The National Federation of Independent Businesses (NFIB) reports on a U.S. Bank study, which claims that 82% of all business failures are related to poor cash flow management. Your accounting functions are paramount to your company’s success, which is why you need to avoid making any of the following mistakes.
#1. Putting off or not Reconciling Accounts
Even entrepreneurs who faithfully reconcile their own bank accounts often fail to do so with their business accounts. Unless you reconcile accounts on a regular basis, you can’t really be sure if your balances are accurate. Accordingly, you might come up short even though you believe you have enough money on hand. Furthermore, small fees and unexpected charges could eat into your balance without you realizing it, especially if you wait a very long time to reconcile.
#2. Not Recording Small Transactions
If a transaction is only a few dollars, you may think it isn’t worth your time to record it. Even so, small things can add up to be quite a bit of money over time. If you’re having trouble keeping up with small transactions, it may be time to revamp your filing system or upgrade to new technology that will allow you to scan receipts with your smartphone.
#3. Failing to Separate Personal and Business Funds
It can be tempting to use your personal debit or credit card to pay for business purchases. However, by doing so you could make it harder to track expenses, and might even be missing out on some important tax deductions. If you haven’t already done so, now is the time to establish separate checking and credit card accounts and begin using them exclusively for your business transactions.
#4. Trying to Handle Accounting Yourself
Few business owners have the time or knowledge that’s needed to manage their books properly. At the same time, their accounting functions are one of the last things that many entrepreneurs are willing to let go of. There could be serious legal and professional ramifications for failing to perform accounting tasks properly. Don’t struggle when you can contact us for assistance instead.