5 Common Accounting Mistakes Small Businesses Make (And How to Avoid Them)
As a small business owner in Australia, managing your finances effectively is vital for long-term success. Yet, many businesses fall into common accounting pitfalls that can lead to financial difficulties or compliance issues. Whether you’re just starting out or you've been in business for a while, it's important to stay on top of your accounting practices. Here are five common accounting mistakes Australian small businesses make—and how to avoid them.
1. Not Tracking All Business Expenses
The Mistake:
Not keeping a record of all business expenses, even the small ones, can lead to inaccurate financial reports and missed tax deductions.
How to Avoid It:
Augmenta Advisory can implement accounting software and apps like Xero, Hubdoc and Dext for you business, to easily track every expense. This will make tax-time smoother for your business, and allow you to have receipts and records readily available for the ATO in case they request proof for tax deductions.
2. Ignoring GST and BAS Obligations
The Mistake:
Misunderstanding or forgetting about your GST and BAS lodgement can lead to fines or penalties, or incorrect claims and payments.
How to Avoid It:
Augmenta Advisory can assist your business with staying on top of your BAS lodgement deadlines. As registered BAS agents, we are familiar with GST tax laws and will accurately report GST and lodge your BAS on time.
3. Mixing Personal and Business Finances
The Mistake:
Combining personal and business finances can create confusion and make accounting more difficult.
How to Avoid It:
We can help set up a separate business bank account and credit to easily manage your business income and expenses. We can integrate these onto your accounting software such as XERO to streamline the financial management process, by automatically syncing your business bank account and credit cards to track expenses and income. This will make financial statement preparation and tax-time a whole lot easier and give you a realtime view of your business’ financial position.
4. Not Managing Cash Flow Properly
The Mistake:
Poor cash flow management can lead to financial stress and an inability to pay bills or employees on time.
How to Avoid It:
Augmenta Advisory can assist your business with forecasting your cash flows and keep track of your payments. We will ensure our communication is clear and transparent, so you're never caught off guard and will take proactive steps to secure funding or adjust your spending.
5. Overlooking Tax Deductions
The Mistake:
Not planning for taxes or missing out on deductions can result in paying more tax than necessary.
How to Avoid It:
Augmenta Advisory will ensure that your records are clean and precise throughout the year to make tax time easier. We will also work with your tax accountant to ensure they do not miss any eligible tax deductions and set aside any funds required to pay your taxes.
Conclusion:
By avoiding these five common mistakes, you can keep your small business finances organised and compliant with Australian tax laws. The key to success is staying organised, using the right accounting tools, and seeking professional advice when necessary
Need Help with Your Business Finances?
If you’re feeling overwhelmed by the financial side of your business or need expert guidance on accounting matters, Augmenta Advisory is here to help. Contact us today for a consultation and let us help you stay on top of your business finances!