Mixing up financial expenses with personal expenses can create confusion when tax time comes around. This increases the chance of missing any business expense while accounting.
Fremont, CA: When it comes to growing a business, one wrong decision can stifle its growth. Most of the small businesses manage all of their accounting on their own. Accounting is one of the important department of businesses. Any errors in accounting can be costly for business owners. Despite that, very few small businesses employ an accountant.
Let us look at some grave accounting mistakes that hamper small businesses growth:
Not Hiring Experienced Finance Professional
Though experienced accountants make mistakes, they are likely to make fewer mistakes compared to a non-professional person. Therefore, hiring a finance professional would help reduce the potential for errors in key areas, such as paying vendors on time, expense tracking, and balancing bank accounts and staying on top of payroll. Besides this, business owners would be able to focus on building other important business plans. Mistakes in key areas can sabotage a business's growth as well as drain out its savings.
[vendor_logo_first]Mixing Personal Finances with Business Finances
Sometimes small business owners mix individual personal finances with those of their business. It's understandable when someone has just set up their business. Often small business owners pick up home items while shopping for office supplies. However, as per Clutch, more than one-quarter of small business owners and managers do not have a separate bank account for their business. Mixing up financial expenses with personal expenses can create confusion when tax time comes around. This increases the chance of missing any business expense while accounting.
Failing to Manage Cash Flow
Cash flow is the lifeblood of businesses. It is needed to keep a business operating on a day-to-day basis. Efficiently billing or invoicing customers would ensure that revenue comes in regularly so that one can tap into it for expenses, payroll and other requirements. But, businesses that do not have any finance professional can fail to manage cash flow.
See also: Top Accounting Consulting/Service Companies
