Four Avoidable Accounting Mistakes

Accounting is tricky business, often best left to the professionals. However, if you run a small hotel, it can be tempting to try and save a bit of cash by crunching the numbers yourself.

While this sounds good in theory, in practice even the most meticulous non-professional bookkeeper is prone to making a few mistakes. If not spotted and remedied correctly, these mistakes can cause major headaches if the taxman ever comes knocking. If you do you manage your establishment’s own finances, be sure to look over my advice below on the most common accounting mistakes and how to avoid them.

1. Delaying Record Reconciliation

When you manage finance, you have two main areas to concern yourself with: the records – which are past transactions and current incomings – and current cash flow – transactions, both in and out that have yet to be archived. Problems with reconciliation most often occur when new data isn’t updated as you go along, leaving you with a growing pile of unintelligible receipts. This is problematic not only because it makes life much harder when the taxman comes around, but also because without accurate and up-to-date financial records you can’t have a clear idea of how your business is doing. It’s impossible to know if your spending is on budget if you aren’t keeping track of your spending. It may be incredibly time consuming, but keep those records updated to the previous month at the very least.

2. Disposing of Invoices and Receipts

The hotel environment is constantly changing. Rooms require maintenance, hundreds if not thousands of guests check in annually, staff require payment, the expenditure is neverending. As a result, the paper trail of transactions is seemingly endless, and it can be tempting to record numbers in a spreadsheet before discarding the paperwork to save the hassle of filing and sorting. This, however, is a bad move. If the government decides they want to investigate your tax claims, and you have no hard evidence to support your account of income and expenditure, suspicions will be raised. The second reason comes from improper record entries or loss of data. It may be that you made a mathematical error, misplaced a decimal, or your computer is damaged or destroyed, but for whatever reason, things can go wrong making data inaccurate. While retaining all copies of transactions may sound like a nightmare, the prospect of facing difficulties without them is far worse.

3. Failing to Record Tips

Often given as small amounts of cash-in-hand, it can be tempting to simply spend tips on a drink and move on. However, if you are regularly receiving tips and do not declare them, and are audited, the investigation may uncover untaxed tips through looking into banking transactions or income compared to expenditures. At any rate, if you are found to not be declaring these tips, it will be viewed as dishonest and fraudulent and you will pay the price for it. For the sake your hotel’s continued fiscal well being, it’s always better to air on the side of caution and declare tips during your tax returns.

4. Not Seeking Help Quick Enough

As the manager of a busy hotel, you have to juggle such a variety of different tasks, responsibilities and people on a daily basis that sorting out your own tax form may end up being the last thing on your neverending to-do list. However, improper payment of tax is no laughing matter, and if you are aware that you have put things off for too long, don’t wait any longer before getting professional help. It’s been found that 23% of micro-business owners spend three full working days on their accounts each month (), but in all honesty, that’s spare time which the average hotel owner simply doesn’t have. By hiring an accountant you can free up more time to do the things in your business which you do best.

Russell Smith, of Russell Smith Chartered Accountants, is a financial expert with over a decade of experience running his own business. The only accountant in the world to update his personal blog every, Russell is passionate about helping people set up, maintain and grow their business.