The startup phase is an exciting period for any business. Despite the size of businesses, the accounting & taxation management plays a significant role in the success of a company. Accounting department is the heart of a company, and any mistake can cost the industry own assets of the entrepreneurs. Moreover, accounting is now known as a strategic arm within corporations, which gathers valuable information for making the strategic decisions for the grown of the business.
Hence, these essential responsibilities shouldn’t be taken lightly. Managing the revenue that comes in and goes out is one of the most important aspects of running a business. The basic thing is to avoid the mistakes that put your business at risk. Unfortunately, the mistakes made by new & young entrepreneurs are often too common.
Here is a compiled list of the five most common financial or accounting mistakes your start-up business should avoid.
Accounting Mistake #1 – Handling Accounting Work by Yourself:
Not hiring a professional can seem like an obvious mistake. Often according to newbie’s in the business think that using accounting software is adequate to get through, or try to accomplish the accounting tasks by themselves. However, it’s not easy as it seems, as doing so may consume your valuable time which could be utilized to increase productivity. Being an owner of the business, your core job should be to run your business, not handing the accounting work. By having a business taxes mason professional to manage your bookkeeping & accounts related work, you’ll have more free time which can be used to strengthen other departments & focus more on business growth.
Accounting Mistake #2 – Disorganization of Accounting files:
All that is declared in the accounting must be potentially proved. To do so, the company notes and tax documents are necessary. Transforming these archived documents into digital format helps companies to avoid mistakes like double or omission releases, differences in the released figures or even reversal and account alters. Avoiding such mistakes helps enshrine companies from getting fined for differences.
Accounting Mistake #3 – Not Tracking the Cash Expenses:
Maintaining a record of all expenses associated with running a small & medium enterprise is highly vital for entrepreneurs. When filing a tax return often business taxes mason professionals need to include each and every expense that are made to run a business, hence it is important to include all the expenses in order to subtract it from total income and to track the profitability. Often businesses overlook the cash expenses which may cause to overstate the income for the year. So, whenever you make a cash expense, ensure to ask for a receipt for tax record.
Accounting Mistake #4 – Data Entry Errors:
Often in accounting, much part is the data entry work. These data entry errors can be avoided easily if you proofread your work. Allowing someone else to review your accounting work is also a great way to find & correct the errors before submitting the documents.
Accounting Mistake #5 – Merging Personal & Business Finances:
Last but not least, merging personal & business funding may prove to be harmful for your organization. Never ever use a single checking account for managing your personal & business expenses, especially when it’s going to get blend together. Transactions made via single account may create several issues for tax return. Business taxes mason professionals always recommend making your personal and business transactions through different accounts. Most of the times, IRS (Internal Revenue Service) finds businesses claiming for personal finances showing it as business expenses. Hence, better way you’re your accounts separate.
Bottom line is, having a professional accountant or accounting service will help you avoid these small and common mistakes which may lead your business to greater losses and business discontinuation.