Common Accounting Mistakes that Small Businesses make

AccountingKeeping the books is one of the more challenging aspects of running a company, particularly a small one. It is also one of the most important. As start-ups transcend from one man bands to SMEs, it is sometimes difficult for small business owners who are accustomed to being involved in every aspect of their business, to admit that they are not an expert at everything and rope in more suitable individuals to handle their accounting requirements. They also tend to favour doing things themselves on spreadsheets rather than investing in the appropriate accounting software.

Thanks to technology and a vast range of accounting solutions for today’s business owner, it is easier than ever to keep an accurate record of where your business’s money is going.

We all make mistakes! Some accounting mistakes are petty, and easy to adjust once noted. But others are more significant and could have a negative effect on your business’s health.

In our 30+ years helping small and medium sized business owners, we’ve come to recognise some accounting mistakes that can have serious negative repercussions for your business.

  1. AccountingDon’t try to do it all yourself! Passionate business owners tend to want to do everything on their own, if for no other reasons, to contain costs. When you first started out, you may have been the one person handing everything. But this cannot be sustained for long. Investing in the right people and resources is crucial and this is truer of accounting professionals. A junior accountant might be great at processing transactions, but likely lacks the skills and experience necessary to guide your company’s growth.
  2. You get what you pay for. This often holds true. When seeking out the cheapest methods to save on business expenses, it can end up costing you more money in the long run. You might hire an accountant at the cheapest rate but frequent mistakes in payroll taxes and late submissions can cost you more. If you are always looking for a cheap solution, you can often count on getting poorer results.
  3. Beware of the Spreadsheet. While offering great benefits, spreadsheets have their limitations and we often find their usage stretched to beyond what is sensible and where a proper system will be far more effective and secure.
  4. Don’t mix business with personal finances. Too many small business owners use a single account for both their personal and business finances. You need clear boundaries, apart from the fact that you can also get into some serious trouble with the tax authorities. The first step when starting a business is to open a separate bank account, and keep all finances separate from thereon.
  5. Profit does not always mean cash flow. It is tempting to post each new contract as income as soon as it is signed off and before the product or service is actually delivered. But doing so can make your business seem healthier than it is and give you a distorted view of your company’s actual financial condition.
  6. Record everything! From small payments to large transactions, it is important to ensure that everything is documented and categorised in your books.  It is crucial that your business has a history of all its spending, no matter how minimal. This is particularly important in business scenarios where transactions are often cash based, from buying stationery to paying for a delivery.
  7. Categorise properly. Ensure you categorise transactions, assets and liabilities correctly. It is also important to distinguish between employees and contractors in order to avoid your business recording its accounts inaccurately.
  8. Perform a monthly check of your accounts which you need to ensure are kept up to date. It is important that your business reconciles its accounts frequently to allow you to accurately track your financial situation. Mistakes happen but when you regularly perform checks, those mistakes can be tracked and rectified in a timely manner without damaging your business.
  9. Budget. Kicking off a project without any concept of how much it could end up costing, is a quick way to end up spending a lot more than you anticipated. As your business becomes more established, you’ll become aware of how much money you need in order to continue operating. This makes it easier to set budgets for projects that are large enough to make success possible, but not excessive or wasteful.
  10. Automate what you can! With the use of software, certain requirements like payroll, budgeting and debtors’ statements can be automated, allowing you to spend your valuable time on other things you should be doing like actually running your business. Spreadsheets can only take you so far and hardly offer any security or reliability. So take your business seriously and invest in a software solution to manage your accounting requirements.
  11. Choose a modular software package that suits your business needs. Countless businesses overspend on fancy financial software because they are drawn into systems that are either too cumbersome for their requirements, or include a vast amount of modules that they will never use. So when choosing your financial package, remember to check its modularity, see that it fits your requirements and ensure that you are not paying for a system that is way too complex for your business.
  12. Back up your data. We can’t stress this enough for all aspects of your business. Any information that is critical to your business being up and running the next morning, should be regularly backed up, preferably off site, protecting you from viruses, theft or any natural disasters that may cause you to lose critical financial data.

At Shireburn, we understand small business challenges more than you could possibly imagine. Having started out more than 30 years ago as a one-man band, we have grown into a strong team of 40 professionals. Our experience dealing with countless business owners across all business sectors means that you can count on us to guide you through our financial and business software solutions, and provide the best fit for your business. Get in touch with us for a proposal and demonstration.


Heritage Malta chooses Shireburn Software’s solutions

Heritage Malta
Fort St Angelo, Birgu

Heritage Malta has recently teamed-up with Shireburn Software to support its prestigious sites with their software solutions. Shireburn was chosen to replace the previous systems and provide its integrated accounting, inventory and point-of-sale solutions to help combine operations at Heritage Malta’s various museums and sites around Malta and Gozo.

