The Worst Accounting Mistakes You Could Ever Make

The Worst Accounting Mistakes Make

On the surface, accounting seems like an incredibly boring topic to think about, especially if you’re not in charge of it at your company. But what you may not realize is that poor accounting can actually be the thing that sinks your business or causes you to lose money in ways you can’t even fathom until it’s too late. Below are the worst accounting mistakes that businesses often make and how you can steer clear of them.

1) Paying Too Much Attention to Tax Planning

If you have enough money in your business to worry about taxes, you likely don’t have much of a business at all. Taxes are important and you need to be organized, but obsessing over them is not going to get your business very far. The issue with paying too much attention to tax planning (if there even is such a thing) is that it takes up valuable time and energy that could be used more effectively elsewhere. Take these tips on board and start working smarter today

2) Not Enough Record Keeping

Keeping accurate records will be one of your most important jobs as a small business owner. Not only do these help you run your company more efficiently, but they’re necessary when it comes time to file taxes and determine your tax liability. 

If you don’t keep records, here’s what might happen: The IRS will assume that all of your expenses are personal in nature and may come after you for taxes and penalties. Your books may appear in disarray when it comes time to sell or liquidate your company. It can be difficult to manage accounts payable and receivable if you don’t know how much is owed to whom.

3) Trusting Your Accountant Fully

I'm not saying don't get an accountant. What I am saying is that you shouldn't be so quick to put your accounting in their hands. If you do decide to hire someone, check references thoroughly and question them about what they've done in certain situations. 

Find out how long they've been practicing their craft, what kinds of businesses they usually work with, and if they can provide case studies that match your needs. If they're unwilling or unable to answer any of these questions (and trust me, you'll know), it's time to go with another option.

4) Hiring the Wrong Accountant

One of my biggest pet peeves when it comes to small businesses is accountants who only provide bookkeeping services for very little money. While it may seem like a great idea to outsource your accounting to someone else (especially if you're operating on a small budget), in most cases, you should avoid these companies at all costs. 

Why? If you’re not sure what your accountant should be doing or if they're using best practices, then there's really no point in hiring them in the first place. Hiring an inexperienced accountant can lead to any number of problems—from tax troubles to payroll issues—that will cost far more than an experienced accountant would charge.

Conclusion

Some of these might seem like no-brainers, but we’ve seen everything from screwed-up credit card transactions to double-entry errors so messed up that they required an audit. If you’re making any of these mistakes, don’t beat yourself up too much—we all make mistakes and we can always learn from them. And if you haven’t made any of these mistakes yet, good for you! Now all you have to do is learn how to avoid them in your own business and watch out for them when clients come knocking with work for you.


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