Growing your small business involve tracking the finances of your company. When you start your business, you want to manage the books on your own instead of hiring a Padgett Advisors accountant. However, this can result in avoidable mistakes that can derail your business. These mistakes include the following:
Not Hiring a Qualified Finance Expert
Even an accountant can sometimes make mistakes; however, they can easily spot and fix them. Accountants are finance experts who will reduce the risk of errors by tracking expenses, balancing bank accounts, paying vendors on time, and managing payroll.
Can you confidently handle the tax withholding of your employees properly? Can you keep track of the financial transactions of your company, no matter the size? Mistakes in such areas can cost your company more than the amount you might save by not working with an accountant.
Failing to Accurately Track Business Costs
Without accurate records in place, your small business accounting becomes less effective. If this occurs, your business could lose money and be unable to pay important bills on time. And when tax season comes, this set you up for significant headaches. Plus, this can result in more issues that can prevent your business from growing. Inaccurate financial tracking makes you unable to plan for the future. A good accounting system keeps track of all transactions accurately, so you can gauge your company’s financial health.
Not Separating Personal and Business Accounts
Usually, small business owners do not care about separating their business and personal finances. This is understandable, particularly if your business is starting to find its footing. However, using one account for both business and personal transactions can make it harder to sort transactions out. In turn, this can cause serious problems during tax time. And when accounting is not done efficiently, you may overlook an expense you could have listed as a business deduction.
Not Managing Your Billing Efficiently
Cash flow is important to keep your business running. Billing or invoicing your customers efficiently can make sure you get timely revenue, letting you tap into it for your business needs including payroll and expenses.
But when accounting is not properly handled at the end of the operations, you could end up with cash flow issues. Invoicing gets delayed and your customers might fail to pay on time, leaving your company stretched thin to have all the bills covered. To improve billing management, invoice your customers right after you have provided the required product or service.