July 21st, 2020 Taxloopholes.com Advisor
Over the last 25 years, I have helped thousands of business owners grow and scale their businesses. I have had the privilege of helping business coaching clients increase their revenue in a short period of time by teaching them how to create systems and controls and making smarter business choices.
Unfortunately, for many business owners the process of scaling often comes with a steep learning curve when it comes to accounting. I have seen brilliant entrepreneurs have to take a step back (or sometimes two) to regroup after an accounting mistake.
I recently sat down to talk with the team at Bench.co about some of the most common accounting mistakes that they see when it comes to small business bookkeeping. These include:
Procrastination comes from the fear of doing something incorrectly. As a small business owner, particularly one who is still learning their way around a balance sheet, the fear of messing up your books can be a very powerful one. So you put it off. Which can cause you to miss important tax deadlines and lead to confusion down the road as you try to reconcile records from several months prior.
Don’t do it. If you are unsure, ask your CPA. It is much easier to make a quick phone call today then have to adjust a year’s worth of books down the road.
There is a reason that I take my car to the mechanic. They are the professionals and specialize in understanding the ins and outs of vehicle repairs. The same is true of your CPA. They are well versed in the current tax rules and regulations and will help ensure that you are running smoothly and avoiding the IRS pot holes.
As a business owner, it is crucial that you educate yourself on the contents of your financial statements and make it a practice to review them often.
No one wants to get audited, but when it does happen you will be happy that you saved all your receipts. Consider keeping them in an electronic format for easy retrieval in the future.
This tip is along the same lines as number three. Hiring an experienced bookkeeper that can set up your books properly and keep things organized is a valuable asset to your company’s financial pillar.
New business owners make this mistake often, and it can cause a headache for both your bookkeeper and your CPA.
An accurate financial statement can help you make informed decisions about your company and it’s financial health. If you make this particular mistake, your records may lead you to make decisions that are not in the best interest of your business.
You have a to-do list a mile long, and this one task can often go neglected. Stay on top of things and talk with your CPA to make sure that you are compliant.
At the end of the day, the majority of these mistakes come down to guessing. When in doubt take the time to ask questions and educate yourself on the proper bookkeeping protocol to ensure that you have the most accurate books year-round.