Did you know that nearly 66% of small businesses close after two years?
This single statistic should be enough to evaluate the overall health of your small business. Spotting problems before they get out of hand is not easy, but it is worth it.
Some of the most common mistakes made by business owners involve keeping books. The only way to avoid these mistakes is to work with a professional accountant.
Read below to find out the most common financial mistakes that a professional accountant can avoid you.
Do not properly classify expenses
If you are inexperienced when it comes to bookkeeping, you are required to make a series of costly mistakes. Among the most common, it is inappropriate to categorize the expenses of your business. Not accurately tracking your company's revenues and expenses will make it impossible to assess how profitable you really are.
A bookkeeper will know how to correctly classify each deposit and each expense according to what the tax code says. With their help, you should have no problem to get a clear picture of where your business is financially.
Do not separate your personal and professional bank accounts
It is very important to have a division regarding your personal and business finances. Often, not separating your professional and personal bank accounts can cause a lot of confusion. If you are audited by the IRS, you will probably need to provide an accurate record of all the financial transactions of the company.
This can be extremely difficult if these transactions are mixed into your personal bank account. Dealing with the headaches that this can cause is not worth the money you will save by doing your own accounting. Hiring an accountant will help you to reconcile your bank accounts with ease.
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Reckless management of petty cash
Most businesses operate with a small amount of petty cash. Typically, inexperienced business owners will not know how to properly track their petty cash. An accountant can help you set up a system to track this part of your business. With their help, you can put an end to the waste and even eliminate the problems associated with employee theft.
Dealing with piles of uncredited receipts
Does your office look like a wasteland of abandoned recipes? If that is the case, it is probably time to seek the help of a professional accountant. The last thing you want is that these financial transactions are not completed because of the problems that this level of disruption can cost. Most accountants can set you up on a digital receipt filing system to facilitate this process.
Making mistakes when it comes to bookkeeping can cost you a lot of money in the long run. By working with an experienced accountant, you can keep the financial side of your business strong. Rushing into the hiring process of accountant can lead to big mistakes.
Participating in a few consultations with local accounting professionals can help you understand what they have to offer. Once you have this information, it will be easy to restrict the selection of bookkeepers.