Top Ten Accounting Mistakes

8/14/2019 Top Ten Accounting Mistakes

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Top Ten

Accounting Mistakes

o ma e um nterpr ses(SMEs)

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business documents.

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1. RECEIPTS !! RECEIPTS !! not saving receipts

Receipts are basically the supporting documents for manyexpenses.

Expenses lower your income tax to be paid.

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xpenses w t out support ng ocuments put you n apossible 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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3. 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 theirrecords.


Remem er, un ess you ave a icense accounting so tware anyour application to the BIR for a computerized accounting systemhas been approved, you are required to maintain and update themanual book of accounts (journals, etc) because your registration

falls under a manual accounting system. BIR checks on the manual books.

Update your books !


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

Others fail to keep company books that are tied-up with BIRReturns submitted.

Variances between books & that of the BIR Forms submitted


.

Variances can be due to reclassification, errors in filing up the

BIR Return or 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.


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5. 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 1601-E, BIR form 1701-Q, BIR Form 1604-E, & a lot more BIR Forms.

Even if you dont have a transaction in a particular month that fall


,need to submit those BIR Forms to be stamped received by theBIR.

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 submitother BIR Forms due to lack of knowledge that they are requiredto do so.


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the business owner.

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6. ALL-KNOWING BEING ! You as a one-Man Team

Some SMEs do their bookkeeping & BIR filings by themselves.

They said, its for cost saving purposes.

After few years, they receive letters from the BIR to check on

their records. Records are found out to be incom lete & not


reconciled with the BIR Returns submitted. Wrong application ofBIR 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 moreefficiently. Competent CPAs know the BIR rules and regulations

and they can also make suggestions in going about your records.


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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 & if you areaudited, any incorrect filing up of BIR form can be seen.

Lets say a business owner filed a return on April 2009 for itstaxable year 2008 income tax but he erroneously filled up


taxable year 2009 in the BIR Form. In effect, the companyhas not filed its taxable year 2008 BIR Form.

Or it can be that the Tax Identification Number (TIN) hasbeen erroneously put or amounts are mistakenly reported.Things like these happen so business owners should ensurethat BIR Forms are filled up appropriately.


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Deadlines.



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8. FAILURE TO BEAT THE DATE ! Failure to meet submission deadlines dates

April 15 is the 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 themessenger being late in the submission due to long queue of people in

the BIR offices.

Prepare and finalize the submissions early on or before April 15.

Remember, you will be penalized even for a day of late submission!


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,,


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

statements

Every month, it is highly recommended that you reconcile

companys cash internal records versus the bank statements.

Man com anies 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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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.


,

services. Ask your Accountant on this.

Should you have not withhold the tax, its a tax exposure to

the BIR and you will be held accountable for it.


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SUMMARY

Top Ten Accounting Mistakes1. Receipts ! Receipts !

2. Reimburse your purse

3. Booked it in the books

4. Two records, Two Versions


.

6. All-knowing being

7. Double check to avoid the Heck

8. Failure to beat the Date

9. Reconcile !

10. Behold ! Withhold !


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Top Ten Accounting Mistakes