Accounting is the mainstay of every business. It has to be pursued judiciously to keep the business on the track and the business firm growing. Companies enroll specific teams for accounting and audit activities, in addition to outsourcing the same to professional agencies.
Although Accounting plays a crucial role in running every business successfully. Being a commercial hub, Dubai hosts a large number of businesses and they all need to maintain the book of accounts which in turn lead to the increase in the number of firms which provide accounting services in Dubai.
Since there are countless business activities happening simultaneously and business scenarios changing rapidly, it is possible that unwarranted errors occur in accounting. Certain mistakes can be of greater repercussions and land in the business in trouble.
It is better to be aware of the accounting mistakes rather than making those and realizing it at a later stage. Many times, it may be too late before you realize it.
Not Making Entries in Time
You need to enter every transaction, each deal in the appropriate register/ ledger. It may be difficult for the accounting team or the business firm to ensure entry on the same day. The complicated nature of different business activities and several tasks of laborious nature can result in deferment of making an entry in the ledger.
This can in turn cause haphazard account data. As memory is fallible, proper record-keeping is essential to avoid confusion and chaos. The incorrect financial data can also invite other complications including the incorrect filing of tax, lack of data regarding money held/ spent, indecisiveness, etc.
Mixing of Personal and Business Accounts
Even though you are a business owner, you are an individual too. Your domestic expenditures and receivables should be kept separate. The amount should never be allowed to get mixed with the credit and debit pertaining to your business.
The basic method to prevent such a thing from happening is to keep a separate business account. Thus, you can have a clear idea about the money in different accounts. In any case, the money for both the requirements should not be mixed up. It is better to spend the money through credit/ debit cards only. So that you can get the exact data without any difficulties.
Not Following Strict Bookkeeping Methods
Bookkeeping is the breathing air for business. Not complying with strict bookkeeping practices can break your business. However, some business owners do not realize this fact. They may recruit one person to do the job.
Without any adequate supervision or inspections from assigned superiors, the bookkeeping will go for a six. Though many countries have developed their Accounting & Bookkeeping standards along with the International Financial Reporting Standards (IFRS), some countries have chosen to develop their own standards.
When it comes to business hubs like Dubai, Abu Dhabi etc, you can find a lot of accounting and audit firms in Dubai that offer professional accountancy services to clients. Aaas (Accounting as a Service) is a back-office technique used by accounting firms in the provision of bookkeeping services in Dubai and other Emirates of the UAE.
You need to layout firm guidelines for ascertaining that bookkeeping is being followed strictly. Period inspections and audits by outsourced external agencies will give a better insight into whether the bookkeeping practices followed are effective or not.
You must recruit only competent employees for accounting and audit if you are assembling an in-house team. Even a minor calculation error can cause you a lot. The team must be monitored for their performance and perfection.
On the other hand, the outsourcing of accounting and audit will be a better method. The professional audit and accounting agencies with several years of experience will help you in identifying the mistakes both in the calculation and in the bookkeeping procedure followed by your firm.
Planning is also important in accounting. There is a stipulated period in each fiscal for tax return filing. You must mark it correctly on your accounting calendar and prepare the documents in advance. The last moment of hurry can be daunting and problematic for you. And can lead to unwarranted errors.
Tax authorities may seek submission of documents in the original. Keeping those arranged in advance can be beneficial. The team must be alert about the directives from the tax authority to act in time, to avoid unwarranted issues.
Reconciliation of Data in Ledgers with Money Held in Bank
Tallying the amount held in hand, money spent and money available in banks is mandatory. People tend to forget comparing the expenditures, receivables, and the money held in actual. The accounting team must reconcile the data to confirm that the calculations are accurate.
At times, small expenses you consider silly may not be recorded in the ledger. You will realize it only when you compare the money in the bank with the money entered in the register. Small business firms have to be extra conscious of this aspect. As they will be dealing with small-scale agencies, the transactions may be small compared to big organizations.
Many small business firms focus on short-term activities rather than on long term planning. You need to have a bigger picture about the growth prospects of the company. The accounting team has to consider all the data that will be advantageous for the business firm to achieve greater heights through measured acts in the long term.
The accounting team has to be advised and trained according to your long-term goals too. So that they can give better inputs regarding financial strategy. You may consult professional audit and accounting firms in this regard. With numerous years of experience in the field, the outsourced agency will be able to provide you with better insights.
Even though it may seem simple accounting is a complex task. You must have specifically earmarked the team for accounting. A simple overlook from their side can be harmful to the business firm. The above-mentioned are some of the accounting mistakes that you can avoid. Focus on your aim, plan it, and move ahead.