Signs You Have Bookkeeping And Accounting Issues

Are you experiencing some financial difficulty? Are your bills starting to pile up, and you don't know how to make ends meet? You may be having bookkeeping and accounting issues.

Don't worry; you're not alone. Many people find themselves in this situation. We will discuss the signs that you are having these issues to get the help you need. We will also provide some tips on how to resolve them.

If you own or operate a business, it's important to be aware of the signs that you may be experiencing bookkeeping and accounting issues. This can help you get on top of things before they spiral out of control. In this blog post, we'll discuss some of the most common signs of problems with your books.

Are you having trouble keeping track of your finances? Do you feel like you're constantly playing catch-up with your bookkeeping and accounting tasks? If so, you may be experiencing some bookkeeping and accounting issues.

This post will discuss some of the most common signs that you're struggling with your finances. We'll also provide a few tips to help you get back on track. So, if you're feeling overwhelmed by your bookkeeping and accounting tasks, keep reading! We can help get you back on track.

Let's get started!

Concerns Relating to Bookkeeping and Accounting

1. You're overworked, but there is no money in the bank

Is it possible that you simply haven't been paid yet? Is it possible that you're just blowing too much money each month? Is it possible that you haven't sent an invoice yet? The lack of adequate cash flow is a common obstacle for developing companies.

Because most people don't get paid until the project is over, you need cash to invest in order to keep your business solvent and fund its expansion. It can be tough to fund the next project and keep the business expanding without good cash flow management, particularly if you need to make monthly loan repayments. This is especially true if you have a lot of debt that has to be repaid.

What you can do: You will be able to maintain control of your cash flow and better understand the areas of your bookkeeping that require greater attention if you keep a cashbook or an analogous record of payments coming into and going out of your bank account. In addition, a properly maintained cashbook can serve not only as a historical record but also as a useful tool for making projections.

2. You continue to come across receipts in odd places

They are in the car's glove box, on your desk, in your wallet, and in your pockets. They are also in the glove box of your automobile. You have no notion which item costs a few dollars but is actually in the hundreds. On the other hand, if you don't organise and keep track of your receipts, you won't have any idea how much tax you might owe or how much you might be able to get back.

This is essential information to have when making projections on the amount of cash that will be available to the company in the years to come. The difficulty is that receipts are typically printed on paper, and it's possible that you won't be at the office when the receipts arrive. The moment they begin to pile up, they transform into a problem, and from that moment on, procrastination kicks in. "Take care of the receipts, please. Not at this time, I have other, more important things to take care of!"

What you can do: The smooth operation of the firm and the avoidance of unsettling interruptions in cash flow can be helped along by paying consistent attention to receipts and maintaining a digital record.

3. You put billing at the very bottom of your list of priorities

You're a valuable asset to your company and you keep everyone very busy. You have a healthy level of confidence in your customers, and you want to maintain a positive relationship with them. Therefore, completing invoices may not always be at the top of the priority list. When it's not necessary, it's easy to forget to do it.

When you have to create an invoice, it might be difficult to keep track of how many have not been paid and how many are still outstanding. It will reflect poorly on your company if you continue to pursue payment from a customer for an invoice that has already been paid, but the consequences for your company will be even more severe if you do not receive payment.

What you can do: When you know where you stand with your invoices, you'll have a better idea of how much income you'll earn over the next few months and how much business you need to secure in order to maintain your current level of success. Instead than viewing invoices as a burden, consider them to be the tiller that directs the course of the ship.

4. Your bank statements are nowhere to be found

Losing your bank statements is asking for trouble, especially if you don't appreciate unpleasant surprises. Therefore, it is of the utmost importance for owners of small businesses to keep a close eye on the balance of their bank accounts.

It helps mitigate the possibility of your bank committing fraudulent activities or making errors. Reviewing your financial accounts on a regular basis will not only help you understand where your money is going and when you are generating it, but it will also provide you an overall picture of how well your company is doing.

What you can do: Because you are using electronic banking, there is no need to wait until the end of the month to find out how you are doing financially. When it comes down to it, if you keep your banking under control and make it a point to never go over your credit limit, you will give yourself a lot greater chance of being able to obtain financing for the expansion of the firm.

5. Your spreadsheets include too many variables

So, you've got things under control with the help of the computer at your company, right? Excel spreadsheets, if you must know. I take it you have everything in order? Well, maybe. In order for spreadsheets to perform the tasks that you require of them, they need to be carefully created.

