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Accounting Mistakes to Avoid In Business

  • By Lauri Paxton
  • 22 Sep, 2016
As a small business owner you are often forced to wear many different hats.  This makes becoming an expert in every aspect of your business nearly impossible.  While some mistakes are inevitable, there are few that you should try to avoid when it comes to accounting.
Have you ever swiped the company card for personal expenses?  What about adding more receipts to your files without taking the time to look at them and make sure everything is adding up?  These mistakes, while seeming insignificant, may lead to turmoil down the road.

There are three big mistakes to avoid that could wind up costing you more than you think.

  1. Mixing business and personal expenses – co-mingling.As a business owner you should have a separate business account from your personal account.  This will help your bookkeeper to better keep track of your expenses.  Knowing these figures are correct will help make financial decisions more clear.  Have a credit card dedicated to your business.  This will help to reduce confusion when it comes to bookkeeping and statement reconciliation.  It is ok to use cash for those transactions but be sure to properly document all cash transactions and copy or scan all receipts as the NCR paper wears off eliminating necessary documentation should you be audited.
  2. Ignoring accounting reports.Many business owners don’t take the time to sit down and learn how to interpret their reports.  These financial reports will help to identify where the company is performing well and where it may be falling short.  By ignoring these reports, you may be missing on an opportunity to take advantage of your business’s strengths.  There are a few other reasons review these reports.
    1. Allows for better managing of outstanding invoices.
    2. Increases management of goods purchased.
    3. Lowers the chance of money mismanagement or fraud.
    4. Allows for planning and moving forward.
  3. Mismanaging receipts.This may not sound as important as it truly is.  Having receipts allows a business to account for all of their spending.  They can and will be used in the event of being audited by the IRS.  It is important to keep them in a safe place and is suggested to use on online system to track expenses.
By keeping up with all of your expenditures and reviewing your accounting reports you stand a much better chance of seeing success as your business grows!  Keep up with your accounting reports and work with your bookkeeper and accountant to help to accurately measure your levels of success!
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