If you’ve just started doing your own bookkeeping in a cloud accounting software, it is normal to make a few mistakes while you’re learning. We see mistakes that are quite common – and unfortunately costly – so you should be aware of them if you want to get the most out of a powerful cloud accounting system.
*If you don’t feel like reading, watch the video here.
1. Not connecting all the bank and credit card accounts to your cloud accounting system, dedicated for your business
Make sure that you keep all your business bank and credit card accounts synced to your cloud accounting software to ensure that you don’t miss any sales or expenses in your reports.
Also, make sure that you separate your business accounts with your personal ones to avoid hassles during tax season. Trust us…your accountant and bookkeeper will thank you! Doing this also helps you make accurate business decisions.
2. Not reconciling the bank account to bank statements
Run a reconciliation report on a regular basis and then compare it to your bank statements to ensure there aren’t any errors or duplications.
Many business owners miss this critical step, which means that they are looking at inaccurate or incomplete data when they check their reports.
3. Regularly check user access and permission levels
Many business owners simply give key team members full access to their business’ cloud accounting software and don’t review the user permissions at all.
However, the best practice is to provide access on an “as needed” basis and review who has access to the system and what permission level they have on a quarterly basis.
Also, when your staff members leave, remember to revoke their cloud accounting system access immediately.
4. Set up rules for repetitive transactions
Many of your business cloud accounting transactions are something that you do every month, week or even every day. Perhaps you buy coffee for your staff every day, you can set up a rule that automatically codes that purchase to meals and entertainment.
Just spend a few minutes each time you are logged into your cloud accounting software, look for at least one rule.
5. Not setting financial SOPs (standard operating procedures)
Create a proper financial SOP which describes who is responsible for what and by when, as well as the step-by-step process on how to get things done.
For instance, you can assign your operations manager to run the aged receivables report in the system so you’ll know who owes your business money. Then, map out a clear action plan of what happens in specific scenarios such as a payment that’s 2 weeks late. You can also have standard replies that the team can send as needed.
6. Mishandling transactions when you’ve paid with your personal money
We find that many business owners don’t know how to handle transactions when they’ve paid for a business expense using their personal account. There are actually ways to capture such expenses paid on the wrong card so you can still claim the tax deduction. Use Hubdoc to gather receipts even if you paid for them with your personal account.
You may need to get in touch with your advisors to make the adjustments accordingly.
7. Avoid Mistakes by Working with a Specialist Advisor
The best way to ensure that you’re taking full advantage of all the features in your cloud accounting system and avoiding costly financial mistakes is to work with an experienced advisor who knows the ins and outs of this cloud accounting system.
We’re Xero Certified and would be happy to take a look at your file to give you some suggestions.
Get in touch with us today and let us help you save time and make smarter decisions that are supported by data.