When a business starts to grow, accounting tasks get even more complicated. It might be overwhelming for businessmen who aren’t that knowledgeable about bookkeeping and accounting, but it’s a good sign. It means that your business is growing.
While this growth is something to be happy about, keeping up with the ensuing challenges can be tough. Problems may arise, especially if you don’t have a team of accounting professionals to help you manage them. Working with a CPA firm, however, can help you avoid costly mistakes that could put your business at risk.
Failure to Keep Track of Receivables
Every invoice comes with a record of a receivable, which indicates that you’re supposed to be paid by a customer. Once the customer has paid, the invoice should be marked as paid. It sounds like an easy task, but updating them becomes more difficult as you begin to collect more receivables.
The result could be a poor receivable report and a mountain of customer deposits stuck in your revenue account. The longer they are ignored, the more problems you may have with overpaid taxes and bad debts. It’s best to follow up on the receivables and update payments every month.
Forgetting to Take Note and Keep Expense Receipts
It’s necessary to keep all receipts you receive from business expenses in order to keep track of cash flow. This prevents accounting, tax, and cash flow problems. Otherwise, you may find yourself confused when you check your bank statement and see charges you can’t explain.
The thing is, with all the expenses, receipts, and hectic schedules, owners often fail to monitor this side of the business. There are ways to make it easier for you. One is to never use your business credit card for any personal expenses. Another is to keep a folder in your car where you can keep all business-related receipts.
Doing the Taxes Yourself
Taxes should be left to professionals who know what they’re doing and are able to keep up with changes in laws and policies. Many business owners force themselves to do their own taxes to save money. As a result, they’re not able to claim all the available deductions or they get penalized for underpaid tax bills. Hiring a professional may cost you initially, but it can save you tons of money and time in the long run. You can also ensure that your business is complying with all tax regulations.
As a business owner, your focus should be on advancing your business as a whole. Getting stressed out by the accounting and financial aspect of your business not only wastes your time and skills but also slows down your company’s growth. Leaving accounting tasks up to the professionals is the right way to go.
5 Accounting Mistakes That Put Your Business at Risk, Freshbooks.com
Right and Wrong Ways to Resolve Tax Issues, Foxbusiness.com