New to small business ownership? If so, you’re probably still learning the ins and outs of handling your small business accounting. Unfortunately, there are a lot of mistakes you can make from an accounting perspective that can be extremely detrimental to your growing business if you’re not careful. By being aware of these mistakes, you can avoid them altogether and set your business up for continued success.
1. Mixing Personal and Business Finances
One of the most common mistakes small business owners make is mixing up their business and personal finances. Sure, you might not think much about using your personal credit card to pay for a few business supplies here and there. Unfortunately, this can make things a lot more difficult come tax time, especially if you want to deduct those expenses from your company’s taxable income.
To avoid confusion, it’s generally best to keep your business and personal finances 100% separate.
2. Sloppy Record-Keeping
Speaking of business taxes, having plenty of detailed documentation can make your life a lot easier when it comes time to file. Unfortunately, many small business owners fail to keep detailed records of their business-related purchases, income, and other financial happenings throughout the year. Unfortunately, this can make tax time a headache and could even affect your ability to file your taxes accurately.
To save yourself tax problems (including penalties and interest) down the road, be sure to keep and properly organize all your financial records. This may include physical copies and digital copies of everything for safe-keeping.
3. Misclassification of Workers
Another mistake you’ll want to avoid as a small business owner is misclassification of the people who work for you, as this can lead to tax issues later on. One of the most common mistakes here is that of classifying a worker as an independent contractor who is actually an employee. Unfortunately, this can result in a failure to pay taxes on that employee’s income, which can come back to bite you with penalties and fines come tax season.
4. Assuming You Can’t Afford an Accountant
Last but not least, never assume that just because your business is starting out that you cannot afford to hire a professional accountant. In reality, working with an accountant can save your business a lot of money and hassle by helping you prevent these and other common mistakes. You might also be surprised at how affordable it can be to work with an accountant who specializes in small business finances and accounting.
Unfortunately, it’s easy to make accounting mistakes as a small business owner. By working with an accountant, you can avoid these mistakes while focusing on other important aspects of running your business. Contact our team at Counting House Associates today to find out more about our business accounting services. You can also schedule a free consultation to learn more about exactly what our experienced and knowledgeable team can do for your growing business!