 3537 or email us at firstname.lastname@example.org. Speak to you soon!