Over eighty percent of small businesses fail due to issues handling cash flow. Many small business owners don't understand the proper way to handle their finances; their companies suffer as a result.
If you want to protect yourself from
becoming another cash flow statistic, you need to know how to manage accounting
for your company. There are some small business accounting mistakes you should
learn to avoid.
Read on to learn six common
accounting mistakes small business owners make.
1.
Mixing Business and Personal Accounts
Failing to separate small business
expenses from personal purchases is a common yet devastating accounting
mistake. If you mix the two up, you'll have trouble when tax time rolls around.
Keep a separate bank account for
your business. A business account makes it easier to track all your
professional purchases--just make sure you use the right debit card when buying
for your business!
2.
Ignoring Your Bookkeeping
Stay on top of your finances. It's
always tempting to procrastinate when it comes to bookkeeping, but the longer
you put it off, the more difficult it will be to balance your books.
If you delay, you might forget to
log some transactions or misplace an important document. Record things as
quickly as possible and check over your accounts at least once a month to
ensure everything is accurate.
3.
Doing Everything Yourself
Not all small business owners are
trained accountants. You might not have any experience handling cash flow, and
even if you do, you have other responsibilities at your company. Don't try to
do all the accounting yourself.
You can automate some of the
work--there's a lot of business accounting software on the market. You can also
hire experts like Amazon accounting services to help your business thrive.
4.
Throwing Away Receipts
Receipts might seem like a small
issue, but they are important financial records. If you lose them or throw them
away, you'll miss valuable info about your small business expenses.
Keep track of all your receipts and
work out an organized filing system for them.
5.
Using the Wrong Tech
Business accounting technology has
come a long way in a few short years. The tech you use has a major impact on
your business. Outdated hardware and software can slow you down.
Consider your accounting software
carefully and keep your hardware current. New computers and cloud technology
will keep your business running smoothly.
6.
Mixing up Cash Flow and Profit
People often assume cash flow and
profit are the same things. They're not. When you treat these terms as
interchangeable, you end up with an inaccurate view of your financial
situation.
Keep track of all the money going in
and out of your business--that's cash flow. Profit is the total money made
after expenses, but you won't truly know a project's profit until that project
is over. Don't treat your estimated profit as spendable cash.
Avoid
These Small Business Accounting Mistakes
Small business accounting mistakes
can ruin your company before it has a chance to grow. Mastering the best
accounting practices for businesses--and avoiding common mistakes--keeps your
company safe and prosperous.
Another way to give your business an
edge is to invest in the latest tech. New hardware and software can help you
stand out from the crowd; visit our technology blog to learn about the latest
gadgets that can help your company!
