Top 4 Accounting Mistakes That Cost Small Businesses Big Money

Keeping the accounting and bookkeeping accurate and up to date is essential for any business to remain healthy. But no matter how hard you try, some errors might creep in which might be minor or major. If ignored or several accounting mistakes and bad practices are regularly executed, it could seriously impact your company’s bottom line and even lead it towards insolvency. Here, we walk you through some of the common bookkeeping mistakes that small businesses must be aware of and do their best to avoid.

  • Assuming profits means cashflow

Any business operation requires investment regarding workforce cost, purchase of supplies and other products, etc. The caution that needs to be exercised here is strictly monitoring your accounts and expenses such that your profits get drained out before you know about it. For instance, your three months forecasted project could get delayed and take an extra two or more months. Thus, it is vital that you maintain as well as keep an eye on incoming as well as outgoing money. Keeping a detailed track of your expenses as well as earnings will help you avoid nasty pitfalls.  

  • Not preserving receipts and purchase orders

Receipts and all paper trails are critical to keeping track of your expenses. They also serve as the most crucial evidence that helps you rectify accounting errors and fill any gaps if found on them. Thus, no matter how small or inconsequential expense it might seem; it is important that you always take its receipt and keep a record of it. There is plenty of online software available today which help make this job easy and hassle-free for you. The software also gives you unique invoices and protects you from vendor’s fake invoices.

  • Mingling business and personal expenses

Mixing business and personal expenses is another most common mistake made by most small business organizations. Not only would it make making tax payments complicated but it would also distort your profit and loss report. It would be challenging to surmise if you have reached break-even, suffered loss or made a profit. The best way to avoid this mistake is to keep a separate card and bank account for personal and business transaction. It will simplify the entire picture.

  • Not checking invoices and vendor’s statements

Another big mistake made by most business organizations is not checking the invoices and statements received by them. Your casual attitude might send an open invitation to vendors to supply you with fake invoices that look almost genuine on the surface. Keeping a microscopic tab on all charges that go through the company will help you deal with the issue efficiently. You can also take help of any online software again which makes the entire operation smooth and more foolproof.

There are numerous other small accounting mistakes apart from the above mentioned which can cost any small business dear. Taking care of these can easily help you save significantly and turn your losses into profits seamlessly. If you feel overwhelmed, it is best to outsource your accounting services to companies such as so that you do not end up making the above mistakes that can cost you dearly.