As a small business owner, you’re tasked with dealing with every aspect of your operations.
You face clients, negotiate with suppliers, oversee marketing campaigns, manage accounts, and spearhead product developments.
The job role can easily turn hectic, but most business owners fail due to failure to understand the gravity of good bookkeeping and accounting practices.
Even the most common accounting mistakes can make any thriving business sink, and since you have a lot on your plate, turning a blind eye on your financial operations can be easy to do.
After all, what else do you need to do when clients and customers are flowing in? While your profit may be smooth and stable, bear in mind that there is more to accounting than just counting your cash flow.
There are accounting mistakes you may perhaps be making now, but many of them are easy to spot and fix. To help you overhaul your accounting and bookkeeping practices, here are the three most common accounting mistakes to avoid:
Mistake #1: Failing to track your expenses
If you’re at loss as to where a huge chunk of your budget has gone off to the past few months, you’re failing to keep and track the right documentation.
Having a system in place will help you ensure that your expenses are in order, as all the details will be recorded.
By keeping careful track of your business expenses, you’ll be able to handle your taxes better, especially when it comes to items that are tax-deductible.
Your office home space expenses can help you save in the long run, as with that lunch and dinner meeting with your business partners.
Mistake #2: Not saving receipts and glossing over details
You may have assigned a credit card for all your business expenses, but relying solely on your credit statement cannot serve as proof of all your business transactions and expenses.
If anything, you’ll only have access to how much you’ve spent, but proof of actual business expenses relies on your receipts—these seemingly small papers validate your business expenses, which is crucial come tax season.
To ensure that you make the most of your budgets, keep your receipts and take careful note of details. Explain how the items were used, and why they were necessary to your business operations.
Log as many details as possible, and you’ll find you’ll thank yourself later when you need those detailed records.
Mistake #3: Waiting for the deadline before filing taxes
While taxes can indeed be difficult to deal with, filing your taxes late comes with hefty penalties and suspicion from the IRS. Given the nature of your work and the never-ending to-do lists, tax preparation may be the least of your worries.
Putting off your taxes is a mistake, however, as you’ll end up gathering receipts and documents at the last minute, with no means to organize them into coherent records.
You’ll end up missing important documents, which may cause your business finances and transactions to look bad in the eyes of the IRS.
Stay away from trouble and wasted time by keeping your records updated all year long. By having organized files, you’ll be able to enjoy tax deductions, without any risk of fines and audits.
A Proper Record A Day Keeps the Accounting Blues Away
Every business owner dreams of entering the international marketplace, with their brand upon the lips of loyal customers.
While the dream is more than possible to achieve, understand that you need to keep a firm grasp on your finances to help your dreams come to fruition.
Knowing and avoiding the accounting mistakes listed above is a good starting point, but never underestimate the power of professional accountants.
That said, why not seek the help of the best Indianapolis accounting firm? Patter & Co CPA has been in the business for more than 25 years, ensuring that small businesses flourish under our team’s expertise.
We know how to help your business grow—reach out to us today.