Common Accountancy mistakes Scottish businesses make.
Proper accounting is essential for any business. As we’re based in Glasgow and work with businesses all over Scotland, we can tell you that unfortunately, Scottish businesses are no exception.
Keeping accurate financial records is crucial to the success of your company. It helps you track your expenses, manage your cash flow, and make well-informed decisions. Accounting mistakes can be costly and can cause serious problems for your business. In this article, we will discuss some common accounting mistakes that Scottish businesses should avoid.
Companies often don’t keep accurate records
One of the most significant accounting mistakes that Scottish businesses tend to make is not keeping accurate and up-to-date financial records. This can lead to many problems, including inaccurate financial statements, difficulty in tracking expenses, and missed tax deductions which can cost you serious money in overpaying of tax to HMRC. Don’t do this! Your accountant should be able to help you implement a system for tracking and recording all financial transactions. This can include using accounting software or working with a professional accountant. If they are unwilling to help you it’s time to look for a new accountant.
Do you mix business and personal expenses?
Another common mistake that we see Scottish businesses make all too often is mixing personal and business expenses. This can make it difficult to track your business’s financial performance and can also lead to issues with the HM Revenue & Customs (HMRC). To avoid this mistake, it is essential to separate personal and business expenses and maintain separate bank accounts and credit cards for each.
Not reconciling bank statements properly
Reconciling your bank statements is a crucial part of proper accounting, but it is a task that many Scottish businesses neglect. Failing to reconcile your bank statements can lead to errors in your financial statements, missed transactions, and potential fraud. Get into the habit of doing this regularly. A good accountant can help you with this and you really will benefit in the long run.
Ignoring cash flow
Cash flow is king as the saying goes. It’s one of the most critical factors for any business, and ignoring it can lead to serious financial problems. Scottish businesses must track their cash flow regularly and ensure that they have enough cash to cover their expenses. As an accountancy firm, we help our clients implement systems for invoicing and collecting payments, managing accounts payable and receivable, and forecasting cash flow. Your accountancy should be ensuring you do this. If they don’t, it’s time to look for one that will.
Not keeping up to date with new regulations from HMRC
Scottish businesses must keep up with tax regulations to avoid potential penalties and fines. You really need to understand your various tax obligations and keep accurate records of all financial transactions.
Many businesses don’t seek professional advice
Finally, one of the most significant mistakes that Scottish businesses can make is not seeking professional financial advice. We understand that it’s tempting to try to avoid the cost of an accountant and try to handle accounting tasks yourself. Good accountants don’t exactly work for free. However, they can help you avoid expensive mistakes and as business and tax laws are complex they’ll most likely save you money by ensuring that you pay only the tax that you need to. A good accountant can help you streamline your workflow, help you control cash flow and help you work more efficiently. As Glasgow-based accountants, we regularly have local businesses contacting us for help. It’s absolutely understandable that they try to save money and deal with business financials themselves but often they get themselves into serious organisational problems.
Your business needs its finances to be streamlined. You need to be able to access information quickly in order to make good financial decisions. The information has to be accurate and up to date. You must have systems in place that allow you to bill quickly and easily see outstanding invoices. The latest Cloud systems allow you to do all this and much more.