4 Common Mistakes Made by In-House Accountants to Avoid - Guide
Updated: Dec 12, 2019
All too often, small businesses utilize in-house accounting rather than hire a certified accountant to do the accounting for them. They do this to save money, eliminating the need to pay for an official accountant. However, in the long run, the lack of experience will start to show in the form of many different mistakes, which can prove extremely costly.
With that said, here are four common accounting mistakes that occur when accounting is kept in-house:
1. Missing Out on Tax Deductions
While doing tax is a lot easier now with available accounting and tax software, it isn't a one-size-fits-all kind of matter. In other words, each business will require a unique way to handle tax, and using software won't cut it all the time. Because of the general-use nature of tax software programs, companies often lose out on potential tax deductions. Sometimes, it can also lead to tax penalties when mistakes occur.
2. Heavy Reliance on Accounting Software
As previously mentioned, relying on accounting software by itself isn't a solution that businesses should settle on. There are plenty of shortcomings when it comes to software. For example, accounting software cannot handle complicated taxes, nor can it offer an industry-specific solution. As such, accounting software should be used for simple tasks and general activities. For more complex tasks, a certified accountant is required.
3. Thinking Short-Term
More often than not, in-house accountants who only focus on daily tasks find difficulty looking at what lies ahead, unlike certified accountants that take the future into consideration. A short-term mindset isn't going to help a business make informed decisions when it comes to selecting the right investments to make or deciding which area of the company to expand. In other words, businesses with in-house accounting could miss out on opportunities to grow.
Because accounting is seen as one of just many business functions, it tends to get pushed back until the last minute. Unfortunately, accounting is a year-round job, and delaying it is only going to make matters worse.
When this happens, deadlines are missed, incurring tax penalties. At the same time, rushing to balance the books leads to plenty of other mistakes when it comes to entering data and labelling accounts.
Delaying accounting tasks can also hurt your relationship with your suppliers, as invoices are either delayed or go unnoticed. Employees can even start to become restless as they sit and wait for their reimbursement that was supposed to arrive a day ago but hasn't because their request was pushed back or forgotten entirely.
With all that said, why should you hire a certified accountant? Simple: they'll make sure that all these problems are non-existent. With their knowledge and expertise, they can make sure all your accounts are in order. With their experience, they can project what the future holds for your businesses and decide which opportunities to capture to boost your growth as a company.
At the same time, certified accountants help you save costs in different forms, such as tax deductions and tax penalties. Finally, because your accounting is done on time and schedule, you can maintain a healthy relationship not only with your suppliers but with your workforce too.
If you are looking for the best accountants on the Gold Coast for your small business, get in touch with us to see how we can help.