As a small business owner, you carry a lot of responsibility on your shoulders. From the day-to-day operations to the accounting and bookkeeping. When you’re juggling all of these different tasks, it’s inevitable that some mistakes will occur. Hopefully, we can help you avoid these common (and often costly) mistakes that pop up for businesses in any industry. If you need more assistance to make sense of your company finances, please contact ENSO Accounting for a consultation!
Not Separating Your Accounts
Having separate accounts for your business and personal expenses is key. Not just for tracking your cash flow, but also for accurately predicting and utilizing your funds! It can be difficult when you’re first getting started—especially if you’re the one funding the business. But trust us, you want to establish separate bank accounts, separate credit cards, and more. This will make it easier to track business versus personal expenses and save you precious time on accounting. If you’ve established an LLC already, then these steps will help you further limit your personal liability when it comes to the company’s legal exposure and/or debt.
You can still use personal assets as business capital. Just make sure you’re clearly transferring the funds from one account to the other and documenting these transactions for future deductions. Although it’s possible to deduct expenses and equipment that you use for both personal and business reasons, we urge you to be careful. Mistakes like deducting personal expenses on your business taxes can have serious financial implications. Apart from having to pay back the taxes you would have paid, you can also be charged a penalty up to 75% of the amount you already owe.
Failing to Automate Your Accounting Practices
Why spend more time on accounting tasks than you have to? Thanks to new technology, you can handle many of these best practices automatically. With remote access and authorization for your bookkeeper/accountant, you can track your income, expenses, invoices, and more with ease! If you connect your bank account to reliable software, you can even pay bills, generate invoices, and get paid in the span of just a few minutes. QuickBooks has some of the most advanced capabilities in the business, which is why we often recommend it to our clients. Even if you’re technologically challenged, they make automation hassle-free. Especially with the assistance of our QuickBooks Pro Advisors. Don’t make the mistake of underestimating your income or wasting your valuable time tracking and categorizing expenses. Choose the right accounting software that will automate these practices—and more!
Refusing to Hire Professional Help
There’s no shame in asking for help. Particularly when doing so will allow you to grow your small business faster and more effectively! You’re the specialist in your industry. Allow us to take some accounting tasks off your plate and do what we do best. With professional accounting services, it’s about more than tax preparation and expense reports. At ENSO Accounting, we believe in offering more advisory services that make sense of these reports and utilize the data to help you meet your goals. Working with a professional will enable you not just to keep up with your accounting, but also to look toward the future!
When you better understand your current cash flow, we can then make future projections for potential expansions. We’ll even work together to forecast expected expenses down the line and maximize tax-saving strategies by purchasing new equipment for the business, deferring income, and more. Depending on your goals, we could assist you with seeking capital for new ventures and growing your business at your own pace. Don’t make the mistake of seeing professional accounting services as an unnecessary expense. Instead, consider the potential return on your investment and what a firm like ENSO Accounting could bring to your team! For more information on these and other best practices, please contact us today.