This document discusses 10 bookkeeping mistakes that can be avoided through outsourcing bookkeeping. It notes that poor financial health from inaccurate accounting can hurt small businesses. Outsourcing ensures efficient accounting through regular expense tracking, account reconciliation, proper employee classification for taxes, and establishing accurate categories. It reduces the risk of fraud or errors from doing the books yourself. Outsourcing provides backup of financial data and management of petty cash. Contact information is provided for the outsourcing service.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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 yearend.
14. 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.
15. About us
• We Recommend Outsourcing, a professional fullservice 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.