Top Ten Accounting Mistakes

  • June 2020
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Top Ten Accounting Mistakes of Small & Medium Enterprises (SMEs)

http://accountingservicesphilippines.blogspot.com/ for your Accounting needs CALL 0916-593-1601

the business owner….

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1. ALL-KNOWING BEING !  You as a one-Man Team  Some SMEs do their bookkeeping & BIR filings by themselves.

They said, it’s for cost saving purposes.  After few years, they receive letters from the BIR to check on their records. Records are found out to be incomplete & not reconciled with the BIR Returns submitted. Wrong application of BIR rules and regulations were made. Time now to pay for much bigger costs....penalties and interests to the BIR for these findings.  It is a fact that competent CPAs can maintain your books more efficiently. Competent CPAs know the BIR rules and regulations and they can also make suggestions in going about your records. http://accountingservicesphilippines.blogspot.com/

for your Accounting needs CALL 0916-593-1601

business documents….

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for Accounting needs CALL 0916-593-1601

2. RECEIPTS !!

RECEIPTS !!

 not saving receipts  Receipts are basically the supporting documents for many

expenses.  Expenses lower your income tax to be paid.  Expenses without supporting documents put you in a possible exposure to BIR which can lead to not allowing your expenses to be deductible in your income tax computation.  So, keep your receipts !!!

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for your Accounting needs CALL 0916-593-1601

3. REIMBURSE YOUR PURSE !!!  failure to include all reimbursable expenses  Small and medium enterprises (SMEs) business owners

usually pay for some office items out of their personal credit card or thru their personal cash from their pockets. After that, they forget to include these as their business expenses. These needs to be reimbursed from the business funds.  Track all things you have paid for !

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for your Accounting needs CALL 0916-593-1601

4. BOOKED IT IN THE BOOKS !  not maintaining BIR required manual book of accounts  Some businesses encode their transactions in computers in excel  

 

files. Others buy unlicensed accounting software where they do their records. Remember, unless you have a licensed accounting software and your application to the BIR for a computerized accounting system has been approved, you are required to maintain and update the manual book of accounts (journals, etc) coz your registration falls under a manual accounting system. BIR checks on the manual books. Update your books !

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for your Accounting needs CALL 0916-593-1601

Records……

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5. Differences TWO RECORDS, TWO VERSIONS ! in BIR Returns versus company books 

 Others fail to keep company books that are tie-up with BIR

Returns submitted.  Variances between books & that of the BIR Forms submitted are target areas during tax examination.  Variances can be due to reclassification or may be due to errors in filing up the BIR Return or can be mathematical errors.  Key thing is to ensure to keep records where tracing can be done from books to the information declared in the BIR form/return. http://accountingservicesphilippines.blogspot.com/

for your Accounting needs CALL 0916-593-1601

6. INCOMPLETE IS NOT NEAT !  Incomplete BIR filings  As there are various BIR Forms/Returns, usually, one is confused

as to which BIR Form he has to submit. There is BIR Form 1601E, BIR form 1701-Q, BIR Form 1604-E, & a lot more BIR Forms.  Even if you don’t have a transaction in a particular month that fall under those BIR Returns that you are required to submit, you still need to submit those BIR Forms to be stamped received by the BIR.  It is sad to hear stories of business owners who thought they are in compliance with the BIR, only to find out that they miss to submit other BIR Forms due to lack of knowledge that they are required to do so. http://accountingservicesphilippines.blogspot.com/

for your Accounting needs CALL 0916-593-1601

Double-check…

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7. DOUBE CHECK TO AVOID THE HECK !  Incorrect Filling up of BIR Forms

 BIR Forms submitted are in BIR database and they would know if

there is a month that a certain business has not filed a return.  Let’s say a business owner filed a return in April 2009 for the taxable year 2008, but he erroneously put year 2009 in the BIR Form. Should the BIR check the company’s records, it has not filed its 2008 BIR Form.  Or it can be that the Tax Identification Number (TIN) has been erroneously put. Things like these happen so business owners should ensure that BIR Forms are filled up appropriately.

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for your Accounting needs CALL 0916-593-1601

Deadlines….

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8. FAILURE TO BEAT THE DATE !  Failure to meet submission deadlines dates  April 15 -due date for the annual Income tax return. Fixed date yet

many companies still miss this deadline.  Reasons include: late preparation of Financial Statements & Income Tax Return; no Certified Public Accountant (CPA) to sign the financial statements; not have planned the funding for the tax payment; or the messenger being late in the submission due to long queue of people in the BIR offices.  Prepare and finalize the submissions early on before April 15.  Remember, even for a day of late submission, there will be penalty charges/fees. http://accountingservicesphilippines.blogspot.com/

for your Accounting needs CALL 0916-593-1601

Php x,xxx http://accountingservicesphilippines.blogspot.com/

for Accounting needs CALL 0916-593-1601

9. RECONCILE !!!  Cash internal records not reconciled with the bank

statements  Every month, it is highly recommended that there is reconciliation between the company’s cash internal records versus the bank statements. Many companies do not do this.  This causes errors like unrecorded bank charges, interest income and being unaware that there are some checks that are outstanding.

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for your Accounting needs CALL 0916-593-1601

10.

BEHOLD !! WITHHOLD !!

 Not withholding appropriate taxes!  Whenever you pay for services rendered to you, you should

withhold appropriate tax so that the expense you paid for can be deductible in income tax computation purposes.  Withholding tax can be 2%, 5% or 10% depending on the services. Ask your Accountant on this.  Should you have not withhold the tax, it’s a tax exposure to the BIR and you will be held accountable for it.

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for your Accounting needs CALL 0916-593-1601

SUMMARY Top Ten Accounting Mistakes 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

All-knowing being Receipts ! Receipts ! Reimburse your purse Booked it in the books Two records, Two Versions Incomplete is not Neat Double check to avoid the Heck Failure to beat the Date Reconcile ! Behold ! Withhold !

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for your Accounting needs CALL 0916-593-1601

For any accounting needs – feel free to call 0916-593-1601

your professional & friendly CPA at your service !!! http://accountingservicesphilippines.blogspot.com/

for Accounting needs CALL 0916-593-1601

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