Many people dream of owning their own business which brings a lot of freedom. The necessity of accounting is less popular amongst most people but cannot be neglected. Both start-up companies and experienced entrepreneurs make mistakes in bookkeeping, which results in losing actual money. In extreme cases, there will be legal consequences, which underlines the importance of legally compliant bookkeeping.
But what are the most common mistakes in bookkeeping, and which ones should be avoided at any cost?
Many entrepreneurs waive a separate business account out of comfort. This results in chaotic payment transactions and makes traceability more difficult. It takes a lot of time and effort to separate private from business transactions afterwards. Therefore, you should open a business account right from the start, so you have an overview of all your income and expenses. Many banks offer cheap conditions for start-up companies, which minimizes the costs for account management.
Several legal requirements need to be met while writing invoices. Common mistakes are a missing sales tax or an inadequate performance description. Additionally, your individual tax number and the name and address of the beneficiary needs to be mentioned in the invoice. In the event of corresponding failures, customers may demand rectification, which unnecessarily delays the payment received. With the help of special software for the creation of invoices, this problem can be consistently avoided.
In addition to external forms, compliance with deadlines also plays an important role in accounting. Annoying duties such as the tax return are often postponed, which rarely remains without consequences. Thus, the tax office can order various coercive measures that negatively affect your liquidity. Surcharges for late filing are unfortunately common but can be easily prevented. Ideally, you should note the deadlines in your calendar like a business appointment and plan for a generous time buffer. This approach will not only save you from high reminder fees, but also unnecessary stress.
Not everyone pays their bills reliably and promptly. However, in everyday business, many entrepreneurs forget to check the receipt of money and rely on the payment morale of their customers. In extreme cases, liquidity bottlenecks and a limited ability to pay are the result. For this reason, you should check at least once a month which items are still open and send a reminder in the case of overdue receivables. For this purpose, it is advisable to digitally capture and archive all invoices.
Legally compliant accounting is a complex subject and consists of numerous tasks. Anyone who does not have basic expertise can therefore quickly lose track of the big picture. Entrepreneurs often underestimate the associated planning and time requirements. For cost savings, bookkeeping is carried out by yourself, and professional work is left on the table. However, you should not save at the wrong end and invest in useful assistance for accounting. Depending on the respective company and your previous knowledge, digital tools such as accounting programs or expert tax advice are possible options.
All in all, it can be stated that bookkeeping offers many stumbling blocks for entrepreneurs. Non-compliance with legal regulations and a lack of organization lead to serious problems. Procedures such as collecting receipts in a shoebox not only cost you nerves but are also no longer up to date. Instead, take advantage of the opportunities offered by digitization and simplify your accounting with innovative tools. On the other hand, you should refrain from small “cheats” such as fictitious business trips or customer gifts. The tax offices carry out comprehensive audits, so honesty should be the top priority. If you follow all of the listed hints and tips, nothing will stand in the way of professional and legally compliant bookkeeping.
See the benefits of automated invoice management:
Better overview. Less accounting work. More time for your ideas.