Regardless of whether you’re a large corporation or a small business, it’s easy to run into accounting issues and nightmares. A missed entry here, an adding mistake there, letting your second cousin Vinny do the books even though he’s had no training — all these things can add up to a recipe for disaster if you aren’t careful and attentive. Do any of these common accounting mistakes look familiar to you?
It’s easy to let things get ahead of you in the daily struggle, but if you aren’t keeping your accounts current then you really have no idea where you’re at and what’s going on. Who’s paid? Who’s late? Did that last invoice get paid? Did you get credit for that return? Will buying new inventory put you in the red? If you aren’t keeping your information current, you can’t answer these important questions.
Math mistakes are another common issue that can create havoc — one wrong number or decimal can throw everything off. If you happen to combine these mistakes with not keeping your entries current, your account’s potential to go up in flames just skyrocketed. Make sure you double-check everything!
There are some places you don’t want to cut corners in your business, and hiring the right person to do your accounting is one of them. A person who’s had the proper training will know how to properly handle your invoices, how to classify expenses, what tax laws you can use to your advantage (and which ones can hurt you), and so on. Having a trained professional can save you stress, and save your business.
While it might be tempting to keep your information all in one place and one account, don’t. When you mix your personal and business finances, it gets very hard to have a clear picture of what’s truly going on fiscally. Your business is not an ATM — using your capital to buy yourself new clothes means you can’t invest that money in growth. The IRS also is not going to let you deduct those season passes to your favorite sports team as a business related expense, no matter how you spin it.
While focusing on the day-to-day of your operation is imperative, ONLY focusing on that can stunt your business’s growth. If you aren’t using your accounting to plan for future opportunities and expenses, then you can wind up putting your entire setup in a stranglehold.
These are but a few of the most common accounting mistakes a business can make — you can find more in this article here.
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