If you’re anything like me, chances are you’ve got an entrepreneurial spirit and the gumption to run a small business, but accounting isn’t your strong point. In fact, accounting is one of my least favorite things because I don’t understand it at all—which means I’ve made a few small business accounting mistakes.
While accounting doesn’t have to be that hard, there are a few specific mistakes that I’ve made as a small business owner. So, I thought I’d share so you can learn from my mistakes!
Not Taking Your Bookkeeping Seriously
One of the first and biggest small business accounting mistakes that newbie business owners, myself included, make is to not take bookkeeping seriously in the first place. This can cause a huge headache in the long run.
I disregarded it because I truly didn’t understand it, and it was WAY easier to pretend that it didn’t exist instead of trying to wrap my head around it. But ignoring it simply means you’ll have to deal with it later and it’ll be a huge mess.
Not Investing in a Professional
Accountants are good at what they do. Or, at least, most of them are. If you can cough up the cash, I would definitely recommend hiring one to lend you a hand. But if you can’t afford a regular bookkeeper or day-to-day accountant, then a tax accountant is a must-have!
Not Reconciling Your Books With Your Bank Accounts
Your books are only one half of the equation. To really get a view of your financial status, you need to not only take a look at your books but also reconcile your books with your bank accounts.
Without doing that you won’t truly know where you are from a financial standpoint—just because it’s in the books doesn’t mean that it’s in the bank. And as an added tip, this is MUCH easier with software (I, personally, use Bonsai).
Not Separating Business and Personal
One of the biggest accounting mistakes that small business owners make in the beginning is failing to separate their personal and business expenses.
If you throw all of your money into the same account it can be seriously challenging at the end of the year when it comes to dealing with your taxes. Make it easier on yourself and your tax accountant and open a new bank account (most of the time it’s really cheap).
Failing to Plan
Every business needs a plan, and that plan needs to include a financial gameplan. When it comes to small business accounting mistakes, one of the big ones is that businesses fail to plan their finances.
If you’re stuck looking at the numbers from today and tomorrow and fail to look into the future, there’s a really good chance your business will never truly reach its potential. So, make sure when you’re planning, you’re also looking at your finances.
What accounting mistakes do you see small businesses make? Share them in the comments below.
Looking for More Small Business Accounting Insights?
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Tae started out as a journalist before following the money into the corporate world. But it turns out that the grass isn’t always greener and now you can find her spending most of her time writing about all the things she loves. Namely, money, travel and business with a hefty dose of self-deprecating humor. She is a podcast fanatic, blogging aficionado and loves to find new ways to turn passions into cold hard cash!