Small businesses are inundated with tasks. For this reason, it’s easy to understand how accounting mistakes might occur. Even so, professional businesses want to reduce all the errors they can so their business can thrive. The following accounting errors are just a few that small businesses must guard against.
Forgetting to Record Cash Expenses
Check and credit card expenses are easy to record because there’s a strong paper trail that makes it easier for a company to keep track of. Cash expenses can be easy to forget if they aren’t recorded right away. Small businesses that pay for any expenses in cash must record the expense right away and also make sure that they save the receipt for each cash transaction.
Failure to Record Receivables
Somehow, recording receivables is one of those tasks that can get pushed off until the next day. If this task gets pushed off too often, the accounting can quickly fall behind. As one expert asserts, “At tax time you’re left with a bunch of customer deposits sitting in your revenue account and a receivables report that doesn’t make sense. The consequences? Hours wasted updating the receivables listing, overpaying on your taxes, and high bad debts.” (1)
Doing Your Own Taxes
Many businesses try to prepare their own taxes rather than hire a professional. Not only can hiring a pro be declared as a business expense, it’s a smart move if you want to ensure that your taxes are done properly. You could be over-paying and you also could be underpaying–a situation that can cost you considerably in penalties.
You can work to minimize these and other accounting related mistakes by employing software and other solutions that help you keep tabs of your finances. Be sure to work with financial tools that “improve efficiency, increase control and save money.” (2) The problem with accounting errors is that they can lead to greater expense for the business not to mention some king-size headaches. Once you are aware of some of the most common pitfalls, you can begin to look out for them as you conduct business each day.
1. Fresh Books, “5 Accounting Mistakes that Put Your Small Business at Risk”
2. TROY Group