Accounting is not just simple addition and subtraction; instead it is the “spine” of any business endeavor. Most of the small businesses, in order to save money, think of handling accounts on their own – but this is not “the best” idea.
Accounting errors can cost a bomb to your company. You probably don’t want to mess up your numbers as this can hamper your business growth. Small business owners often make mistakes due to lack of proper accounting procedures.
Let’s have a look at some of accounting mistakes usually committed by businesses:
- Not Segregating Business and Personal Finances
First and foremost mistake, most of the small business owners do not keep business and personal finances separate. This mistake can get you into a lot financial and legal trouble. Separating your personal and business finance will not only track your expenses accurately but also helps to be prepared when tax time rolls around. If you fail to do this you will have to depend on your memory and analyzing a year’s worth of credits and debits in one bank account.
From a government tax body’s point of view this one is a perfect recipe for disaster. Don’t fall into that trap — prepare for the financial future of your company by creating a separate bank account your business finances. Strictly use your personal account only for personal purchases. You can reap the benefits later.
- Not Maintaining Receipts
While you do your taxes it is mandatory that you accurately report your expenditures. Many businesses tend to lose, throw away or just forget to take receipts for their business expenses. Keep your receipts safe and in a well-organized manner in a separate drawer or in your computer as a draft.
One important thing to note is that you take receipts and not lose them. It’s also equally necessary, to have a great organization system so that it will be easy for you to sort through them for accounting purposes.
- Doing Everything by Themselves
Sometimes out of sheer passion and in an attempt to save money, small business owners try to do everything themselves including payroll, which is commendable, but the same can cause problems too. Not only you will have less time to devote to critical administrative activities, but you might also be prone to make mistakes if you are pulled in too many directions once the business starts growing. An expert’s help or accounting specialist can help you take a great responsibility off your busy shoulders and help you focus better in other areas where you need to.
These are some of the major mistakes small business owners do; if these are handled carefully their business will grow to the next level. To cope up with the complexities of payroll, salary processing and employee management in your organization, you need a comprehensive, automated payroll software management system. PayWheel is a one-stop shop that provides end-to-end payroll software for small business as well as medium business requirements.