5 Ways DIY Bookkeeping Can Harm Your Business
Some business owners try to save money by doing the bookkeeping by themselves. DIY bookkeeping can be really handy and offer temporary solutions for your business, especially if you feel that having a full-time bookkeeper will be too costly.
But DIY bookkeeping may not be a reliable long-term solution for your business. In fact, it may even pose threats to your bottom line, especially if you don’t have the background, experience, and training to do it.
To help you avoid the potential pitfalls of DIY bookkeeping, you need to become aware of the many ways it can harm your business.
1. Lack of Knowledge and Experience in Accounting Software
Accounting software is essential in bookkeeping so you can manage your books, maintain your records, and generate accurate financial reports. However, if you don’t have a solid understanding and bookkeeping knowledge, you may not utilise the software effectively. This can lead to a lot of inaccuracies in your records. And if you submit erroneous records and documents to the Australian Tax Office (ATO), then you’ll incur penalties for underpaying your taxes.
To prevent this, you need to hire a certified bookkeeper to do the job for you. They have the expertise to navigate accounting software, so you won’t need to worry about comprehending your system. If you think about it, you’ll actually save less on hiring an expert rather than paying penalties.
2. Mistakes in Superannuation Contributions
You, as an employer, need to pay a minimum superannuation amount of 9.5% for each of your employee’s base earnings if they earn over $450 per month. If you fail to pay your superannuation, you have not complied with the Australian superannuation law, resulting in strict penalties from the ATO.
With a certified bookkeeper by your side, you won’t have to worry about preparing this with your payroll each month so that you can focus on the more important aspects of your business.
3. Missing ATO Deadlines
Just like paying your superannuation, you won’t have to handle paying your taxes and lodging your BAS all by yourself. You can take care of your employees and customers while your certified bookkeeper manages your books so your business won’t miss the ATO deadlines. Aside from that, your bookkeeper will take care of lodging your forms and keeping your records updated.
4. Mistakes in Claiming Deductibles
Claiming deductibles on purchased items for business purposes and use is granted by ATO. However, if you unknowingly claim for deductibles when your supplier is not registered or when you are actually using an item partially for private purposes, then you’ll have a serious penalty to pay.
Knowing what and when to claim deductions is not easy if you don’t have the expertise to do so. But a certified bookkeeper knows exactly which deductions can be claimed.
5. Mistakes in Invoicing
Taking care of invoices can be a burden, especially if you already have a lot on your plate. And one of the biggest mistakes you can make is when you provide incorrect invoices. This will significantly affect your cash flow, and if you decide to remediate the wrong invoice, then that will add additional costs.
By hiring a professional bookkeeper, you can rest assured that your business will only generate timely and accurate invoices to prevent overdue debts for your business.
When it comes to your business, your main priority should be tasks that will lead your business to success. Your time should not be wasted on tasks that may create inaccuracies in your records and books that can pose serious threats to your business. Hiring a bookkeeper can ensure that your books are correctly managed, your records are precise and up to date, your cash flow is monitored, and your tax liability is reduced to a minimum.
New Wave Accounting can provide you with end-to-end accounting and bookkeeping services that help scale your business to succeed. We’ll provide you with the best accountant on the Gold Coast that can take care of your bookkeeping right away. Contact us today!