Even seemingly small accounting mistakes can work against the growth of your small business, putting it on unstable ground. Unfortunately, mistakes with accounting, bookkeeping and payroll are all too common, especially for new or extremely young businesses. Hiring a Bookkeeping Services can help a business owner alleviate the stress that comes with deal with these finances. Â Knowing what the most common mistakes are can help you to avoid them and keep your business on the path of growth.
Not Keeping up with Receivables
While getting paid is an extremely exciting part of running your business; keeping track of receivables is not-so-exciting. When you create and issue an invoice, a receivable needs to be recorded. This means that a customer now owes you money. When you check the receivable listing, you will see that that individual as an outstanding balance. When you receive a payment, it needs to be applied to the invoice and marked as paid. While this is an extremely easy process, too many businesses put this off until later; however, later never comes.
When tax time arrives you will be looking at number of customer deposits in the revenue account and your receivable report will not make sense. The consequences is that you must waste hours, and even days, updating the receivables list, may wind up overpaying on your taxes and acquire large, bad debts.
Throwing Out Expense Receipts
There are far too many business owners that do not save copies of expense receipts for their business, which may result in a series of cash flow, accounting and tax issues. If you do not have the actual receipt for a certain business expense it may result in you using the charge on your business taxes, when in fact is was for a personal purchase. This can cause huge problems if you are ever audited by the IRS.
Failing to Record a Cash Expense
It is important that you track all of the expenses that are related to the running of your small business so that you can subtract these costs from your total income when it is time to do your taxes. While you can link your debit and credit cards, as well as check purchases to accounting software, cash purchases are often overlooked.
The fact is that it can be extremely difficult for a small business owner to keep track of all their business accounting needs. In these situations, you should consider using a professional Small Business Accounting service in Greenwich CT. They can take over management of your books and let you focus on running your business.
With the right help, a business owner will have no problem keeping their finances straight.
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