As your small business expands, some things will get more complicated. At the top of this list is bookkeeping. Larger numbers means more complicated math and more finances to keep track of. Even if you outsource and hire an accountant to help you with the number-crunching, it is still helpful to double-check his or her work, just in case.
Here are some common mistakes that small businesses make when it comes to accounting and bookkeeping.
1. Neglecting Receivables
If you’re an entrepreneur, you know what receivables are — it’s recorded when a customer owes you money for your business’s product. Make sure all of your customers have paid you in full. Go through your list of receivables and double-check that you don’t have customers whose balance is outstanding.
2. Throwing Away Receipts
Expense receipts are very important for tax returns, as well as monitoring cash flow. Especially for small businesses with more employees, it can get difficult to keep track of everybody’s expenses — especially when they are away on business trips, when many expenses are reimbursed by the company. Keeping receipts also will help you better monitor your bank account to ensure that there is no fraud.
3. Trying to Handle It All Yourself
Accounting is one of those tasks that are better left to someone who is an expert. Entrepreneurs already have enough on their plates, without having to worry about expense reports and receivables. Leave these tasks for professionals, and save all your entrepreneurial spirit for cultivating and improving your business. It is a good idea to double-check the accountant’s work, but for the most part, trust the hired professional to take care of the task.
4. Pretending to Understand
It’s important to communicate with your accountant. Financial jargon can be difficult for people to understand, especially people who are not in the field of finance. Make sure nothing is going over your head, and ensure that you understand the numbers involved. This is especially crucial for the long run, as your small business’s finances can get more and more complicated as time goes on.
Biz2Credit can help you with your small business needs. Visit the website or call (877) 861-2210 for help.