As a business owner, making mistakes in accounting is something you literally cannot afford! Its growth-killing. It is understandable that you don’t register the intricacies of this part of operations. You may not be trained for it, but accounting problems can affect your profitability. They are a vital part of your fiscal responsibilities.
Small business owners often must do more to make sure the lights stay on! New businesses have to build both a customer base and prove their market potential. Other companies need to ensure high – or at least maintained – levels of customer satisfaction. With myriads of processes going on and hundreds of things to take care of, some details can slip through the cracks.
We mention the most common Accounting Requirements for Small Business issues below. Match them against your accounting activities because they could stop your business from thriving!
1. Understating the Importance of Monthly Financial Reports
Some small businesses even skip the reports altogether. Here’s why that can create a huge mess for yours if you are one: you discourage potential financial backers from investing in your company! Any source of additional investment would want to see those monthly reports before they part with their capital. You cannot substitute it with a bi-monthly or semi-annual snapshot. Monitoring financial activities indicate to an investor that their money is used to its full potential. Moreover, it will also allow you to spot liabilities, including payables, oversights and slow-paying clients, much earlier.
2. Thinking you can do the Accounting Manually
Manual calculations introduce a big margin for human error. They also increase the time spent on bookkeeping. Instead, small businesses like yours should use accounting software. A brief search online will show you how many different kinds of software you can choose from. Don’t allow the volume to overwhelm you, though. Look for one that will fulfill your accounting requirements and has rave reviews.
Still confused? Then check if the software of choice is good for the following:
- Invoice generation
- Sales tracking
- Producing cash flow and financial statements and balance sheets
- Managing contacts and tracking their histories
- Various methods of payment, including credit card
- Tax Preparation Services
- Inventory management
3. Getting your Accounting Software to Work for you
Say, you found the best software and purchased it. But if you aren’t using it to get the most value out of it, what good is it? Just as you leave your company open to accounting mistakes when you don’t use the software, you do the same when you don’t use it the right way. For other small businesses, not having personnel trained to use the software can be an issue. You have two options in such situations. Firstly, you can dedicate an employee to learn to operate the software using tutorials. They may get the hang of it – or not. Secondly, you can consult Accounting Firms to walk you through What Is Bookkeeping.
4. Not Keeping Personal and Business Accounts Separate
This is crucial because it will help you identify the deductible expenses, which investments led to profit generation, and so on. Out-of-pocket spending can lead to accounting oversights. You could be paying more in taxes without even knowing it. Finally, imagine having to explain the mess during an audit. Right from the books to credit cards and all banking must be separate for your personal and business needs.
Incorrect financials never lead to positive results. The problems they can cause can balloon up enough to scare away potential investors or lose the existing ones. As a small business, you are much more vulnerable to those who may take advantage of these inaccuracies. Protect your business from fraud and stop making these growth-killing accounting mistakes! Learn how AKIF CPA help your small business grow through accounting and bookkeeping servicesPlease contact us by email or phone.