4 Costly Accounting Mistakes to Avoid
Running your own business can give you flexibility and control, but it can also be challenging. If you are like a lot of small business owners, accounting is one your least favorite business tasks! Did you know that good bookkeeping is crucial to business success? You can both protect your business and reduce your stress by avoiding these ‘4 Costly Accounting Mistakes’.
1. Mixing personal and professional finances
One of the most common accounting mistakes that new business owners make is comingling business and personal funds. It is crucial to have separate bank accounts to keep your business and personal finances separate. If you do not have a credit card in your business name, then you should maintain a credit card just for your business expenses. Separate accounts will make your monthly bookkeeping simpler and will reduce the risk of an agonizing audit.
2. Neglecting accounts receivable
Without a firm policy on how you will handle accounts receivable, it will be too easy to lose track of which customers have paid you and which ones have not. Lack of collections means lack of cash flow, which will have disastrous consequences for your business. Some easy accounts receivable tips include:
- Have customers pay at the point of purchase or offer terms of no more than 30 days
- Follow up with clients soon after payment dates are missed
- Keep accurate and updated records of each client’s payment history
Utilizing accounting software like QuickBooks is a key tool to being able to quickly, and accurately, run reports on your accounts receivables.
3. Not using technology to track your expenses
Tired of scrambling to find missing receipts and struggling to justify claims at tax time? This is one of the easiest accounting mistakes to fix, let a mobile application come to your rescue. QuickBooks Online offers an app that allows you to snap a photo of an expense and categorize while on the go.
4. Doing it all alone
Unless you also happen to be an account, you should not try to manage your company’s finances by yourself. Consult with a trusted professional, invest in quality technology, and spend some time familiarizing yourself with tools and trends. A good accountant, like C2 Accounting, can help you to organize, simplify, and demystify your business finances!