5 Mistakes Small Businesses Make
Top Errors to Avoid and Strategies for Doing So
It doesn’t matter how big or small your business is, accounting and bookkeeping mistakes can happen if you don’t know what to watch out for.
It’s even more confusing for small business owners who might not have a lot of knowledge about accounting or business finances.
Here are 5 of the most common business mistakes that can be easily made in bookkeeping and business finances. Avoiding these mistakes can save you a ton of stress and money.
1. Mixing Personal and Business Finances:
Mixing personal and business finances can be a big mistake. Sometimes expenses get classified incorrectly and it’s pretty difficult to track a consistent “salary” for the owner with this method. In a corporation – when you pull funds directly from your business without running it through payroll, it can create a bit of a cleanup at the end of the year through dividends or additional payroll payments. It also makes cash flow difficult to manage. Essentially, it makes life more difficult for business owners and their bookkeepers.
2. Failing to Keep Accurate Records:
Ok, we mentioned this on Instagram, but to stay on top of your finances and avoid missed deductions, small businesses must keep accurate records. Failing to do so can lead to inaccurate financial statements and even legal trouble. Make sure to keep all receipts, invoices, and financial statements organized.
3. Not Hiring a Professional Bookkeeper:
When you hire a professional bookkeeper (like Indigo Bookkeeping), you can be confident that your books will be handled accurately and professionally. This means you can stay on top of your finances, avoid costly mistakes, and free up your time to do what you do best – focus on growing your business. Win, Win, Win!
4. Ignoring Cash Flow:
Cash flow is the lifeblood of any business, and ignoring it can lead to major financial problems. Make sure to regularly monitor your cash flow and take steps to improve it if necessary. This may include reducing expenses, increasing sales, or obtaining financing.
5. Not Staying Up-to-Date on Tax Laws:
We can’t stress this enough: tax laws are constantly changing. Failing to stay up-to-date can lead to missed deductions, penalties, and legal trouble. Make sure to stay informed on tax laws and regulations that affect your business.
Let’s face it…
Bookkeeping isn’t the most exciting thing in the world… But by avoiding these common accounting mistakes, you can save yourself time, money, and a whole lot of headaches. And who doesn’t love that?
By hiring a professional bookkeeper to keep your finances in check, you can stay organized, stay informed, and avoid those costly mistakes that can derail your business faster than you can say “tax time.” 🫣
Luckily, we have systems in place that are customized to fit your needs.
We significantly reduce the manual effort on your side, and our staff takes care of the rest. So, if you’re ready to take the plunge and get serious about your bookkeeping and your business, contact us today for a consultation!