When you run a small business, accounting can be one of the biggest challenges. Systems that might suffice when you were a small company might not work as your business grows, or your system may be flawed to begin with. This can lead to problems down the line.
To help avoid potential accounting issues, we’ve created a list of the most common mistakes small business owners make when it comes to accounting. Here are some to be aware of:
1. Not Tracking Receivables Properly
Any time you issue an invoice, a receivable should be recorded. When payment is received, then it should be marked as paid. Unfortunately, many small business owners don’t track their invoices/receivables and payments very well. That means customer payments may be outstanding or income isn’t properly recorded when invoices are paid. It’s easy for your receivables report to get off track. This can lead to huge problems come tax time. The more the receivables process is automated and streamlined, the better off your small business will be.
2. Not Keeping Receipts for Expenses
This is a fairly simple issue to resolve. Save all receipts for any business expenses. If you keep hard copies of everything, keep the receipts well organized. Or, better yet, use a cloud-based system to track and organize all of your business expenses. If you aren’t keeping all your receipts, you are missing out on valuable tax deductions or running the risk of an audit if you write off expenses that you can’t prove have been made.
3. Not Tracking Cash Expenses
Records of purchases made with credit cards, debit cards and company checks are much easier to remember and track. Cash expenses often go overlooked, so make sure you are are always keeping proper records and receipts from any cash expenses.
4. Not Hiring a Professional Tax Preparer
Small businesses bring with them complex tax returns. It pays to hire a professional tax preparer like Ferguson, Timar & Company who has experience in dealing with small businesses and understands current business tax laws and regulations. You’ll have a small business tax expert on your side that can help you maximize your deductions and get more out of your tax returns.
5. Not Being in Touch with Your Accountant
Whether you hire a professional accountant/CPA firm, outsource your CFO services, outsource your bookkeeping and accounting services or hire a professional to do your taxes, it is important for you as a small business owner to be in tune with your accountant. Make sure they understand your business and are doing what it takes to help you achieve the best results.
Ferguson, Timar & Company can help you manage a better small business with our accounting services and tax preparation experts on staff. Hiring professionals to handle your important financial needs can make a major difference. For more information about Ferguson, Timar & Company and our services, contact us today.