Having experienced running multiple business myself and now helping business owners get more from the accounting software, I thought it would be good to share some of my own mistakes as well as some of the common mistakes business owners continue to make when using accounting software.
1. It’s the wrong platform to start with!
Marketing is a very powerful thing. So is listening to people who think they have your best intentions in mind but do not really understand your business processing needs. Jumping at the latest whiz-bang wonderful tool online is way to easy these days. Pretty colors are used, easy wizards to get started and advisors or friends being swayed to promote certain companies.
Tip - Make sure you are planning for the future and understand what and how you want your financial information delivered to you. E.g. from anywhere at anytime using an online accounting solution or only when you are in the office using software installed on your desktop or laptop.
2. Trusting automated bank reconciliations
Technology is a wonderful tool and you can certainly automate many of the processes you have. But there is a perception in SME land that it is as easy as clicking a tick button and your bank reconciliation are done. Hold the phone please! How do you know that the accounting software has coded the transaction correctly and has the right tax code applied. You could be up for a lot of money down the track when your bookkeeper or accountant has to fix up the mess.
3. Not having a pre and post processing audit system in place
Not having pre and post checks on all of your entered transactions before lodging your BAS / IAS, trial balance and balance sheets could lead to under or over payments to the ATO. You could save yourself a lot of time and money with some simple procedures in place when using your accounting software.
Tip – your accounting software should have these features in place.
4. Doing the books yourself
You start a business with limited cash flow and resources so the logical thing to say is “I’ll save time and money doing it myself and get someone else done the track.” By the time you some how find time to do your bookkeeping and with potentially a lack of accounting knowledge in terms of how to enter certain transactions into your accounting software will cost you down the track.
Tip – find someone who can bundle up their services with the accounting software and get your books down correctly, on time the first time. It's doesn't actually cost that much!
5. Not having a backup and a lack of security
The BIG one! I am guilty of this myself and every second person I speak to is under the impression that “everything will be alright.” Ask yourself this. What would happen if you lost all of your accounting data?
Tip – move your accounts to the cloud. There’s no need to worry about installing software, backing it up or the security. It’s all done for you.
I would love to hear other people mistakes along your journey!