Every dollar is precious. It is a well-earned certificate of thanks for a job well done from each and every customer you have served. You simply can’t afford to throw away any of them!
But every time you make one of these accounting blunders, that’s exactly what you’re doing. Here are 4 common mistakes you can start avoiding today:
1. FALLING BEHIND IN PAPERWORK
Who among us hasn’t found more interesting things to focus on than keeping forms and files in order?
Of all the hats you wear, this one seems to sit on the shelf the longest collecting dust. Long-range planning, creative marketing, and interacting with customers are a LOT more fun than making sure you are filling out accounting paperwork on time each week/month/quarter.
Then, on top of all that joy, you get to make sure everything is neatly organized and kept up-to-date so that every bit of your financial information is available at a moment’s notice. Just in case people in suits come calling.
2. FAILING TO KEEP RECEIPTS
Similar to the first mistake—but much easier to mess up day-to-day—is the mistake of not keeping up with your receipts.
How many times have you stopped in a store real fast to grab another ream of paper for the printer or a last minute item one of your employees needs? It’s not a big purchase, and it wasn’t anything you were planning to pick up. In fact, you were on your way to something else more pressing. So you tossed the bag in your backseat, and kept going. Who knows where the receipt ended up? Oh well, it was only a few bucks. No big deal.
EVERY transaction needs to be accounted for, no matter how small or insignificant.
- The IRS will find them very significant if they ever need to audit.
- Receipts can help you quickly discover errors in reconciliation…saving you time and money.
- You may be able to use them to find possible deductions when you file your taxes.
3. NOT BACKING UP YOUR FINANCIAL DATA
This one often gets overlooked entirely. With the first two, we usually are at least aware that we should be doing them. However, it is entirely possible to go months (or even years!) without simply backing up our digital files.
No doubt you’ve heard horror stories from people who have had their harddrive crash only to be told that the data isn’t recoverable; irreplaceable information and family memories…gone. Or maybe someone you know has fallen victim to thieves or malicious hackers. (Hopefully, you’ve never had to encounter any of those things!)
When it comes to your business and the employees who are counting on you, you can’t afford to have that happen.
4. TRYING TO DIY
A one man (or woman) band will eventually get very tired.
And when we get tired, we make mistakes. At some point, trying to run your business, grow your business, and stay on top of the financials of your business all become too much for one person to handle. Even at first, when there isn’t much finance to manage, if you aren’t savvy in what you’re doing you can make costly mistakes.
More than likely, the business you started isn’t an accounting firm. That’s probably not your strong point, and that’s ok! There are plenty of numbers folks (like us) out there who actually enjoy that sort of thing.
Don’t risk damaging your business by trying to do things outside of your gifting.
We can’t point out common mistakes without at least offering some simple solutions as well. All of the problems above can be solved at pretty much the same time with 3 simple steps:
1. OUTSOURCE BOOKKEEPING AND PAYROLL
By partnering with a qualified accounting firm, you instantly remove one of your biggest stress points.
- They’ll keep track of what needs to be recorded and when.
- They’ll make sure the receipts you give them are sorted and saved (you still need to make sure they all get sent in, though!).
- They’ll stay on top of the most current federal, state, and local tax laws.
- They’ll have current backups of all of your financials.
- They’ll free you up to focus on building your business.
An accounting firm is only as good as the information you give them. So it is imperative that you establish clear and ongoing communications with whomever you choose to outsource your financial matters.
In order to maximize your profits and potential, avoid errors, save on taxes, and sleep easier in general, be sure that you and your accounting team have a regular communication plan. Let them know what you expect from them and what they can expect from you. Be sure to deliver on your end (remember those receipts?), and don’t be afraid to ask questions (again and again if necessary). After all, they work for you!
3. HAVE MULTIPLE BACKUP PLANS
The easiest thing you can do today to create instant peace of mind is to back up your data…all of it. Then do it again and keep that backup somewhere else.
- Purchase two external harddrives.
- Keep one at your business, and keep the other at home. (If your business operates from home, keep the second one somewhere you can trust.)
- Set your system to back up automatically.
- Switch the harddrives out once a week. That way if the worst should happen, your physical harddrives are never more than one week off.
- Back up to the cloud.
There are several reputable companies that allow you to securely back up your devices to their offsite servers in real time. They are worth every penny as additional insurance against crashing, hacking, or both of your harddrives failing at the same time.
(The US Chamber of Commerce has a helpful article on this as well.)
Our team at Cowart Reese Sargent understands the importance of avoiding these costly mistakes, and we have decades of experience providing proven solutions to business owners just like you.
We have a “small firm personality with big firm capability.” Contact us today to find out how we can lighten your load and help you win in business.