Accountants are the ones primarily responsible for the maintenance and examination of records of a business while computing the financial status of the company by preparing final accounts like P&L account, Balance sheet, etc. Also, accountants are the ones liable to file taxes and scrutinize the accuracy of records of a company. As a result, they are expected to be accurate. Any accounting mistake on their part can have long lasting effects.
Incompetence as well as inaccuracy in maintaining the accounts of the company can give major blow to a small sized company. Though it would not be right to say that big companies wouldn’t be affected by it at all. Misleading information resulting from the accountants mistakes can lead to major losses and punitive action from regulatory authorities. In this content, we will talk about the costly accounting mistakes that could cost high to companies of all sizes and should be avoided by the accountants-
An accountant should not:-
Maintain one account for personal and professional finances of the owners
An accountant should not commit the mistake of maintaining one account for personal and professional transactions. Rather, he should have different accounts for the proprietor’s and business’s transactions to be able to have a clear picture of profitability of the company. Separate accounts will also facilitate in enjoying tax benefits through claimable business expenses. He should also insist on a business-only credit card. These steps also help in regulatory audit if any done later on.
Go with the traditional mode of monitoring expenses, rather make use of technology
Are you still confined to traditional type of accounting? It not only involves more human errors, but also require vigilant collection of receipts and other proofs of income or expenditure making the work little tedious. Switch to technology and use apps. These applications draft easy to share expenses reports and affirm automatic sync with the accounting software.
Ignore to manoeuvre for growth
Are you emphasizing on for the strategy for long term expansion of your clients’ business? If not, then this is one of your costly accounting mistakes. Successful accountancy refers to overseeing day-to-day finances along with working on to fetch future expansion of the business.
Software and cloud-based accounting confirms much easier way. It tracks the financials along with identifying the potential risks, trends, and metrics.
Show ignorance in accounts receivable slide
Mistake in keeping the track of accounts receivable and outstanding invoices is another serious mistake on behalf of the accountant. An accountant should be highly vigilant as well as strict in making policy for tracking the accounts receivable as well as that of due invoices.
Immediate action, up-to-date accurate records, and adoption to cloud based accounting is the solution to this mistake.
Should not be a one man army
One of the mistakes is absence of comprehensive knowledge as well as qualification of accounting. No matter what the size of a business is, the accountant should be well-qualified, trained, and experienced with the accounting skills. However, the accountant cannot be expected to have expertise in all areas of business. Therefore, one should not hesitate to seek help of specialised accounting professionals in the matters related to specific line of business. An accountant should seek the help of trusted professionals, invest in excellent IT solutions , and get himself updated with the latest trends and tools.