12 Feb 3 Simple Accounting Mistakes That Could Jeopardize Your Business
Even with the best intentions, mistakes happen at work. But sometimes, these mistakes are serious enough to jeopardize your business. Today, we’re going to focus on the accounting mistakes that could be putting your business at risk.
Accounting is a fundamental part of any business. It is especially important for small businesses to make sure their accounting operations are not preventing them from growing into the best company that they can be.
Avoid these 3 accounting mistakes
Paying attention to these three tips will help make sure your business stays on track with its financial outlook.
Not being able to communicate with your accountant
Accountants are sometimes thought of as a different breed. It’s true, we enjoy numbers and regulatory codes a little more than the average person, but at the end of the day we want to be able to communicate with customers in a clear and understandable manner.
We know how your AR and AP are affected by your FE, VE, AE, OE and COGS. We know this can affect your CF and determine what investments will have a good ROI based on the firms NI and the PV of CAP.
But none of that matters to the business owner if they don’t understand all the jargon we are throwing around.
Being able to communicate in plain English about accounting strategies and principles can help a company understand how it is doing financially, which is crucial to developing the business.
Not recording expenses correctly
Most businesses have company credit cards, debit cards, and checks. These money transferring tools give business owners an advantage when managing receipts.
But there is another popular way of paying for things that makes keeping track of expenses a little more challenging.
Paying for items with cash can cause major accounting mistakes if receipts are not accurately kept.
I know it can sometimes be challenging to keep up with that little piece of paper detailing your purchase. But having a system in place to help you track where the business’s cash goes will make your business finances much more accurate and can help save you money when tax season comes around.
(Hint: this system doesn’t involve keeping your receipts in a shoebox! Read more about going from shoebox to success in this post.)
Having a good bookkeeper that can keep track of these expenses allows you to focus on what you do best.
You may not always be able to identify the nameless $50 charge on your statement. Was it from a lunch meeting, a stop for gas, or were you picking up a few reams of paper on your way into the office?
Knowing where these expenses came from is important for keeping your budget in order and maintaining a healthy outlook on the business finances.
Want to learn more about your profit and loss statement and how to read it? Visit this link next.
Not hiring a professional to handle taxes
It is very important to find the right accountant to handle your small business’s taxes. There are many tax experts out there specifically trained to handle taxes and stay current with new tax laws.
It may be easy to download a tax software and punch in a few numbers on your own. But what you don’t realize is there are many more deductions and saving opportunities that can be uncovered by a dedicated tax professional.
Hiring a tax professional ensures you’re getting your taxes done right. But at the same time, it ensures you’re getting the maximum tax benefit available for your business.
Your best bet for steering clear of accounting mistakes
Does that sound like exactly what you’re looking for? We should talk! We’re passionate about helping businesses succeed. In order to do that, we focus on two areas that we believe we’re best at: Bookkeeping and CFO Advisory Services.
Did you like reading about three of the biggest accounting mistakes that could be putting your business at risk? Read these next:
- Hey Small Business Owner! Are You Trying to Do Too Much?
- 5 Ways for New Business Owners to Take Financial Control
- 5 Bookkeeping Questions Every Business Owner Must Be Able To Answer
This post was first published in 2013, and it was updated in 2021 just for you.