With only 10 days to go, the End of Financial Year is creeping up close at an alarming rate! So you’re prepared for this EOFY, we’ve asked some of the best accounting and finance experts to reveal the top 5 most common mistakes made by Small and Medium-Sized Enterprises. So you can dodge the most prevalent slip ups that surface after June 30, take heed of the following points to ensure things operate smoothly for your business this tax season.
Miscoding bank transactions
One of the most common accounting mistakes made - not only at the end of the financial year but throughout the year as well - is miscoding bank transactions. This means that transactions will be going through under the wrong account, which often leads to having a significant effect on your business’ financial health. Here are some of the most common miscoding mistakes:
Misclassifying current liabilities as noncurrent
Classifying fixed assets as expenses, or vice versa
Not amortising business start-up costs
Not keeping accounts and records up to date throughout the year
This common pitfall will make the end of the financial year much harder than is necessary. Ensure you don’t have to check a backlog of accounts by making sure that your incomings and outgoings are all accounted for as soon as they occur. Installing reliable accounting software is a great way to do this.
No contact with their accountant over the financial year
This is particularly important for those who are not experienced in tax accounting! It’s absolutely vital that as a business owner, you utilise a bookkeeper and/or accountant so that they can provide timely advice so you can grow your business and maximise your position at any point in time. Don’t wait until the end of the financial year to reach out!
Not providing enough detailed or supporting information
Unpreparedness can result in another very common mistake: not providing enough supporting information. Make sure that all of your accounts and records are reconciled, updated and on-hand so that they can be readily presented if need be.
Not being fully trained up on accounting software functionality
Accounting software is a staple of the modern financial landscape for any business. Especially at the end of the financial year, software can be extremely rewarding for both businesses and individuals. Most accounting software these days will ensure that your accounts are automatically up to date, ensuring that the end of the financial year is a less strenuous time for all. Make sure you utilise the software available to you by employing an accountant who is up to date with the latest accounting programs whilst also ensuring you are up to date, as well.
If you think that you may be making any of these mistakes (or others), don’t hesitate to contact the friendly professionals at Next Level Accountants today. We can help you make your end of financial year as painless as possible.