Connecting the various facets of your company, such as tenders, sales, invoicing, cash flow, and banking, is necessary to achieve efficient management of your company's finances. That can refer to a variety of different formulas. It is simple to err, but not always obvious when one has done so. Spreadsheets are prone to inaccuracy since they require constant manual input of data.

What you can do: If you want a better-looking mess, moving your business administration to spreadsheets could be the answer. However, before you do so, you should examine more intuitive tools that can assist you with your bookkeeping.

6. You "don't have time" to do your books

The final indication that you may be suffering from bookkeeping phobia is that you constantly persuade yourself that you do not have time to complete the task. Your company is doing too well, and you have too much work on your plate. On top of that, you probably didn't get into the corporate world to become an accountant.

What you can do: Keep in mind that the time you invest in maintaining your books is time well spent in the long term. Spending less time rummaging through receipts and adding them up. Less time wasted following up invoices. Less time spent juggling financial flow. In conclusion, being proactive will enable you to accomplish more of the job that you enjoy because it will free up more of your time.

Quick Methods For Recognising Poor Bookkeeping

1. Items from historical or rare reports

Jump into your software programme and print out the following reports: the balance sheet, accounts payable, and accounts receivable.

Let's take a look at the Account Receivable since, let's face it, everyone is interested in seeing out how much money is coming in! How does it look? Exist any things in the 90 days Plus category? Are all of these things TRUE? In other words, are all these clients listed and the totals they owe up to date?

When I start working with a new customer and go over these reports with them, I constantly hear the same thing: "Oh no, they have paid, that's paid, now they can't still owe that!" and if this is the case, then your reports are incorrect, which will also have an impact on your balance sheet.

Apply the same strategy to your account payable! If you come into some old things or credits, you can be sure that your record-keeping practises are not up to par. I would also then propose looking at your balance sheet, and this will identify again loans and liabilities that may not be forecasting the correct numbers

2. Unable to respond to inquiries concerning their work

An illustration taken from one of the reports presented above is going to be used.

If you see on the accounts payable that one of your big suppliers has a credit balance in 90 days or more, you need to contact them immediately (but you know that is not true). When you ask your bookkeeper a question, they give you a lengthy response in which they avoid directly answering your query. However, they are unable to answer any of your queries; I am very certain that they are aware that it is present, but they have no idea how to 'address the problem.' This may be due to the fact that they lack the necessary skills or are oblivious to the appropriate procedures for doing this task within your software.

For instance, the manner in which to record a credit note on a supplier account in Quickbooks Online may deviate marginally from the manner in which one would record the same event in Xero.

3. Treating related transactions differently

When one company's recurring costs are charged to several different expense accounts, this is referred to as "code-hopping." The most common ones that come to mind for me are those associated with fuel.

It seems straightforward, but in practise, it's not uncommon for people to apply it inconsistently. It will say "Motor Vehicle Expenses" one month, and then "Fuels and Oils" the following month. It might not appear to be a significant concern at first, but if you are a clever business leader who uses your reports to make judgments about your company, inconsistent code can mean making terrible decisions.

During the hectic process of 'clearing,' it is possible for the bank feed screen to incorrectly code loan repayments and other complicated charges. When it comes to getting the job done, an inexperienced bookkeeper is more likely to take the "she'll be right" approach than the "get the job done well" approach. When clicking on transactions, poor bookkeeping can be done in a split second, but correcting it can take many hours!

Avoid Losing Money On Sloppy Bookkeeping

A person who keeps the books is an expert!! They bring the necessary abilities and experience to the table in order to ensure that the day-to-day operations of the company are carried out as effectively as possible. They do this by ensuring that everything is operating as smoothly as it should and by preventing issues that could prevent the owner of the company from operating at their full potential.

If you maintain your books in order, you'll be able to spot possible difficulties like those related to cash flow before they even occur. And excellent bookkeeping will immediately begin calling the clients of the business to remind them to make payments.

Accounting Goofs That Typically Happen And How To Prevent Them

Errors in the bookkeeping are common across all types of businesses. Accounting errors can take many forms, from failing to properly track spending to failing to timely file tax returns. If you do one of these seven avoidable mistakes, you run the risk of suffering unanticipated financial setbacks as well as penalties from the government.

