When it comes to running a business, thorough and accurate accounting is essential. This is especially true when you're running a small business since you probably don't have much room for error. However, there is a chance that you are making a few accounting mistakes with your small business. These are a few common errors that you should change immediately if you want to help prevent future financial problems with your company.
1. Not Separating Your Personal and Business Finances
When you first open up a small business, it can be easy for the lines to get blurred between your personal and business finances. It could be easy to cash a business check in your personal account, for example, or to use your personal debit card to pay for supplies for your business. This is a bad idea, however. It can make record keeping a lot more difficult and can get in the way of you getting all of the business deductions that you deserve when you file your taxes. Make sure that you keep a separate business bank account and run all of your income and expenses through this account for accounting reasons.
2. Not Uploading Files to the Cloud
You might just count on your computer to save all of your records, but this is a big mistake. If your computer is stolen or damaged, you won't be able to access your records, which can cause a lot of financial problems. Make sure that you invest in a secure cloud storage option and use it to upload your files each time that you make changes to them. Not only will you still be able to access your files if something happens to your computer, but you'll also be able to pull up important records when you're at home or traveling.
3. Trying to Do Everything Yourself
It might seem simple enough to keep track of your accounting yourself, but this is only going to get more difficult as your company grows. Plus, there's a good chance that you don't know about all of the tax deductions that you might qualify for and all of the tax laws that you have to follow. Although you might be able to keep up with your day-to-day income and expenses, it's a good idea to hire a small business accountant to help with things like taxes and payroll.
A lot of small business owners make mistakes with their accounting, but even small mistakes can cost your business a lot of money. Therefore, you should make sure that you aren't making these common mistakes if you want to help your small business succeed. For more information, contact a professional like those at Teri J Henderson, CPA, P.A.