If you are a small business, then you might think you don’t have enough time for accounting. But this is the line of thinking that will get you into trouble.
Since 2006, the number of accounting mistakes in the United States has been on a downward trend. But in the past two years, that trend has gone the other way.
Even if you don’t have much time—there are some common accounting issues that small businesses make. This post will shed light on those so you can stay prepared.
Keep reading to learn five of the common accounting problems companies see in their business.
1. Data Entry Errors
If you don’t have an automated system in place, you will be entering your data yourself. If you aren’t careful, you can become swamped with data entry problems.
If you are in this situation, double-check all your work to make sure you or your staff enter everything correctly. Also, try to put systems in place to automate this as much as possible to reduce the number of errors manual work can cause.
2. Missing Petty Cash
Cash may seem like a small part of your business, but it adds up over time. You never know when you might need that missing cash.
Before you start dealing with petty cash, make sure you have procedures in place for how to handle it.
Make sure you keep receipts and have a safe to lock cash up for safe keeping. When you document and have a place for everything, it becomes a lot harder to let things slip through.
Taxes are complicated and can cost you money when you mess up.
Businesses have it worse. They have payroll taxes, sales tax, and business deductions. There are countless things to account for that make things hard.
Make sure you have every small or large transaction accounted for and any deductions documented. A tax professional can help you figure out what you need to pay and what you can deduct.
If you do it yourself, make sure you do your research so everything is right. IRS audits are not fun.
4. Misreading Cash Flow
Everybody has that time where they see the next big thing and need to get it now.
But, that might not always be the best investment. You may not even be able to afford it right now.
Cash flow problems are one of the more severe constraints of small business. You need to be careful where you put your money—because when something unexpected happens, you need to be able to handle it.
Make sure you need everything you purchase and make sure that all your invoices for customers get paid on time.
5. Mismanaging Payroll
Payroll is a must for businesses (unless you are going it alone). It isn’t the easiest thing to handle, either.
You need to keep track of wages, income withholding, hours worked, and a host of other variables. Make sure you have a system in place so that you don’t make any mistakes.
Consider using an online payroll system to help manage this. These systems will calculate your payroll information for you and provide a paystub generator online to provide your employees with copies of their paystubs.
Don’t Get Caught Off Guard With Accounting Issues
It’s essential to manage your accounting correctly as a small business.
When you run across accounting issues, it can not only cost you money but a lot of time trying to fix the problem. Don’t fall behind and let accounting become a problem for you!
Staying prepared now will save you money in the long run. Are you ready to spend some of that budget on advertising?
Read our guide on advertising ideas for small businesses for some interesting ideas!