• Fri. Apr 12th, 2024

Common Accounting Mistakes That Small Business Owners Make


May 19, 2023
That Small Business Owners

Small businesses are the lifeblood of the UK economy and while they are extremely productive and effective at what they do, the majority of them are not accountants. That can lead to accounting errors that can be both costly and time-consuming.

Small business accounting experts Accountingpreneur said “Growing your business takes smart accounting practices that meet your accounting needs, and the financial health of your company depends on you avoiding the common accounting mistakes that many small business owners make. What are the 9 most common accounting mistakes out there?”

Only One Bank Account for Everything

 Separating your personal and business finances is an absolute must for small business owners.  Personal and business accounts ensure that your business finances aren’t used for personal use and vice versa.

Not Filing Your Tax Returns on Time

This is far easier to do than one would think. As a small business owner, you are busy running a business, dealing with clients and employees, planning for the future and much more. Tax time can come and go without you even noticing so make sure to set reminders in your calendar and make plans to work on your books monthly.

Not Keeping Accurate Records

Failing to keep receipts, approximating expenses and being disorganised with your expense and income tracking inevitably leads to disaster. Create systems to keep yourself organised and set reminders monthly to ensure you are not falling behind.

Failing to Reconcile Your Books

As a business owner, you should always reconcile your books and bank statements with your purchases and expense reports. Keeping these numbers fresh in your mind gives you a great picture of the financial health of your company as well as helps you catch any mistakes.

Mixing Personal and Business Credit Card Purchases

Similar to keeping different bank accounts for personal and business expenditures, you should also consider having separate credit cards. This will help avoid confusion when you are reconciling your books.

Neglecting Small Expenditures

It is amazing how quickly the small things add up! Small expenditures, because they are more frequent and often more spontaneous, can easily eat into your budget if you don’t keep track of them.

Improperly Managing Cashflow

Cash flow is what allows small businesses to operate. If you spend more than you have or make reckless decisions with your cash flow, you can seriously hinder your ability to grow and make a profit.

Mishandling Billing

Another common mistake is for small business owners to neglect their billing. Forgetting to send out invoices and failing to ensure payment are a few of the many ways that improper billing can affect your bottom line.

Failing to Assign Budgets to Projects

Your projects and department should have clearly defined and well-thought-out budgets. You can always make adjustments if necessary but if you don’t set a target, you won’t know if you are doing well or failing miserably.

Not Seeking Help When Needed

If you need help with your accounting or if you feel like you are starting to fall behind, don’t hesitate to ask for help. Your job as a business owner is to make sure that your company succeeds, and you may need professional help when it comes to accounting.

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