Ferdinand Pinto

Accounting Author

Running your own business is hugely fulfilling… often, it gets quite demanding. It takes a lot of hard work to get your business off the ground, but it's worth it to be your own boss and be devoted to your specialization to something that you genuinely love doing. However, there's a critical part of maintaining a business that most business owners dislike: bookkeeping.

If you are not a professional bookkeeper, the chances are that you find bookkeeping complicated and rather dull. However, having good bookkeeping is vital to your business's financial health, and getting it wrong can have devastating outcomes. So, let's look at the five most common bookkeeping errors that can endanger – or even destroy – your business.

1. Failing to Include Bookkeeping in Your Business Plan

As mentioned above, bookkeeping is uncertain to be the area of your business that you're most motivated about. However, failing to account for bookkeeping in your business plan is a huge mistake. Your business plan must lay the foundation for your future achievements, and it's essential to have a firm plan in place before moving ahead.

Be sure to include your financial goals and bookkeeping processes in your business plan. Make sure that you are clear on who oversees each financial deliverable and create a bookkeeping schedule. Many entrepreneurs get swept up in the excitement of their new venture and put bookkeeping off until later, which is a big mistake. Staying on top of bookkeeping is essential to ensure that your company stays in good financial health, so make a schedule that you can stick to.

2. Poor Organisation

Bookkeeping is complicated enough, so don't make it worse by failing to organize your invoices and receipts properly. It's worth taking time to set up a transparent organizational system to follow so that you don't find yourself buried under a mountain of messy documents later. Cloud-based bookkeeping software can be beneficial for this, as you can upload pictures of your receipts from your smartphone, and the program will automatically organize them for you. This also ensures that you don't lose any receipts and end up paying more tax than necessary.

3. Mixing Business and Personal Bank Accounts

Doing business with your personal bank account is a sure-fire way to muddle your records and enter mistakes on your tax return. So, it's essential to create a separate business bank account as soon as possible to ensure that your business and personal transactions stay separate. Otherwise, it can be challenging – not to mention time-consuming – to remember which purchases were business expenses and which were personal. This may lead you to miss out on tax deductions or mistakenly entering personal items on your tax return, which could lead to penalties.

4. Neglecting and Misusing Petty Cash

Many business owners neglect to file petty cash, resulting in an incorrect tax bill and even fines. Furthermore, some business owners think of petty cash as free money or their personal wallet. While petty cash is undoubtedly convenient, remember that the money still belongs to the business and that these transactions need to be tracked.

5. Failing to Classify Employees

It's essential to correctly classify your employees and keep track of their employment status to avoid confusion regarding filing your tax return. There are three main types of employees that most businesses have on their payroll:


Full-time

Part-time

Independent contractors


You worked hard to launch your business, so don't jeopardize your company's

financial health by making the above bookkeeping mistakes. However, bookkeeping can undoubtedly be a demanding job, and it only grows more so as your business expands. Therefore, if you're struggling to stay on top of bookkeeping, it may also be time to consider hiring the services of a professional bookkeeper to make sure that you stay on track for financial success. Contact Finance Advisor Auckland


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Bookkeeping

You can create any structure you want by using the same tools as in the regular workflow. Add buttons and forms or anything else you'd want.

Being experienced with an accounting background, we can offer a wide range of reliable and accurate bookkeeping services. A common question often asked is, "What exactly does a bookkeeper do? "The answer to this question is shown below for our services as specialist bookkeepers. We can,of course, modify our services to suit the needs of your business whether you need a few of these services or all.

·      Accounts Receivable*-Invoice preparation and follow-up with the client

·      Accounts Payable* - Suppliers' invoices are processed and paid when due.

·    Bank Reconciliations -Reconciling Bank and Credit Card accounts with daily bank feeds

·     GST Filing                        - Timely filing of Bi-Monthly or Six-Monthly returns

·     System Training               - Training is required whenever you choose new software. We provide free training.

·    Accounting Software conversions – With our expertise, we can switch your accounting information to XERO/MYOB

·        Payroll

·        Unlimited Email Support

*Note:- Accounts Receivable and Accounts Payable are closely monitored to ensure that your business has no issues with cashflow

Payroll Management

Business Pillars offers all-inclusive payroll services that help your business run efficiently. We are committed to being legally compliant. Our services are built to simplify payroll processes for small to medium-sized businesses throughout New Zealand.

PAYROLL processing made easy

We provide the most updated payroll solutions tailored-made that is affordable to your requirement. We are committed to taking care of all the work demanded, allowing you to focus your time and energy on more essential things you love to do.

Our payroll services are:

·        Employees pay, On-time payments including benefits, reimbursements, deductions, Weekly/Fortnightly/Monthly

·        Employee PAYE

·        Payday Filing   – Timely filing returns to IRD

·        Leave entitlements– Accruals for each type of leave

·        Leave Payment - As per Holiday Act 2003

·        KiwiSaver contributions

·        Maintaining payroll records – payments and documentation

GST Filing

Timely Processing

We ensure that we file all GST Tax returns two weeks before the due date. We keep our clients informed before we proceed. This ensures that the client is at ease.

·        GST Filing        - Timely filing of Bi-Monthly or Six-Monthly returns

Monthly / Quarterly Advisory

The clients are in a position to process their reports from the software chosen. Based on the service requested, additional reports are also given that are not available in their chosen software. These reports enable the client to make corrective business decisions. Business Pillars reaches out to clients who require more assistance.

Monthly Management Meetings

The primary purpose of a monthly management meeting is to get the business to grow. This is either done through a phone call, zoom, or meeting in person.

Cash flow Management

Managing cashflow is a significant responsibility faced by most small businesses. We reach out to businesses making it stress-free to ride on the highs and lows of the cash flow throughout the year.

We assist in producing a cashflow statement which is a financial statement that summarizes the amount of cash entering and leaving the business. The cashflow statement measures how well the business can manage its cash position, meaning how well the business can generate cash to pay its debt commitments and fund the day-to-day operating expenses.

Budget Forecasting

Small business budgeting and forecasting

We need to get some relevant numbers to know what the future will look like regarding a business. Budgeting and forecasting will help to support this vision. Business Pillars can work alongside you to understand these basics so you can build a financially sustainable business.

What is a budget?

The budget estimates how much money will come in and go out from your business over time (usually a year). Budgeting and forecasting normally benefit all businesses and first-time startups to see if they can afford to run the business and compensate for all their hard work with a good return for their initiative.

What are the main principles of having a budget

Budgets forecast the money-making possibility of a business. It will also highlight things like:

  • How much will it cost to startup?
  • How much money is needed to borrow?
  • When will be the breakeven point?
  • How much should the customers be charged?
  • How many staff are needed?

Monthly / Quarterly Advisory

The clients are in a position to process their reports from the software chosen. Based on the service requested, additional reports are also given that are not available in their chosen software. These reports enable the client to make corrective business decisions. Business Pillars reaches out to clients who require more assistance.

Job Management

Job Management is software that supports project managers and teams to complete client requests and projects efficiently. Most professionals depend upon this job tracking software which assists them in supervising multiple sections of a business. Business Pillars are here to assist in setting up this service to track income and expenses related to service jobs.

XERO and MYOB both have the capability for Job Tracking

These are the advantages:-

·        Create quotes immediately

·        Easily track jobs from quote to invoice

·        Schedule the jobs on the go

·        Get paid quicker