As a business owner, there’s a million and one things to manage – controlling stock, marketing your company, hiring the right people, and serving your customers.
Ultimately, there’s a lot on your plate – and keeping track of the financial side of your operations can become extremely difficult and time-consuming. Here are the top 5 frustrating accounting challenges that face businesses like yours:
- Not keeping track of receivables:
Of course, getting paid is exciting – but keeping track of your receivables? Not so much. After issuing an invoice, a receivable is recorded – showing that a customer owes you money. Once payment is received, it should most definitely be applied against the invoice to show that it’s paid. Instead of leaving this until last minute and spending hours at tax time updating the receivables listing, make sure your bookkeeper follows up on your receivables and applies payments to invoices on a regular basis.
- Losing or misplacing receipts:
Have you ever lost or misplaced a business expense receipt? If so, you’ve probably noticed how problematic it becomes. If you don’t keep receipts, you’re leaving yourself open to incorrectly reported tax expenses and a high tax bill if an audit occurs. If you’re tired of losing or misplacing expense receipts, start keeping all of your receipts – only use your business card to pay for relevant expenses and keep an envelope for all of those receipts, then once a week, go through them and file them as needed.
- Misclassifying expenses:
When you’re entering information into your accounting software, it’s not hard to pick the wrong expense account or description – leading you to misclassify expenses. When this happens, your accounting software won’t accurately reflect what’s going on in your business. Make sure your bookkeeper slows down and puts all expenses into your software accurately. Then, make sure your bookkeeper scans your expenses on a regular basis – ensuring the data appears to be correct and reasonable.
- Not understanding your accountant:
Have you ever been in a meeting with your accountant – and it’s like she’s speaking another language? Many business owners tend to let this slide, after all, they’re not financial experts and their accountant knows what needs to be done. If you’re not on the same page as your accountant, you’re not going to be aware of any mistakes made. Make sure your accountant speaks your language – ask for explanation when you’re not sure what he or she is saying and have regular meetings to stay in the know.
- Choosing to handle financials on your own:
Sure, most of us don’t want to handle financials on our own; but that doesn’t stop many business owners from trying, simply to save some money. Unless you’re great at bookkeeping and accounting, don’t go this route. As your business grows, start making room in the budget to hire an experienced, professional bookkeeping/accounting person who knows what they’re doing.