Managing company finances is crucial to running a successful business. However, many owners/managers make costly bookkeeping and accounting mistakes, leading to financial issues (legal troubles, financial instability, poor decisions, etc.). The following are the most common errors businesses make and actionable tips for improvement.
Common Accounting/Bookkeeping Mistakes
- Mixing personal and business finances: When owners/managers blur the lines between business and personal finance (use personal credit cards, bank accounts, and cash flow for business expenses), problems occur. These errors create a confusing financial picture. Separating personal and business finances simplifies tracking expenses, filing corporate taxes, and creating financial reports. Best practices include applying for a business credit card, opening a dedicated bank account, and keeping accurate records of business transactions.
- Inadequate recordkeeping: Inferior recordkeeping leads to incomplete records, lost receipts, tax compliance issues, missed deductions, and reduced cost savings. Accurate recordkeeping makes it easier to retrieve financial information. To improve your records and create a clear picture of financial health, utilize accounting software (Xero, QuickBooks, Kashoo, FreshBooks, etc.), establish a clear recording system, and ensure receipts are correctly entered.
- Making reconciliation errors: It’s important to regularly compare bank/credit card statements with a company’s accounting records to ensure they match. A lack of reconciling accounts may result in unauthorized transactions, missed discrepancies, accounting errors, and financial problems. To avoid these difficulties, reconcile credit card statements and bank accounts regularly (monthly, weekly), implement controls to flag/address discrepancies, and consider hiring an accountant for your corporate accounting needs. Accountants have the expertise and tools to assist.
- Misunderstanding tax obligations: Payroll, sales, and self-employment taxes are complex! Misunderstanding a company’s tax obligations leads to interest charges and penalties. Hire professional accountants to walk you through your business’s tax responsibilities. Make note of deadlines and learn deductions specific to your business/industry.
How Cook and Company Chartered Accountants Can Help
Efficient accounting practices are critical for all companies, maximizing financial health. Recording, communicating, and measuring financial transactions can be time-consuming and challenging. Cook & Company can help simplify the task. We offer corporate accounting solutions tailored for your business, providing what is necessary to ensure stability, prosperity, and efficiency. Our experience, technical savvy, knack for numbers, and grounding in the current financial landscape help us deliver accounting solutions that work and invaluable tax planning and advisory services. We offer integrity, honesty, and a personal touch. Put our diverse and detailed expertise to work for your company. Contact us today.
