Whether you’re just opening your small business, or you’ve been around for a while everyone makes mistakes, especially when it comes to money. These mistakes can be detrimental though. Below are the worst, and most common, accountings mistakes small businesses do and can make.
Using your business account for personal purchases (for vice versa)
First things first- always have separate accounts for your personal and business finances, even if you’re a company of one. It’s incredibly hard to sort out which payment was for what purposes later on and your accountant won’t thank you if this happens often. It also looks fishy to the CRA and it’s a potential audit red flag.
Not keeping receipts
Even keeping your receipts in a shoebox is better than not keeping them at all. There are plenty of safe apps out there for you to use to keep track of your receipts electronically. Accurate accounting is extremely difficult without a full record of receipts.
Not watching the cash flow
Cash can be hard to keep track of but even the smallest receiving and spending needs to be kept track of. Those small payments can add up when they’re not kept track of and going back later trying to remember them all is nearly impossible.
Doing it all yourself
Just because you own a small business doesn’t mean you have to wear all the hats. Focus on what you’re training and skilled in and hire professionals to help you with the rest. Not asking for help can lead to costly mistakes.
Doing accounting in-house
It’s tempting to cut costs by doing all the bookkeeping yourself. And while small amounts of money might seem manageable doing the accounting in house is a mistake if you’re not trained. An accountant keeps your financial data organized and can end up saving you tons of money through hidden tax deducts and catching math errors.
Not having backups
Not having backups is one of the easiest mistakes to do. Just having the information saved on one computer isn’t enough. What if it gets stolen or there’s a fire? Consider adopting cloud accounting software for you small business so that you can have remote backups of all your data.
Avoid making these critical small business accounting errors and you’ll see a flourishing business. An accountant is always your best bet to gain valuable advice and insight on how best to accomplish avoiding these mistakes. Contact one today.