Rarely Realized! Here Are 5 Bookkeeping Mistakes Often Made By MSMEs

Bookkeeping mistakes that are often made by novice businessmen are mixing personal money with business money. (photo: doc.unsplash)

JAKARTA - Small mistakes such as incorrectly making food or drinks for customers may be understandable. But bookkeeping errors will definitely hurt your business. These mistakes are common in small companies such as coffee shops or food trucks which generally do not have a large number of employees.

The main cause of errors is running the business alone. Starting from marketing, production processes, to bookkeeping, everything is done by the owner. At first, you may not feel overwhelmed because the number of customers is still small. Even though now there are a number of business bookkeeping applications that help the current bookkeeping process.

However, over time you will grow your business and your busyness will increase. It is at this time that business owners usually start to make a number of mistakes. Well, the following are bookkeeping mistakes that are often made by small entrepreneurs.

Do not separate personal and company finances

Bookkeeping mistakes that are often made by novice businessmen are mixing personal money with business money. This is highly discouraged, even if you have god-level discipline. Unexpected disasters such as sick family or urgent needs can come at any time and at this moment you usually think about using business money first.

This will certainly disrupt your company's cash flow. Therefore, it is highly recommended to separate personal and company accounts. On the other hand, you should also be careful if you want to use personal money for the company. It often happens that you forget to record expenses from your own wallet and you end up losing!

Doing bookkeeping manually

Let alone small companies, companies with dozens of employees are still many who do the bookkeeping manually. A Microsoft Excel spreadsheet or Google Sheet is a tool commonly used to record cash flows in and out of a company.

This manual method has a major weakness, namely in terms of human error. Some examples of human errors that may occur are you forget to pay your monthly bill or enter the wrong payment from a customer. Danger right?!

At this level, you may think about hiring an accountant to help you minimize human errors that may occur in your company's books. However, are you sure that the accountant has met your needs?

Hiring an accountant that doesn't suit your needs

Finding an accountant is actually not difficult. The hard part is finding an accountant who understands the ins and outs of your business. This is important because an accountant who does not understand the flow of money in and out of your business will not be able to provide advice on where you can save expenses.

In addition, you also need an accountant who can be trusted. This point is obviously important because it is your accountant who will take care of your business finances. You certainly don't want to hire someone with no clear background to manage the most important aspects of your business, do you?

This is what makes it difficult for entrepreneurs to find accounting staff. And when we manage to find the right person, we often have to spend quite a bit of money to pay salaries.

Wrong use of accounting software

For those who have difficulty finding the right person, they generally switch to using accounting software. The reason is simple. Accounting software can be trusted, reliable, and facilitates your business bookkeeping by automating all things related to company finances.

However, not a few business people still have difficulty using accounting software because they are accustomed to doing bookkeeping manually for years. When the software is misused, instead of helping you, the system turns into your master's weapon.

Therefore, consider using accounting software where the software developer has good customer service. Without this service, it's useless for you to spend a lot of money to buy accounting software but you can't use it.

Procrastination

Not only bookkeeping, in fact we often procrastinate because we think we still have plenty of time to do other things. It was only when the deadline approached that we just started the work that was already piling up.

This is a bad habit that is hard to break, but that doesn't mean it can't be fixed. Get used to doing something before the deadline comes to pick you up. That way you can focus on work and give the best results instead of rushing to finish work which usually leads to mistakes.

It's the same with bookkeeping. Don't put off doing the bookkeeping until it's time for the bill to arrive. Panic usually accompanies those who are rushing to do something before the deadline, and panic is prone to making mistakes. As we all know, bookkeeping errors are fatal.

The importance of automated solutions for bookkeeping

Stakeholders such as managers, investors need relevant and real-time information to help them make business-related decisions. By recording financial data in journal entries, it will simplify the process. Each transactional process has an impact on the financial position of the business, so it must be supported by one or more source documents for the basis of recording in the journal or subsidiary ledger. Examples are sales invoices, purchase invoices, cash receipts, account statements, and other documents that can be valid evidence.

A good record-keeping system includes a summary of your business transactional processes which are usually recorded in journals and ledgers thereby creating transparency in the flow. One solution that can make it easier to record cash flows in real-time and manage transactions is a complete financial software. The software can record and manage all activities in one dashboard for easy access whenever the company needs it. Then, at the end of the year or a certain period, the system will prepare financial reports with complete and reliable information to assist the company in making decisions.

Benefits of bookkeeping software

Manually recording daily journals and transactions is often time-consuming and prone to errors. Business bookkeeping applications automate bookkeeping work so that it is faster and more accurate. The benefit of business bookkeeping applications in transactions is that recording simplifies the financial management process and keeps accurate financial records. This solution is a must in running business operations, and the sooner you implement it, the better. These records help in evaluating the effectiveness of the company and its profit over a certain period. As the business scale grows, its accounting needs become more complex, thus requiring automated solutions.

For novice businessmen, learning from mistakes is important. The most important thing is not to make the same mistakes over and over again. Moreover, the mistakes made are related to your business books. Take immediate action to avoid these problems, be it hiring an accountant you can trust or automating your books with a business bookkeeping app.

Simpler Bookkeeping with Journal Accounting Application

Financial bookkeeping is not an easy thing, but bookkeeping must still be done for the sake of running a business.

Actually, there are 3 ways to manage bookkeeping in a business, which are done personally, using the services of a bookkeeper or using business and financial bookkeeping applications such as Journals.

Let alone expenses and income, the Journal's financial statements are equipped with a Balance Sheet, Profit and Loss Report and Cash Flow.

In fact, bookkeeping can be managed in real-time anytime and anywhere. There are many other benefits of journals such as invoices, stock of goods, cash links to accounting and other business needs. Looking for a complete but easy-to-use business bookkeeping application? Register Journal, you can try it for free for 14 days.