Entrepreneurs are skilled at coming up with creative ideas for new businesses, but a large number of startups fail within the first five years. Often times, the problem is not the entrepreneur’s idea or the services they offer- the issue is how they handle the finances. A stable financial footing is crucial for every business, as even the best businesses will fail without it. Continue reading to learn about the top three accounting mistakes entrepreneurs make when starting a business and how to avoid them.
Blurred Lines Between Personal and Business
Many entrepreneurs make the costly mistake of blurring the line between personal and business finances. At the early stages of a new company, it may not seem important to keep these finances separate, but as the business grows, it can become a significant problem. The best way to avoid this mistake is to make clear, separate accounts from the very start of your business to ensure you never cross the line.
Limited Financial Analysis
Every entrepreneur should begin each endeavor by developing a detailed budget, but many startup owners fail to regularly asses the status of their company. This is a serious mistake to avoid, as it limits your ability to modify the budget as the business grows. It also limits your ability to detect problems before it is too late to fix them. Using a professional bookkeeper can help you to avoid this situation, as they will provide up-to-date reports that make it easy to analyze the financial status of your business.
Not Using A Professional Accountant
The majority of entrepreneurs will admit that they are not the best at accounting- yet they will still try to handle their own finances. This is a major mistake, as it forces creative startup founders to focus their time and attention on payroll and accounting tasks rather than on ways to grow their company. Using a trained professional allows business owners to be confident that their accounting tasks are taken care of correctly and efficiently, while they focus on expanding their business.
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, YouTube, and LinkedIn.