5 Common Accounting Mistakes Small Businesses Make

Starting and running a business is no easy feat. Thus, most business owners hire experts for their accounting & bookkeeping in Saskatchewan. See, as owners, you must have a lot on your plate. From working on brand identity to charting out marketing campaigns, there are plenty of tasks for owners especially when they are starting anew. Handling finances amidst such a hectic schedule often becomes difficult. Those who try to take this matter into their own hands end up making some silly mistakes in accounting which derails the business operations. 

So, let’s take a look at the 5 most common accounting mistakes that small businesses make. You should try to avoid them while running your business. 

Also read: Financial Planning for Beginners: Step by Step Guide

No consistency in recordkeeping 

Recordkeeping is an integral part of accounting. Professional accountants in Saskatchewan use updated data sources to assess the financial factors of a business based on which they keep a record of all the financial transactions in the business. 

What business owners often do is keep the records without a specific order. They may use different formats in different months. Some may not save receipts enough to maintain a 100% accurate financial record. 

You must keep track of all expenditures involved in your business. You may tend to avoid it but the task is very monotonous. What you can do is hire experienced accountants and bookkeepers to get the task done. 

Not deciding how much to charge customers 

Business owners shouldn’t be uncertain when it comes to billing their clients for their services. Take your time and do your research before deciding on the billing amount. You may think a certain amount is fine initially. But, eventually, chances are, you will realize that the amount isn’t worth the hard work and number of hours you are actually putting into it. 

Not tracking reimbursable expenses 

A reimbursable expense is the one businesses bear on their customer’s behalf as a part of their daily operations. Examples include delivery fees, travel costs, office expenses, etc. Business owners who do not keep track of the reimbursable expenses end up losing valuable tax deductions. You must get into the habit of tracking all expenses and categorizing the reimbursable ones lest you overlook this task. According to the best accountants in Saskatchewan, it is as important to track reimbursable expenses as to save every receipt involved in business transactions. 

Also Read: What is Credit Card billing cycle? How it works, due date and minimum payment?

Not keeping business and personal expenses separate 

Most business owners take this casually and end up mixing their personal and business expenses. They assume they can sort that out while doing taxes but usually prove wrong. Tax filing in Saskatchewan is complicated. If you don’t keep your business and personal expenses separate, things might get more complex and can also put you in trouble. 

No emergency fund 

You save money for personal emergencies such as hospitals, right? The same goes for the professional world as well. Keep an emergency fund so your business stays safe during a crisis. If you are starting new, make sure you have enough money saved to cover unexpected expenses. Examples include a high electric bill or a software purchase. 

Wrapping Up, 

It is not easy to take care of businesses. But, with a trusted accountant by your side, you can manage the hardest part of business operations- managing finances.