avoid 10 bookkeeping mistakes

!ca. Thakur Prasad adhikari

outsourcing book keeping

outsourcing book keeping

• Poor financial health is often a major contributor to the failure of many small businesses. Financial health is directly linked to efficient and accurate accounting. Particularly for small businesses, where resources and budgets are tightly rationed, outsourcing often proves to be the best way to ensure efficient accounting and subsequently timely, updated financial reports.

why outsource

• Outsourcing reduces dependency on trained and skilled manpower. Therefore, over time, outsourcing can also impact a company’s bottom line. Following are 10 mistakes that can be avoided with the judicious use of Outsourcing.

1. Not tracking expenses diligently

• It is easy to forget about recording an expense once a transaction is complete. Outsourcing can help resolve this by ensuring all expenses are tracked. This strategy also applies to reimbursements, especially when small business owners may be covering expenses from their own funds without applying for reimbursements from the company.

2. Doing it all yourself

• Most small businesses do not hire a trained bookkeeper for fear of incurring higher costs. Outsource solutions can assist in effectively ensuring expenses are tracked and books updated.

3. Delaying account reconciliation

• Account reconciliation is a critical step in the bookkeeping process. For business owners performing this function themselves, it is often relegated as a task to complete later. However, this opens the door for small errors to snowball into larger accounting mistakes. Outsourcing can reconcile business books with bank and card accounts on a regular basis, thus highlighting discrepancies that may arise.

4. Tracking small ‘incidental’ purchases

• Oftentimes, expenses which are smaller than those stipulated by the Income Tax for PAN/VAT Bills, or internal policy of the organisation requirements remain unrecorded by business owners. However, these small expenses accumulate and could be beneficial to track for tax purposes. Even small expenses add up to help you qualify for effective tax deductions.

5. Reduced human interaction translates to reduced chance of

fraud

• Bookkeepers have the opportunity to commit fraud, especially embezzlement. For a small business, such losses can have huge impacts on profitability, as well as morale. Apart from implementing failsafe controls, Outsourcing also reduces dependency on human beings, therefore reducing opportunities for fraud.

6. Ensuring back up

• Outsourcing helps create updated reports and, more importantly, accounts that are tracked and contain recorded data. As opposed to manual bookkeeping, Outsourcing can generate reliable trails and ensure accurate financial data.

7. Misclassification of employees

• Once configured, the chances of misclassification of an employee are greatly reduced in Outsourced systems. A small business could have a number of different resources, including part time employees or those working remotely. The Income Tax has various rule classifications for each employee category when it comes to calculating tax. An Outsourced system leads to reduced errors and more accurate tax filings, regardless of the number of employees in the business.

8. Not making the appropriate deductions

• Only a trained accounting professional knows for certain which tax deductions to take. Forgetting to deduct value added tax from a sale is a common error. For business taxation purposes, this error can prove costly because it displays a higher amount of sales.

9. Creating wrong categories

• Bookkeeping is all about creating categories and ensuring the right figures are assigned to the right categories. Outsourced solutions can help by creating the correct categories and ensuring these are updated accurately. Updating the wrong category can result in larger issues at fiscal year-end.

10. Stronger management of petty cash

• Most businesses maintain a petty cash reserve for minor expenses. However, it is easy to lose track of the money withdrawn from this reserve. With Outsourced bookkeeping, expense tracking can ensure updated records of withdrawn funds and balance the remaining reserves.

About us

• We Recommend Outsourcing, a professional full-service business support solutions provider. We offer comprehensive and scalable accounting and bookkeeping services while leveraging its expertise, experience, and state-of-the-art infrastructure. We offers multiple services in diverse packages for companies that are seeking a trustworthy and professional partner to give their business a head start.

can we help?

business contactsWe can be contacted at the following office;

TP Adhikari & Associates,

Chartered Accountants

2nd

Floor, 723/60, Tanka Prasad Ghumti Sadak,

Anamnagar, Kathmandu- 32, Nepal

GPO Box No. 10915

Contact No: 01-4247816 / 4247917

Email : tpadhikari2012@gmail.com

Fax: +977-1-4247917

!CONTACT PERSON: CA Thakur Prasad Adhikari Cell +977 9851094055