If you handle your business accounting on your own, you
probably think you do a pretty good job. In truth, though, accounting is some
pretty tricky stuff, and it’s very likely that if you’re not using a professional
accountant or at least professional accounting software, you’re making some
mistakes along the way.
And the problem with accounting mistakes, even small ones, is that they can end up costing you big time. Mistakes can result in your company looking unprofessional and disorganized, in legal problems, in fines and fees from the IRS, in an audit, and in many other issues.
Obviously, the best solution is to not make accounting
mistakes in the first place, but if you’re going to make errors, there are some
that you REALLY want to avoid. Below, you’ll find some of the worst accounting
mistakes you can make and, after reading, hopefully you’ll be inspired to
double-check your figures and forms for mistakes or maybe even to hire a
professional accountant to assist you.
Mistake #1: Overestimating Your Assets
One of the worst things you can do is to make an accounting
error, such as adding an extra zero in somewhere, that leads you to believe you
have way more assets than you actually do.
If the error is bad enough, it could easily lead to financial ruin, employee loss, and public scrutiny from those who think you’ve been dishonest.
These errors, as mentioned, can come from “bad math” or from just not understanding how to properly analyze and predict where your company will be, financially speaking, within a given timeframe.
Regardless of what caused this type of error, it’s always an
indicator that a business needs professional help and fast!
Mistake #2: Not Being Consistent
When people who, to put it bluntly, don’t know what they’re
doing are managing (or attempting to manage) the finances, problems often arise
with consistency.
Inexperienced people will often do things like put in a
different product costs for each order, only keep some receipts but not all of
them, and forget to record certain payments or credits.
Obviously, this can lead to gaping errors, confusion, and a
lot of disgruntled clients. Consistency is achieved by having standard
financial plans and strategies that everybody follows all the time...or by
having a financial pro on board who knows exactly what he’s doing!
Mistake #3: Not Taking Advantage of Credits and
Deductions
Another common mistake that people make is not taking
advantage of available credits and deductions. Sometimes, these get written off
as not being that worthwhile or that big of a deal, but, when you consistently
skip out on ways to save money, it can end up costing your business big time.
As you can see from these all-too-common mistakes, having a
professional accountant on board or at least someone who knows what he’s doing
is absolutely indispensable.