When you’re running a small business, aside from wanting to do all that you can to keep your customers happy, one of your greatest concerns is making sure that you keep your books in order. That way, you don’t find yourself losing money simply due to the fact that you made certain accounting mistakes.
So, what are some of the most costly errors that business owners tend to make? There are several, actually. The good news is that each one included in this article is relatively easy to avoid. So, as you’re going over your financial information, make sure that you keep the following five mistakes that could ultimately hurt your business in mind.
Not using a business account. You might think that because your business is a bit on the smaller side that it doesn’t matter if you put your personal and business expenses together. This couldn’t be further from the truth. Having a business account is one of the best ways to accurately track your business expenses. So, make sure that you have a separate banking account and separate debit and credit cards for your company as well.
Not saving all of your receipts. Just so that you can keep your expenses straight, it’s a good idea to collect all of your receipts. However, if you’re assuming that since the IRS tends to not be as interested in receipts that are less than $75 that those aren’t necessary, think again. When it comes time to file your taxes and you’re looking for ways to make certain kinds of deductions, having those receipts in tow can serve as documented proof of your claims. For this reason, make sure that you keep every single receipt carefully filed away.
Not filing your employees accurately. If you happen to have a few people working for you, it’s imperative that you file them properly. In other words, if they are full-time workers, you should provide them with a W-2 form. And if they are a contract worker, they need to have a 1099. There are some pretty stiff penalties that come with skipping this particular tip. That’s why it’s important that you make it a top priority. For information on how to accurately file your employees, go to SBA.gov and put “employer filing and instruction” in the search field.
Not hiring a professional accountant. Say that you were to speak with someone who works at an accounting firm like SDA CPA Group about how you can process your business payroll properly. One of the things that they would probably tell you is that you should definitely look into hiring a professional accountant to assist you. Although initially it might seem like nothing more than an additional expense, remember that accountants are professionally skilled to manage your books and prepare your taxes. If you’d like to know some of the other benefits that come with hiring an accountant for your small business, visit Small Biz Accountants.
Not communicating regularly with them. Once you’ve hired an accountant, you need to make sure that the both of you communicate on a consistent basis. That way, you can be on the same page when it comes to processing expenses, invoices, and tax returns. There are a lot of people who end up making professional mistakes simply because their accountant was thinking one thing while they were thinking something else. Therefore, make a point to meet with yours on a monthly basis. For the sake of your business, it’s definitely time well spent.