Accounting should be the last thing on a business owner’s mind.
Accounting should be looked at as the backbone of a company; used to track financial health, forecast income, create budgets and manage expenses. Otherwise, without accurate accounting, owners won’t have a clear view of where they stand.
To prevent poor finances from impacting you, we’ve compiled a list of five business accounting mistakes that are easy to avoid.
1. Mixing Records
Many owners make the mistake of mixing their personal expenses with business. But, doing this only complicates the accounting process in the future as you will have to manually sort through every transaction to label it correctly. This can cause owners to waste countless hours sifting through documents that could have been avoided by simply opening a business bank account and solely using it for business related expenses.
2. Not Having a Schedule
Not having a bookkeeping schedule is another common mistake that many owners make. A bookkeeping schedule is something that every owner should have as a way to avoid missing invoices, tracking expenses or forecasting correctly.
A schedule does not need to be complicated; simply setting aside an hour of time weekly or monthly to update books can prevent financial mistakes in the future. During this time, be sure to mark down any new expenses, upcoming payments, taxes or deductions as a way to stay disciplined and informed.
3. Overlooking Taxes
Tax planning shouldn’t be left until the last minute, especially for busy business owners. Otherwise, owners that ignore their tax obligations might not have enough money set aside to pay it when they file. This poor planning could result in cash flow problems that could impact things for the year ahead including payroll, equipment upgrades and rental payments. So, prevent this by creating a tax calendar at the start of the year highlighting any important due dates or forms that need to be submitted.
In addition to planning for what is owed, deductions should be looked into as well. That’s because deductions could offset the amount owed and payments made throughout the year on things like home office expenses, travel and equipment could be forgotten.
4. Ignoring Payroll Compliance
Payroll is a complex part of any business. Oftentimes, owners are too busy to pay close attention to these filings, but mistakes in this area can result in huge fines and penalties by the government. That’s why owners need to take the time to understand federal and state payroll regulations in their area, including things like tax withholdings and employee classifications. Not understanding these terms or what the repercussions are of using them incorrectly could result in a costly mistake.
5. Not Seeking Professional Help
If you are ever unsure about how to handle your books or are struggling to find time to do it, you should seek the help of a financial professional. Owners that continue to suffer in silence and try to save money by doing all their bookkeeping themselves only end up wasting time, getting frustrated and owing more in the end.
So, consider getting professional help from something that understands all there is to know about business accounting, like us at A.P Accounting and Tax Services. We can be there for you regardless of how much support you need; making sure you have all the correct information, documentation, and paperwork to get your finances in order.
If you’d be interested in learning more, or knowing what services would help you, give us a call at 407-328-5001.
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