7 Common Accountancy Mistakes made by Businesses

We see many great businesses doing great things, but we also see common themes in what many don't get quite right with their accounts.

1) Mixing Business and Personal

We often see businesses not using a separate bank account for their business income and expenses. This is very confusing for business owners as they can't see clearly how much their business is making but also becomes much more costly at year-end as your accountant has to seperate the figures.

2) Wrong Structure

When you first start a business there is a lot to think about and business owners often think they have to be a Limited Company or that if they are a Sole Trader they can't be VAT registered. Taking some professional advice at the start will ensure that you have the right structure from day 1.

3) Not using any software

Soon it is going to be a legal requirement for businesses to use proper accounts software and submit reports to HMRC every quarter. So if you aren't using any now is the time to do so. As well as been compliant , this will make your life easier and give you better information.

4) Letting the books get behind

Making sure your books are up to date is a fundamental part of any business , it is also a little bit boring and time consuming. However without up to date books you don't have any financial information about your business, so either set aside some time each week or pay someone else to do it for you.

5) Not Setting Targets

"What gets measured gets done" It is really important to set financial targets for your busienss and to monitor them closely. Doing this is what will set you apart from your competitors and add more money to the bottom line.

6) Not understanding cashflow

Most businesses have to keep their cash in balance and can have times when that is tough. It is important to have robust credit control procedures, know who you are going to pay and when and not be surprised when it's time to pay the VAT.

7) Confusing Profit and Cash

Business owners often look at their accounts and see a profit , then wonder why they have no cash. A good accountant will be able to explain where your cash is and it is important as a business owner that you also understand where your cash goes.