24 Oct Top 10 Accounting Mistakes Made by Small Businesses
Whether you are a solopreneur or a major corporation, accounting and bookkeeping are huge parts of any business. While it is not typically the reason you get into a business, accounting is often considered the “heart of a company’s success.” That is why it is so important to look out for costly errors and foolish accounting mistakes.
In 2014 alone, the IRS assessed 2.1 billion dollars in civil penalties against business income tax filers.
Save your business’s hard earned money and avoid these 10 common accounting mistakes:
1. Not using all the resources available
Accounting and bookkeeping means more to a business than just keeping logs of money. It can tell an owner or supervisor what is working for the company and what has worked in the past. Make sure you are using all the resources available to help you grow your business.
2. Throwing away or losing receipts
In a world gone digital, it seems odd that we still need to keep receipts. Many businesses may not see the immediate need to keep all copies of, that is, until the IRS comes knocking. *If you don’t want to keep all hard copies of your receipts try scanning them into a computer system and keep them backed up.
3. Poor hiring choices
Hiring the wrong person to do your accounting can hurt your business in the long run. Make sure you always work with a professional accountant or bookkeeper that knows tax laws and is familiar with your accounting system. If you don’t work with a professional who loves their field, you may be looking at a future of audits and harsh penalties.
4. Lack of communication
Remember that having someone handle your bookkeeping only pays off if you, the business owner, communicate with them. Make sure you hand in all receipts and notify them of recent financial transactions.
5. Struggling to learn the software
When starting a business, the last thing you have time for is learning your accounting software. If you do not know what to purchase or how to use the software you already have it may be worth it to look into working with a professional accounting firm.
6. Not having adequate backups
Make sure your accounting system is scheduled to do automatic backups. It is also a good idea to keep a paper copy of important items in case of a computer catastrophe.
7. Falling behind
When you own your own business, you often have to multitask, putting an item or two on the backburner. Since accounting doesn’t often make you money, it is often the first thing to fall by the wayside. Make sure that you are staying up to date on your bookkeeping or have a professional there to help you.
8. Making simple mistakes
When you don’t know and don’t have a passion for accounting, it can be easy to make simple mistakes. It is common to miss-post an item or type in the wrong number, leaving you with a confusing mess of unbalanced accounts. If you can’t keep your accounts straight, try looking into a personal accounting firm to help you!
9. Combining business and personal accounts
In order to keep your accounting system organized and simple, make sure you are maintaining separate accounts for your business and personal finances. This will save you money if you are audited and will help you make sure that your business is staying profitable.
10. Holding on
As a business owner, you want to be able to do everything yourself, and you want to have your hands in all of your business’s projects. As a result, sometimes it can be hard to admit when you need help. Remember that as your business grows and expands there is a time to move from a “do-it-yourself” system and be willing to ask for help from accounting firms or in-house bookkeepers.
Do you know where your business is heading? To learn more about how we can simplify your accounting process, call us at 727.828.9945 to schedule your free consultation.
About Accounting & Business Partners
Accounting & Business Partners is a CPA firm with an efficient bookkeeping department. We believe that success lies in numbers. However, the drive behind the numbers is what truly matters. That’s why we look beyond the financial statements.