Common Accounting Mistakes for Small Businesses
Businesses big and small are required to handle various accounting processes, however, it’s common for smaller enterprises to make several mistakes in the accounting department, especially when they’re still standardising their processes and putting in place the right framework.
As accounting mistakes can significantly undermine your growth and damage your integrity as professional and competent business, we explore some of the common errors you should be looking to avoid.
- Inaccurate Expense and Cost Tracking
You can undermine your whole accounting process if you don’t keep track of your costs accurately. Even with the most skilled accountants on hand or the industry's best accounting software, you can leave your business vulnerable to money loss if you don’t properly track your costs.
If you don’t have a good idea of your current numbers, you won’t be able to plan for the future effectively. Whether you’re recording transactions or paid bills, cost tracking lets you see your current state of affairs when it comes to your finances, which can prompt you to reduce spending or even invest more money into growth projects, depending on how your books are looking.
It's essential that your accounting system lets you keep track of every transaction so that you can accurately gauge the health of your business at any given point in time.
- Interrupted Cash Flow
You need to stay on top of your billing and invoicing if you want to ensure you always have steady cash flow to keep your business running smoothly. Billing or invoicing customers efficiently goes a long way toward ensuring that your revenue comes in on time so that you can make all the necessary payments you need, such as paying for expenses, supplies, or employee salaries.
If invoicing gets delayed for several months, which can be incredibly common in certain industries, you might face a time in the future where you simply run out of money and must take on a loan that ultimately you didn’t have to if you’d stayed on top of your billing in the first place.
- Failing to Put an Effective System in Place
Whether it’s hiring a professional in-house bookkeeper or accountant or working with an external agency you can outsource to, you must have an effective system in place if you want to avoid the many financial dangers and risks that come with running your own business.
Hiring an accountant and relying on their industry skills and expertise will help to minimise the potential for errors in certain areas, such as expense tracking, staying on top of payroll, or paying vendors on time.
Even if you have an in-house accountant and don’t want to handle absolutely everything internally, you can work with an accounting firm that can assist with online payroll services for accountants. The most important thing is that you address the specific needs in your organisation and make a plan for staying on top of things, even as you start to scale up.
- Not Planning for Tax Season
No one loves tax season, but when you get on top of your accounting processes from the start, you don’t need to fear it. The best approach is to minimise errors and oversights by ensuring that your business has a good system in place from the beginning, whether that’s seamlessly tracking company expenses or having a diligent bookkeeper on hand to assist with tax calculations.
Can We Help?
If you’re worried about making important mistakes with your business accounting, or want to learn more about online payroll services for accountants and small businesses, get in touch with us at Paycheck.