Forbes magazine states that one of the reasons that 80 percent of businesses fail is that they cannot establish profitable business models with reliable revenue streams. Financial knowledge and accounting skills are essential for the success of any company. Avoiding the following calculated and inadvertent accounting mistakes will save your company more than just money.

Entry and Reconciliation Scheduling

Small- to medium-sized business owners often spend so much time putting out daily fires that it may be weeks before they can make entries, review sales tax accounts and reconcile checking, financial and credit card statements. A lack of current information makes it challenging to make the best long-term business decisions. It also attracts problems like unpaid invoices, negative balances, reduced profitability and bad credit ratings. Learning the accounting software’s capabilities and functioning is the best way to avoid these problems.

Strategic Planning

Accounting isn’t just a tool for processing mundane financial data to manage money and fulfill state and federal tax regulations.  Accounting is a powerful tool to understand business trends and make insightful strategic decisions. Most accounting information systems offer in-depth and customized business reports that can identify issues, streamline cash flows and increase company profitability. Accounts payable and accounts receivable aging are two excellent reports to see who is behind on payments and who may generate more sales.

Work Habits

One of the most common accounting mistakes that business owners make is to mix their business expenses and personal finances. It is imperative to segregate these activities and provide specific records of what was purchased and why. It is best to maintain separate accounts and save all paper and digital receipts. The IRS actually offers quite a lot of flexibility to business owners who follow the rules. For example, an annual corporate shareholder meeting is deductible, even if the event takes place in Hawaii, as long as the expenses are only related to established business activities.

Note that the ultimate mistake is to hire the wrong person to handle your accounting needs. An inexperienced office temp or family member who makes uninformed decisions with the best intentions may actually lead to losses, audits or penalties. This is why many small- to medium-sized businesses prefer to outsource their bookkeeping and accounting to experienced professionals.