I still remember the first time I filed taxes for my business. In addition to having no idea what a write-off really was, I also didn't worry too much about guessing on the numbers. A few government audits later, I discovered what it really meant to do things the right way. Over the years, I have met lots of business owners that weren't too worried about fudging the numbers, and nearly all of them have run into problems. Proper accounting is important, which is why I created this website dedicated to business accounting. I know that if you learn the right way to do things and focus on integrity, your business can avoid a world of problems.
It is no easy feat to run a small business, especially when you are just starting out. As a new entrepreneur, accounting-related tasks are some of the most complicated tasks that you will encounter, particularly when you consider the simple fact that mistakes will cost you a lot of time and money. Below you will learn about three of the most common errors that are made related to small business accounting and how you can avoid them.
Error #1: Improper Handling of Petty Cash
Petty cash helps to ensure that staff members have the financial resources that they need during the day. However, in the event that there is not a financial system in place for these expenses to be monitored, there is a high probability that the resources will be abused.
Therefore, it is imperative that methods are devised to ensure that the petty cash is tracked accurately. For instance, you could limit it so that authorized staff members only have access to the petty cash, require receipts for how the petty cash was spent, and record and compute the petty cash expenses to check for any potential inconsistencies.
Error #2: Failures with Bookkeeping
Bookkeeping is a very grueling task, and it is one that many business ones tend to put off. However, when you slack on maintaining your business records, it can put your business at financial risk, even if you are running a small organization. By keeping track of your expenses, you are able to ensure your bills and vendors are paid, but you can also get a clear picture of your business's financial health. Ultimately, this is the most effective way to determine areas of the business that need to be improved upon.
Error #3: Errors with Data Entry
When it comes to accounting processes, human error is always a threat. This is particularly a true statement where data entry is concerned, as a single typo can throw off your entire financial situation and put your company in jeopardy. Though data entry mistakes cannot be prevented all the time, you can take certain measures to reduce the risk of them occurring. For example, always double- and even triple-check your work. You may even want to have another staff member look it over as well; after all, another set of eyes is always good—sometimes it can be difficult to detect your own errors.
Making accounting mistakes that can put your business at financial risk is a scary thought. If you are concerned, reach out to a business accounting firm, like Emerald Financial Partners.Share
6 January 2019