1. Combining professional and personal concerns

Maintaining a wall of separation between one's personal and professional dealings is universally acknowledged to be the soundest method for managing a company's financial affairs, regardless of the size of the enterprise. Blended finances might be a problem later on when you are trying to compute tax deductions and reconcile your end-of-year reports. If you utilise an account that is specifically designed for your business, you will have fewer messes to clean up in the future.

2. Inappropriate use of accounting software

The most common accounting software packages are capable of doing a lot of work in a short amount of time. However, there is still the possibility of human error. In other words, you are unable to avoid going through the lesson.

Do a yearly check-in with your accounting software and ask yourself: Am I utilising the most up-to-date version of this software? Can this software manage the scale of my bookkeeping needs? Does this software provide the most recent version of the tax rates?

3. Failing to keep up with the books

The simple act of falling behind is another of the most typical blunders made in bookkeeping. If you miss a month's worth of reports, you won't have an accurate grasp of your cash flow and your current obligations. Maintaining an accurate daily general ledger requires you to keep track of every transaction that occurs inside your accounts, both those that go in and those that come out.

4. Throwing away your records too soon

Did you know that the government mandates that your company preserve specific financial documents for a particular amount of time? When the annual tax season has concluded, you cannot simply feed everything into the shredder and walk away.

After you have submitted your tax return in Australia, you are required to preserve written proof of your financial reports for a period of five years. In New Zealand, you are required to keep all of your financial records on hand for a period of seven years after you have filed your taxes for the year. This includes any and all documentation, such as bills and receipts, as well as wage books and car logbooks.

5. Incorrectly compensating workers

The mistake could cost you thousands of dollars if you have a full-time worker who is listed as a casual worker on your payroll. You run the risk of being held liable for back pay as well as interest, in addition to facing legal penalties. What may appear to be a little administrative task is, in reality, a significant choice. Get yourself familiar with the employee classification systems used in Australia and New Zealand to avoid making this expensive error.

6. Providing inaccurate information regarding sales and payroll taxes

Paying taxes at the appropriate rate is an essential component of maintaining correct business finances. Because the laws governing payroll taxes in the various states and territories are different, you might need some assistance figuring out how to properly set up your payroll system. In this scenario, it is always better to triple check than risk a big penalty at the end of the year.

In addition to this, you need to make certain that your point-of-sale systems are equipped with the appropriate sales tax rate (10% in the majority of instances in Australia and 15% for the majority of goods and services in New Zealand). You may rest comfortable that if you do not pay an adequate amount of taxes now, you will be required to do so at a later time.

7. Hiring an accountant with little experience

The majority of the faults discussed above may be traced back to a single, more widespread mistake: selecting a bookkeeper who is unable to keep up with your ever-changing bookkeeping needs.

Someone with greater expertise is capable of managing financial data, preparing a correct balance sheet, and staying on top of the needs for taxes. If you continue to find errors, it may be time to recruit a more complete bookkeeping crew to flesh out your back office and keep everything in line. This is especially true if you keep coming into problems.

Typical Indications That You Might Require Bookkeeping Services

1. Your books are never brought up to date

Do you have a backlog of documentation, including a shoebox full of receipts that haven't been tracked, payments that you haven't reconciled, and revenue and costs that haven't been assigned? Even if the thought of doing anything "accounting"-related causes you to feel overwhelmed and causes you to dread managing your books, there are other reasons why you can have outdated records.

It could be because these systems are isolated and don't communicate with one another; as a result, you have to conduct a great deal of manual tracking, which usually leads to errors in data entry. You'll understand what I'm talking about if you use several applications to generate invoices, keep track of spending, and monitor how much time you spend on certain tasks.

The difficulty with using out of date books is that it makes it difficult to get a good grasp on your financial situation. It will be difficult for you to keep track of and manage your financial flow. It is even more difficult to get a sense of how your company is doing financially.

A bookkeeper can assist in resolving this issue by recording everyday transactions in order to improve the client's understanding of their current financial status.

2. There isn't enough time to complete everything

When a company expands, it typically acquires new customers, experiences increased billing volume, and generates additional paperwork. And the length of this list is just going to get longer as your company continues to expand.

If there isn't enough time in the day to get everything done, you should rearrange your priorities and concentrate on what's most important for your company. You might find that outsourcing certain activities, such as bookkeeping, frees up more time for you to do all of your work.

3. Just in time for tax time, you've decided to update your books

I recently hurried to update my books to prepare for the tax season. My accountant has received both my bank statements and an Excel sheet detailing all of my income and expenditures. After that, he looked over the documentation, informed me of the amount of tax that I owed, and filed my return. Does this ring a bell?

