Accounting plays a vital role in your business, serving as an essential tool for recording every financial transaction. In turn, this helps you make decisions and financial projections. Unfortunately, accounting is one of those areas in running a business that could quickly go wrong. Committing errors in inputting data and balancing your accounts are a few of the agonies. Here are some common mistakes you need to avoid in accounting in the Philippines to see your business flourish.
Being Ignorant of Updates
If you want accurate accounting, it is vital to stay informed. According to the experts of tax and accounting services in the Philippines, filing taxes based on new requirements that the Bureau of Internal Revenue has carried out in recent years is the most common mistake that small and medium-sized enterprises make.
These firms offering tax services in Manila has observed that these issues usually arise when bookkeeping is taken over by a client. Take note of the several documentary requirements that small and medium-sized enterprises often make mistakes in. These are the following:
- Not being able to quarterly file the Purchases and Sales summary list
- Not being able to annually submit the taxes withheld on employees’ compensation
- Not accurately declaring the base amount for sales when official receipts are used.
Those mentioned above can be avoided by simply asking your assigned accountant or external auditor about any newly passed regulations and staying abreast of new memorandums.
Failing to Reconcile the Books
Failing to reconcile your accounting records will make room for undetected errors and discrepancies. Cross-check your bank balance against your book of accounts to see if you have overlooked and missed something. Through cross-checking, you’ll be able to realize and notice sales or expenses that were not recorded properly. It is advisable for you to schedule a monthly financial reconciliation to avoid this mistake.
Making Things Personal
This common mistake is what most first-time business owners (especially sole proprietors) make. They fail to separate their personal funds from their business finances. This usually happens only if you are personally funding your own business. It is like you are just transferring money from one account to another. This will eventually lead you to lose track of how much money you personally have and how much money your business really has. Sooner or later, you might end up using funds from your business to pay for your personal expenses.
According to professionals from tax and accounting services in Pasig ascertain that you treat the money you invested in your business as a loan or an advance to keep from committing these mistakes. You can also create your own schedule as well as when you will be paid back for it. Lastly, never delay resolving any fund transfers, and make sure you always record those transactions.
Failing to Double-Check Entries
People are imperfect so it is inevitable to eventually commit mistakes. In accounting, you might make mistakes in calculations, or sometimes it could be a data entry error. That is why it’s important to regularly double-check your entries because it is a habit that will minimize mistakes.
You may assign a person to audit the books for you, and you can double-check them, too. This way, you can ensure your data entries in the books are accurate and up to date. In turn, you won’t make any erroneous business decisions.
Not Being Hands On
You need to be more hands-on in your accounting. Even if you already hired professional accounting services in Manila, you must still make an effort in understanding and monitoring your books. Moreover, should not just only do internal reporting. Stay on top of the bigger picture as well.
You need to remind yourself that the books of account are a reflection of the health of your business. Keeping your books and financial statements accurate and easy to understand will allow your business to have a healthy representation over the years. As a result, you can count on your business to grow.
Hiring the Wrong People
You need to choose wisely when you hire someone to do your accounting. The decision you make is crucial since hiring the wrong person can either make or break your financial reporting. You need an accountant with whom you can communicate effectively.
Furthermore, you need an accountant who is experienced and capable. You should meet with your accountant at least once or twice a year to align properly for the company’s accounting needs to grow. If you need help, call our team at UNA for assistance.
Bear in mind, whether or not you are handling your own accounting or asking a professional to do it, these common accounting mistakes can cause major problems for your business. It’s crucial to prevent and face these issues before they become a more serious problem.