Description: Taking care of the Accounting and Bookkeeping of a company will help in the business’s survival and assist in making the company more profitable.
Accounting and Bookkeeping is the most important business function for its survival. These two processes are repetitive and time-consuming, but the management should take care that there is no mistake in recording the company’s accounting records.
There are many instances in which the proper recording and analysis of a company’s accounting and bookkeeping information are not done, which leads to the company’s downfall. Even the smallest mistake can hamper the growth and working of the business.
Here are some accounting mistakes which can harm the business in the long run:
1. Not using the Proper Accounting Standards.
All the businesses need to maintain their proper Accounting records of the company. In today’s world, maintaining compliance is a very important issue. Using the proper accounting standards will ensure that the company is making no mistakes. The accepted standard of reporting in the United Arab Emirates is the International Financial Reporting Standards (IFRS).
2. Not maintaining all the Business Records of the Company
The management needs to maintain all the records of the company so that during auditing or any other function, the management faced no problem. Maintaining a proper business record will help not only during audits but also in the management of the company. It is suggested that a company should maintain at least five years of accounting records.
3. Keeping Backups of all Accounting Data
Accidents can happen to anyone at any time. This is why it is recommended that backup for all the data of the company should be maintained. In case of an accident, this will help the company to fill in the gaps. This backup data will also help the company to provide better and accurate information during a Statutory Audit.
4. Not Planning Proper Budget for the Company
Budgeting is essential for a company. Preparing and maintaining a budget will help in properly allocating the resources of the company. Availing Accounting and Bookkeeping Services will ensure that all the company’s resources are properly distributed among all the functions and are used judiciously.
5. Omitting Records Intentionally or by Mistake
It may be possible that an accountant does not record certain transaction either by mistake or knowingly. This is a very big accounting mistake for the company as even a single transaction can greatly impact the company’s accounting. It can lead to false estimation of profits or losses, which can further lead the management to take incorrect decisions for the future.
6. Hiring the Wrong or Underqualified People
Hiring the correct professional to conduct the business functions is very crucial. If the company hires an auditor to complete the accounting functions or only a bookkeeper, the company will only perform a part of its job. There is a difference between an Accountant, Auditor and a Bookkeeper, and so is the functions performed by each of them.
7. Depending too much on Technology
The increasing technology has made the lives of businessmen simpler and easier, but the management should not solely depend on technological advancements. These technologies may be used to assist in performing repetitive work, but from time to time, a human touch is required. Only a human can understand the data and then work on it according to priority. The use of technology can result in losses for the company on thus, it is recommended that a business avail the services of a dedicated individual.
These are some of the mistakes that can break the business and have long-lasting effects on the company. Thus it is suggested that a company should avail accounting and bookkeeping services from reputed sources.