Mistakes That Can Endanger Your Business

A bookkeeper may be deemed unnecessary for small business but shouldering penalties and interest due to late payments will make you realise the importance of bookkeeping in your business. Making mistakes is inevitable and a fledgling company needs to keep records of every transaction to prevent problems from becoming serious especially when it is about taxes. The ATO can chase you due to expenses you have not indicated on your financial report.  While there are many mistakes you can commit as a small business owner, these mistakes are the ones you are most likely to commit.

Not Keeping A Record Of Expenses

Every transaction must be recorded so you can easily identify all the expenses you have incurred. Failing to record business-related expenses can spell trouble when it comes to paying your taxes. Avoid mixing personal with business expenses because this will give you a hard time figuring out which expenses are considered valid. Make sure reports are accurate so you will know if your business is still heading in the right direction. Once you know the expenses you incurred, it will be easy for you to make an adjustment. You will also know if it is time to grow your business.

Falling Behind Payment Schedules

Do you develop a habit of making a payment as you file your tax return? This is one mistake that business owners often commit and this can lead to penalties and interest. Make sure you pay your taxes on time and be mindful of the due date. You can trigger an audit from the ATO when you always fall behind your payment schedule. Late payments must be taken seriously because it can hurt your business and affect its growth.

Not Keeping Receipts

Entertainment and travel expenses that are business-related are hard to justify if you do not have any tangible evidence to present. During the audit, you will need to present documents and receipts to indicate that these expenses are indeed valid. Receipts must be given importance if you are running a business and if you need to indicate the business purpose of the transaction, make sure you keep a journal so it will no longer be a problem recalling when and how you incurred such expenses.

These mistakes can wreak havoc on your business if you do not have a bookkeeper to prepare accurate business report for you. Even if you have a small business, a bookkeeper can still help you in more ways than one because when the ATO makes an audit, you will not worry because your business is on the right track.

Tamara Deterding

Written by : Tamara Deterding