As starters, entrepreneurs, with little or no knowledge of the business industry, often make accountancy mistakes that they should avoid. Some mistakes can create future hurdles in the growth of the business. Especially for smaller businesses and SMEs; as they didn’t have the very comfort of a large budget; money is short and they have to do everything inside a small circle of business budget.

Accounting mistakes can lead to lag times in business operation, clog cash flows, and damage business reputation from both suppliers and valued business customers.

 So what are some common accountancy and bookkeeping mistakes; and what are the measures to avoid such mistakes in your business day to day operations.

5 Common accounting mistakes small business people make 

  1. Keeping everything to yourself

    “Jack of all trades” is what we say to the person who tries to manage everything on his/her own. Well as you become a Jack of all trades, you will soon realize you became the “master of nothing”. Business people often try to do tasks by themselves including: running business operations, managing the business’ books, and auditing financial business records.  But here you can make a large mistake by managing financial business records without much knowledge in accounting and bookkeeping. You  should hire a certified Quickbooks ProAdvisor accountant and bookkeeper, who will be help in you in your financial auditing and bookkeeping.

  2. Giving more importance to money than proficiency

    As people hire bookkeepers/accountants, not everyone prefers spending more for proficiency. Sometimes spending money for proficiency can help you avoiding future loss in the profit of your business. If done in reverse, you can end up spending more money for inefficient work from an inexperienced accountant that you hired.  Always give importance of your dollars  to efficiency, professionalism, and experience.   What you gain from an experienced accountant is worth its weight in gold.

  3. Can’t differentiate income/cash flows from profit

    Business income is profit after a defined interval of time. Profit is the benefit of spending in the business; i.e. surplus of money after subtracting the expenses incurred in the business operation. Expenses also include the rent of the building, utility bills, employees’ income, or anything that you bought or purchases from the income coming from the business. If you business monthly income from the goods you sold equals 5000$. That money is not the profit of your business. You still have to minus the employee’s salary, utility bills, and other expenses that your business incurred in a specific interval of time. So business financial audit should outline all the cash outflows and inflows. The summary will give you the actual financial audits of your business. Don’t ever confuse income with profit.

  4. Falling behind on your finances?

    Business people often ask when they should running financial summaries and other important industry related ratios. The management of your finances is one of the major determination of your success.  You will spend much more money on paying someone to clean up your records and oftentimes you will get no benefit with the historical reporting.

    1. You should spending time as you will be recording historical information.   Recalling specifics of older transactions are time consuming and can lead to mistakes.

    2. Account statements will show negative balance or reduced profitability.

    3. Unpaid invoices to the suppliers will lead to problems in getting material from them.

    4. It will also lead to bad credit rating for the business.

  5. Not using bookkeeping software

    There are many powerful accountancy and bookkeeping software’s that entrepreneurs and using these days. Quickbooks software is one of the best accounting and bookkeeping software’s that help entrepreneurs and professional bookkeepers in the online accounting and bookkeeping of financial business records. If you hired a certified Quickbooks ProAdvisor, you will get the best accountancy solution for your business.   Xero is a great online software for many industries.  A good accountant will recommend which software will work best for you.

If you are required the service of a professional bookkeeper, Leslie Huegerich will be the best choice you have. She will give you the accountancy and bookkeeping services needed for smooth running of your business.