Common Accounting Mistakes

Managing the accounts for even a small business is never easy and requires a great deal of attention to detail in order to avoid serious future repercussions.

Today, I’d like to give you a heads-up on the most common accounting mistakes I see small businesses make. Knowing these possible pitfalls will help you make sure your finances are in good health.

It’s Serious Business

The first—and possibly worst—mistake is to not take your accounting seriously. If you’re forgetting to record small transactions, overlooking errors in entering data, or not keeping receipts, you risk ending up with wildly inaccurate numbers. Even worse, if your business is ever audited, you’ll be scrambling to locate the necessary information and paperwork. Sloppy accounting causes a lot of problems in the long run.

Remember to Reconcile!

A second common mistake in accounting is not reconciling business books with bank statements. We’ve talked about how important this reconciliation is and how it not only helps keep your records accurate but also helps you discover more serious issues such as fraud.

Plan Ahead

It’s so easy to get bogged down in all the minutiae of accounting—the invoices, the taxes—that we often fail to plan for the future of our business. But tasks like creating a budget and measuring your financial progress are also important aspects of your business accounting. Having a budget lets you see where your money comes from and where it’s going, which in turn allows you to make any necessary changes and ultimately increase profits. And by generating regular progress reports from your accounting data, you’ll improve both day-to-day and long-term operations.

Profits Are Not Cash Flows

This issue is especially important if your business works on long-term projects. Knowing (or estimating) how much a project will bring in and how many expenses it will incur is not the same as actually having that money in your account. The project could fall through or end up making you a lot less. So when you’re looking at your accounting, keep in mind that what you should have is not necessarily what’s actually there.

Get a Second Opinion

Finally, even if you’re doing all (or most) of your accounting in-house, it’s important to know when to delegate some of that work. In the long term, the expenses you can incur from poorly filed taxes or careless bookkeeping might be higher than what it would cost to hire a professional. If you don’t want to (or can’t) employ a full-time accountant or bookkeeper, you should try to at least have one on call for occasional checks and advice.

Remember that accounting professionals are there to make sure all those books and reports are accurate and complete and to help your business plan for future growth! So if you’re interested in keeping your accounting error-free, please don’t hesitate to contact me and book a consultation. Here is my email [email protected]