New accounting software has made bookkeeping and accounting more manageable for small business owners, but it has also made it easier for owners to make mistakes. Some accounting mistakes are minor and are easy to correct, but some mistakes have a significant effect on a business’s financial health. Continue reading to learn about three common accounting mistakes that all business owners should avoid at all costs.
Not Recording Small Transactions
Do you take the time to record all transactions, no matter how small? This is a common mistake for business owners, as they think that petty cash is not important and it won’t make a difference whether or not it is recorded. However, it’s essential that your business has a record of all spending, even if you believe it is insignificant. This rule is especially crucial in retail environments, as many transactions are cash-based. By keeping an updated record of transactions of all amounts, owners will have a much easier time managing their books as the company grows.
Not Specifying Between Employees and Contractors
Employees and contractors are not the same, and it’s essential to specify whether someone is an employee of your business or if they are someone you’ve hired on contract. Business owners should not only know the difference between employees and contractors but should also know the accounting consequences of the difference. If your company contracts to others, you should be aware of the changes to tax deducted from payments to contractors.
Not Taking Bookkeeping Seriously
As a business owner, it’s easy to become overwhelmed with other aspects of running the company and to not prioritize bookkeeping. While you want to remain productive, bookkeeping is a huge part of being a business owner and should never be put off. If you leave small accounting tasks for another day, odds are that you will end up with a mess of neglected payments and invoices. Instead, invest 15 minutes a day or every other day to save a lot of time and stress in the future. Taking bookkeeping seriously is the best way to give you an accurate picture of your company’s financial health.
Trust the Professionals at The Harding Group
Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for emails or phone calls and will strive for open communication with our clients. Whether you are interested in business advising, tax preparation, bookkeeping and accounting, payroll services, Training + support for QuickBooks, or retirement planning, we have the expertise and years of experience to help. We serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of taxes, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, Google+, YouTube, and LinkedIn.