Owning a small business can be a bit of a rollercoaster ride and sometimes this can lead to mistakes in accounting that can result in problems for the business. Here are some tips on avoiding some of the common pitfalls business owners often encounter.
1. Not keeping personal finances separate from business finances
Old habits die hard and if you are new to running a small business, you may still be receiving payments in your personal account rather than a separate business account. While it is tempting to continue doing this if only to feel the financial benefit of all your hard work directly, it can result in your finances becoming a complex jumble of ins and outs that are hard to unpick come tax return time. As a result you could end up paying more or less tax than required. It can also result in poor financial planning which can stifle any growth.
2. Failing to make use of accounting software
We live in the digital age so there is no excuse for ignoring all the technology available to make business processes easier. Accounting software will give you accurate data on where your business stands and is effective in removing any delusions that might build up about how successful a business really is.
3. Not employing or hiring an accountant
Trying to do everything in your business never really works. A business is always more successful when you have the right people doing the right jobs. Good accounting is essential to running a healthy business and having someone qualified to work on them will ensure that no costly mistakes are made and tax bills are paid on time.