Although at first glance this may appear to be an excellent method for dealing with a laborious work, there are several issues with this approach:

• You never have books that are up to date to guide the decisions that you make for your company, including significant financial figures.

• The fees for bookkeeping services are more expensive. If you wait until the end of the year to attend to your books, you will be required to provide an accountant all of the relevant financial information (remember: only accountants file taxes). They will have to make the required modifications and designate expense categories, both of which your bookkeeper might have done for a lower cost.

• When it comes to filing your taxes, you are usually rushing, which might generate extra stress.

4. You were unable to take tax deductions

It is possible to claim a tax deduction for a variety of business expenses, including mobile phone bills, online subscriptions, and digital downloads. You can use these deductibles to balance your overall business income and minimise the tax owing.

But chances are you’ve certainly missed a few tax deductibles over the years because you never recorded them. When you're rushing to get your books up to date at the eleventh hour, it's easy to forget about obvious tax write-offs that you may claim.

Bookkeepers are responsible for recording transactions and allocating costs to the appropriate categories, which, thankfully, results in a lower overall tax liability. They will most likely identify company expenses that you were unaware may be deducted from your taxes.

5. You think you need to take a break from the daily grind

Are you busy and tired? Is the tedious chore of managing your books draining your creative energy and impacting the quality of your work?

If this describes how you feel about the work you do, you might want to think about hiring someone else to do your bookkeeping so that you have more time and mental space to rediscover the reasons you began your company in the first place.

Focus on a passion project. Invest in training, which forces you to enhance your skill-set. Alternately, you may switch gears and concentrate on coaching. Not only does coaching verify your skills, but it also offers you the energy that flows into all aspects of your life, including both your professional and personal life.

6. You lack faith in your ability to keep books

It's possible that you're an absolute master at what you do, whether it's developing websites, writing text, or shooting stunning images. However, it is impossible to be an expert in every field.

Employing a bookkeeper can provide you with the piece of mind you need if you have concerns about the accuracy of your record-keeping or if you have the impression that you are constantly failing to take advantage of available tax deductions.

7. You experience erratic financial flow

Have you ever reached the end of a specific month without enough cash to cover your bills, even though you tried everything you could?

Although there are a number of circumstances that could have led to this scenario, including a lack of client work, significant unanticipated expenses, and late payments from clients, the fact of the matter is that your expenditures have exceeded your revenue. As a direct consequence of this, you now have a problem with your cash flow.

Bookkeepers monitor your accounts payable and accounts receivable and follow up on delinquent invoices to ensure that you are always aware of your company's cash flow situation. The correct bookkeeping software even lets you construct cash flow statements to know exactly how much money goes in and out of your firm over a certain period.

8. You are being forced out of high-growth areas by bookkeeping

It's possible that by handling your company's bookkeeping on your own, you're taking time away from activities that would otherwise contribute to the expansion of your company. These include any activities that have an effect on your revenue, such as working with customers or clients.

Obviously, if you've only ever been responsible for managing your own books, you might not even be aware that you're giving up control over these important aspects of the business. Therefore, you should think about keeping track of the time you spend on bookkeeping by using a time tracker. The next step is to consider the essential aspects of your company on which you would be able to concentrate if you had more time thanks to the hire of a bookkeeper.

9. To have an accountant handle your financial records would be a waste of money

Bookkeeping and accounting are two completely different disciplines. Bookkeepers are responsible for recording monetary transactions, while accountants examine and make sense of the resulting data. Accountants plan. They made projections. They provide guidance on financial matters and tax matters.

They are more qualified than bookkeepers, which means that you pay a higher price for their services, even if they are merely completing your books for you. If this is your situation, then you're probably paying too much for a function that a bookkeeper might perform at a lower price.

Conclusion

As owners of a locally owned and operated company, we take great pleasure in our do-it-yourself mentality. Why on earth wouldn't we do that? It was of great assistance to us when we first began our company. And it should come as no surprise that a good many of us choose to keep our own books.

But when our company expands, this do-it-yourself approach to maintaining our books will prove to be inefficient. Along with expansion comes an ever-expanding laundry list of tasks, as well as new obligations. At some point, you're going to have to make a sacrifice, and when that time comes, you'll have no choice but to hire a bookkeeper. This post offered a number of indicators that you may or may not have already reached that point.

Have you progressed to that point as of yet?