When many entrepreneurs start their business idea, they themselves try to take care of all occupations to save money, for example, they try to keep their own bookkeeping. However, the task of tracking every penny of supplier income, taxes, expenses, and payments is really complicated and requires a great deal of time to complete. It is important to mention that when carrying out the bookkeeping of a company it is easy for a large number of errors to occur that unfortunately could cost a large amount of money to your business, although they can be avoided with the help of bookkeeping service. Therefore, in this article we will explain what are the most common errors that can occur, do not miss it.
Learn about the benefits of bookkeeping in companies.
1. Assume that earnings always mean cash flow
To explain this situation a little more, it is important to give an example. Let’s suppose that you have just closed an agreement for COP$10,000,000 in a project that your company will take 2 months to complete and that costs you about COP$4,000,000,000 to execute; In that case, a profit of $6,000,000 would be reserved. This situation would be a great mistake since it is not aware whether situations that could lead to the delay of the project could occur or not, thus increasing its cost.
It is tempting to write down each agreement as income when it happens; after all, it is a new income for your business. But this situation will make your company appear healthier than it really is, providing a distorted image of the actual condition. Therefore, bookkeeping service in Bogotá will allow you to allocate the profits in the proper way.
2. Not taking bookkeeping seriously enough
It is important to emphasize that the key to effective bookkeeping is to record everything from the smallest transaction to the payment of large customers and suppliers. You must make sure that everything is registered and categorized in your accounts.
No matter what the size of your company is, if you take bookkeeping seriously you will provide an accurate and reliable picture of the financial health of your company, allowing you to determine exactly how well or poorly it has performed in a given period. In this regard, it is advisable to hire a Colombian bookkeeping service and leave your company’s bookkeeping in the hands of experts.
3. Separate personal and business accounts
Although maintaining two bank accounts instead of one may seem like a burden, the reality is that it is not. It makes your accounts much easier to manage. Although it may seem obvious to some, others have yet to consider it.
When all of your business finances are taken care of from one account, it makes taxes much easier and simpler.
It should be noted that the business bank account must be used strictly for business purposes. The credit card should not be used in emergencies for any personal use as it will be reflected as a sign of misuse. It is also a good practice to present all the invoices, commercial and personal separately and to contract a bookkeeping service that allows you to better manage your accounts.
4. Forgetting to record small transactions
For someone who is not an expert, it is quite easy to think that petty cash transactions are not important, but it is essential that your company keep a record of all your expenses, no matter how insignificant.
This is especially important in retail environments, where many transactions are based on cash.
Stay on top of small transactions and it will become much easier to manage larger ones. Bogotá bookkeeping services help you keep track of small transactions so you can easily manage your books as your business grows and number of transactions increases.
5. Not assigning clear budgets to each project
Entering a project without having any idea how much it could cost your company is an easy way to end up spending much more than you intended.
Not budgeting effectively also makes it difficult for you to control a project that has clearly cost your business more than it should. This can cause your company to spend its limited funds on projects that will not yield a return on investment. A Colombian bookkeeping service allows you to know the appropriate budgets for each project.
6. Not being willing to delegate
Small business owners are often unwilling to delegate bookkeeping to experienced accounting professionals, but business growth depends on the critical ability to allow other professionals to handle anything outside of your core business competencies.
We explain what accounting records are.
Simply, you must be willing to let other people do their work while you do yours. Few business owners are qualified in bookkeeping, tax strategies, business asset management, and business entity creation to capitalize on the advantages of certain business structures. A bookkeeping service will help you maximize income and minimize taxes.