In business, as with most anything in life that we strive to excel at, mistakes will be made. That’s not always a bad thing. In fact, many would argue that some mistakes are an absolute necessity in reaching long-term goals. While some mistakes are more costly than others, they can definitely serve as a teaching moment if we let them.
There are some mistakes we want to try and avoid altogether. Their detriment to a business will far outweigh any valuable life lesson we may glean from it. When mistakes put the future of your business at risk, you’ll want to be sure you’re paying close attention. Some of the most dangerous mistakes made in business stem from spending and reporting money earned, aka: Accounting.
Here are 5 accounting mistakes that put your business at risk:
Mistake #1 – Failure to keep receipts
In this wonderful digital age we live in, it can often be considered cumbersome to keep receipts for business expenses. However, too many businesses have paid a heavy price down the road by not keeping track of their receipts. Small expenses can add up quickly and can make a big difference when tax season approaches.
Mistake #2 – Mixing Business with Personal Finances
When you fail to keep your business spending and your personal spending separate, you end up in an accounting mess. It’s very important to open a separate bank account as soon as you start your own business and keep everything separate. The problem is, if you don’t stick to this discipline from early on, it becomes easier and easier to blur the lines and you eventually end up in a bad situation.
Mistake #3 – Not Staying on Top of Receivables
The best part about running or working in a business is getting paid, right? One would think that, because earning money is such a major goal for any business, carefully managing the money that is coming in or should be coming in should be a top priority. However many businesses fail at keeping track of receivables and end up spending too much time catching up, too much money on overpaid taxes, and too much bad debt.
Mistake #4 – Attempting to Go It Alone
There’s no reason for you to spend your time and energy focusing on areas of your business that you are not an expert in. There are professionals who can handle your accounting for you. They have the knowledge and experience to steer you away from accounting troubles and keep your books looking great.
Mistake #5 – Not Working With Your Accountant
This definitely ties in with Mistake #4. If you are going to hire an accountant to help you manage your business revenue, make sure you are on the same page with them. Take the time to discuss important ideas and deadlines so that everyone is aware of what is happening. When you hire an accountant and then forget about them, you’re missing out on a valuable resource.
Related: 3 Accounting Company Red Flags
Hacker Accounting knows these mistakes far too well because we’ve seen other businesses make them over the years. The good news is, we can help you avoid them. We invite you to give us a call at 602-375-5251 and set up a time to talk about your business needs.