Common Business Accounting Problems and How to Avoid Them

Running a viable business means being prepared for innumerable obstacles. Even the most experienced entrepreneurs can run into problems that take a toll on their profitability, and many of these problems are related to accounting. Stay sharp by considering these key examples.

Cash Flow Issues

The cash flow of your business is represented by calculating the difference between available funds at the beginning (opening balance) and end (closing balance) of a particular period of time. It’s an important part of determining whether or not you can cover the expenses you incur as a company. 82% of failed businesses experience their failure because of cash flow problems. These can be prevented with thorough and organized bookkeeping, effective credit control that minimizes bad debts, accurate cash flow forecasting, and more. You may be well acquainted with cash flow as a concept, but an experienced CPA can help you truly master it.

Unexpected Costs

Not all expenses involved in the operation of a business can be predicted with total certainty. Economic downturn, equipment breakdown, lawsuits, drastic changes in customer demand or preference, new tax and business regulations, and natural disasters are just a few examples of how unpredictable circumstances can introduce a sudden strain on company finances. It’s therefore wise to have emergency funds in place, be fully aware and up-to-date with regards to legal and tax issues affecting your business, and pursue extensive risk management practices. These and other efforts are best carried out with the help of a skilled corporate accountant.

Tax Problems

A number of tax-related problems can go undetected and lead to unforeseen complications and penalties for the business. Businesses may under-pay what they owe, fail to comply with GST/HST law, misclassify their business or employees, or lack organization and thoroughness in their bookkeeping and recordkeeping practices. By the time they come to realize the degree of these issues (or the issues are discovered by the CRA), business owners will be faced with costly fines, not to mention additional stress on the operations of the company. With the right professional accountants by your side, you can avoid countless unnecessary tax obstacles.

Problem-solving skills are a core part of operating any kind of company, but when it comes to accounting problems, you don’t have to do it alone. Whether you’re a small business or a large corporation, call (403) 768-4377 and our team of chartered accountants will be ready to help.