Metro Accounting & Taxes, CPA is dedicated to ensuring the accounting success of new and existing small businesses. We have created this guide to help small business owners understand the most common accounting errors performed by small businesses and ways to avoid them.
1) Mixing Personal and Business Expenses: Failing to properly separate finances can greatly complicate the filing process. If you use personal accounts to pay for business expenses and don’t keep an accurate record, it is easy to miss out on valuable deductions. Personal accounts are usually not monitored, compared to business accounts, leading some to claim expenses that were not used solely for the business. An easy solution to this issue is opening a separate account for running all business expenditures.
2) Not Keeping Expense Receipts: As with mixed bank accounts, failing to document expense receipts can cost business owners tax deductions. Many see keeping hundreds of receipts throughout the year as daunting. With modern technologies and accounting software, business owners can digitize their receipts, keep track of year-round expenses, and avoid the clutter of a physical paper trail.
3) Underutilizing Accounting Software: While QuickBooks, Microsoft Excel, and other software has made record-keeping easier than ever, not understanding these programs or failing to adopt them altogether can hamper business operations. Rushing to implement these programs can lead to human error, or may allow you to miss essential functionality. When using these programs for your business, be sure to thoroughly understand available tools and double check the information logged to avoid error.
4) Confusing Cash Flow and Profits: Many first-time business owners make the mistake of confusing their profits for cash flow. If services are supplied before receiving payment, you may show profit, but will be unable to pay the necessary bills for your business until payment is received. Regularly reviewing financial statements gives you an idea as to the positive or negative trends of your company’s cash flow and helps you better understand what adjustments can be made.
5) Trying To Do Too Much: For sole proprietors, the temptation to handle every aspect of your business by yourself can be strong. However, knowing when to hire professionals to help run and operate your company is essential. Whether it’s bringing on additional staff to run the daily operations of your business, or hiring a professional to keep your books up to date, delegating tasks helps your company maintain effective daily operations.
Contact Our Accounting Professionals Today
To avoid these common accounting mistakes and others, contact Metro Accounting & Taxes, CPA today. Our Atlanta accountant provides business owners with the support necessary to maintain long term financial stability.
User | 11/10/2017