Heritage Malta embarked on a long term project to integrate all systems across all its operations. Shireburn’s Inventory Management System (SIMS) was implemented as the backbone inventory control system, with a total of 21 implementations of Shireburn’s Point-of-Sale (SPOS) solution across all Heritage Malta museums and sites, including the National Museum of Archaeology, the Inquisitor’s Palace, St Paul’s Catacombs and the Gozo Nature Museum amongst others.

Heritage Malta
Ta Kola Windmill

Heritage Malta is continuously striving to integrate all its data into one knowledge base and hence this includes several initiatives which concern the updating of all its ICT services and tools.

The Shireburn Financial Manager (SFM) has also replaced the previous accounting system, and with direct integration with inventory, point of sale and payroll, it now provides a more cohesive solution for Heritage Malta to run its operations more smoothly.

Training was provided to all Heritage Malta staff over the course of a month, starting with back office employees, and onto management and front facing staff, in time for the ‘go live’ date.

Heritage Malta had already been using Shireburn’s Payroll System (SPS) in conjunction with Shireburn’s Time and Attendance system since 2002 and runs a monthly payroll for its 310 employees.

Shireburn Software is a software products company, specialising in the development of business software solutions and their support, both locally and overseas. Solutions include accounting, payroll and HR, inventory and retail, eCommerce, business intelligence and document management amongst others.


Shireburn introduces Electronic Payments into its Accounting Solution

SEPA SFMUsers of the Shireburn Financial Manager are now able to electronically process Euro payments to their local and Euro-Zone suppliers without the need to print cheques or effect manual bank transfers.

This facility, available in the new SFM SEPA module, increases productivity by removing the need to prepare and sign cheques, reduces costs while also enhancing controls and auditability. The move away from cheque payments towards electronic payments ensures a faster, cheaper and more secure, fully audited and authorised payment process.

The SFM SEPA module allows businesses to manage electronic SEPA payments more efficiently, directly from within SFM. Payments to suppliers are posted as usual and authorised users are able to export a SEPA file, ready for upload on their bank’s on-line payments portal for authorisation by a signatory. Remittance advices are also able to be printed or sent to suppliers via email to notify them of the payment.

“Shireburn’s SEPA Module is yet another example of how Shireburn responds to evolving business needs and market requirements,” said Franco Galea, Operations Director at Shireburn Software. “Thousands of companies that depend on Shireburn’s accounting system will now be able to further boost their productivity, reduce costs and controls.”

The Shireburn SEPA module supports payments through Bank of Valletta, HSBC Bank Malta, Banif Bank, Lombard Bank Malta and APS. The SFM SEPA module was unveiled among some 200 of Malta’s top accounting professionals at the Malta Institute for Accountants (MIA) Conference held on the 6th and 7th November.

For more information about the Shireburn Financial Manager SEPA Module or other business solutions, companies may contact Shireburn on +356 2131 9977, info@shireburn.com or visit shireburn.com/sepa

About Shireburn Software

Shireburn Software is a software products company, specialising in the development of business software solutions and their support, both locally and overseas. Solutions include accounting, payroll and HR, inventory and retail, eCommerce, business intelligence and document management amongst others.

About SEPA

SEPA (Single European Payment Area) is a banking industry framework which simplifies bank transfers denominated in Euro to a bank account in a SEPA member country. SEPA allows anyone to affect cashless payments in Euro to anyone located within the Euro-Zone, using the same bank account and instructions as if they were affecting a local payment. This makes paying Euro-Zone creditors easier, cheaper and more efficient. More information regarding SEPA can be obtained from: http://ec.europa.eu/internal_market/payments/sepa/


Shireburn supports the Malta Institute of Management VAT and EU Conference

MIM VAT & EU ConferenceShireburn Software supported the Malta Institute of Management VAT & EU Conference held on the 15th October at The Xara Lodge. Over 120 delegates gathered to listen to top local and international speakers discuss issues related to the collection and exchange of information in VAT matters, technology systems and legal updates, amongst others.

“As a leading local business software provider, we feel it’s important for us to play a role in encouraging open discussion about such issues that affect the daily running of local business”, explained John de Giorgio, Managing Director of Shireburn Software.

Shireburn’s accounting solution, the Shireburn Financial Manager (SFM) is a leading financial solution on the local business market, having been developed locally specifically to cater for the needs of local businesses, and supported here in Malta by a team of experts ready to assist users with their requirements.

Shireburn Software is a leading local software products company, specialising in the development of business software solutions and their support. Solutions include accounting, payroll and HR, inventory and retail, eCommerce, business intelligence and document management amongst others. For further information, email info@shireburn.com.