The last type of mistake you want to make as a new small business owner is an accounting mistake. An accounting mistake can incur fees from the IRS and could also lead you to make poor financial decisions for your business. Here are a few of the most common accounting mistakes that new small businesses run into and a few tips on how to avoid them.
#1 Not Applying Payments To Open Receivables
One of the primary mistakes that new businesses make is not handling their payments correctly. When you get paid for a business transaction, do not just turn around and deposit the money in your account. You need to keep track of all the payments you make. Mark all of your invoices as paid, and make sure that you write down that the account receivables have been paid. This will allow you to know which clients have paid their bills and which clients you need to pursue and follow up with in order to get them to pay their bills.
#2 Not Checking Bank Account Activity
The second mistake that new small businesses tend to make is not checking their bank accounts. You need to keep an active eye on your bank account and make sure that you everything in your bank account lines up with the payments that you have deposited and the bills that you have paid.
Reconcile your bank account at least once a week. Make sure that everything in your account matches your personal records. Doing this once a week will allow you to quickly correct mistakes in your book keeping or get a handle on anything fishy happening with your bank accounts.
#3 Not Backing Up Financial Data
Finally, the third biggest mistake that new businesses make is not backing up their financial data. If you keep your financial data in an accounting program, you should back up all the information on various sources, such as a USB drive or on a cloud storage account, on a daily basis. If anything happens to your computer or your program, you'll need that data backed up so you can keep running your business.
If you can manage to avoid the three big accounting mistakes described above, your business should be on a strong path to success. Work with an accountant at Bliss & Skeen CPAs to ensure that your small business stays on the right path.