10 Common Management Mistakes in Accounting for Businesses

Managing business finances can be challenging, and small errors can lead to bigger problems later on. In this post, we’ll talk about 10 common mistakes businesses make with accounting and how you can avoid them to keep your business running smoothly.

“A good business owner doesn’t run a business blindly without knowing their financial situation.”

If you know our firm, you’ve probably heard us talk about how important it is to have up-to-date and accurate information to control your costs, cash flow, and profits. Just like in sports where you need to see the score, your business also needs a clear view of its financial position. Without it, you might be unaware of whether your business is doing well or poorly. Other common accounting mistakes we see include:

1. Handling all accounting tasks without proper training.

We often see people invest a lot in starting a new business but then cut corners on accounting, putting their investment at risk. Bad accounting is like neglecting your business. It’s like following the wrong score at a sports event and making bad decisions because the information is wrong.

2. Relying on spreadsheets instead of professional accounting software.

Spreadsheets are less reliable and miss out on the features that accounting software offers. The software makes it easier to track expenses, income, GST and reports all in one place. A professional can help you pick the right software for your business.

3. Focusing too much on sales instead of profit.

While growing sales is important, keeping an eye on costs and profits is even more crucial. Profits matter more than just sales figures.

4. Failing to set up a framework for tracking deductions and GST.

Using a business bank account for all spending helps make sure you’re capturing all your expenses and GST correctly. Poor systems can end up costing you more in taxes.

5. Inconsistent invoicing and bad debt management.

Always prioritize sending invoices on time. Set up a system that helps you minimize bad debts, like sending statements or reminders when payments are overdue.

6. Not using budgeting for growth planning.

Businesses often aim to grow but lack a detailed, month-by-month budget plan. A solid budget breaks down your growth goals into actionable steps, helping you stay on track.

7. Neglecting to understand cash flow drivers.

Few business owners fully grasp the factors that impact cash flow, such as capital expenditure, profit margins, and inventory turnover. An expert can help you measure and forecast your cash flow to keep it under control.

8. Inefficient payroll, superannuation, and wages tax management.

A good accounting system simplifies payroll. Many businesses struggle with properly clearing PAYG and superannuation liabilities.

9. Incorrectly allocating GST tax accounts.

Carrying forward inaccurate GST amounts can inflate balances on your balance sheet. Properly handling BAS journals ensures your financial statements reflect the correct figures.

10. Overlooking the need for accurate financial information.

Having reliable financial reports gives you control over your business. Regular reviews of these reports are essential for making informed decisions.

Good luck with managing your accounting better!

At Tax Accounting Adelaide, we’re here to help you manage your accounting effectively and guide your business toward success.

Break free with Tax Accounting Adelaide Services call us on 83374460

• Sole trader, Partnership, Company and Trust Tax and BAS returns;
• Self-Managed Super Funds;
• Bookkeeping and Choosing Accounting Software;
• New business Startups Advice;
• Specialising in personal training businesses;

More than just Bookkeeping, Bas returns and Tax returns – At Tax Accounting Adelaide we use accounting to grow your business