Accounting mistakes to avoid

As a small business, there’s a lot that you can do to ensure that your business thrives and grows. The fact that you are in business is a testimony to your determination and hard work. To help your business stay thriving and avoid pit holes, there a few things to avoid.

Making your bookkeeper an entity

While bookkeepers are necessary, it is important always to be involved in the things that they are doing. Curiosity is a good trait in a business person. It enables you to learn a lot. Ask questions so that you find out the importance of each task. It is very easy to let your bookkeeper ‘handle’ your accounts and give you a profit figure at the end of the month. Don’t fall for this temptation. Go through the accounts with them and make sure that you understand all the figures.

Mixing business with friendship

It is always important to keep business and friendship apart. This is one of the lessons that small business owners must muster. It is very easy to extend credit to a friend. You’ve known them for years, and they might just be in a tight spot. This is very unwise. Unlike other businesses and institutions which you’ll sell to on credit, your friend has nothing to back their creditworthiness. You have no idea about their finances, and you may never get paid. Separate business and friendship right from the start.

Paying your payables last.

You’ll find some that some businesses after transacting with you for a while will be willing to extend you some credit. Remember to pay them first. Avoid the temptation to take care of your own things first and then paying debts as a last priority. You will lose standing with them, and this news will travel fast. Try always to be in the good books of your creditors.

Extending too much credit

As much as you want your sales figures to go up, do not extend too much credit. You can plan each month on how much credit you are willing to extend. This will be after considering the money that you need to pay out each month in terms of expenses, purchases and accounts payables. Always ensure that you have enough to keep your business going.

Taking your business as a hobby

Takes your business as seriously as you would an employment contract. Remember that this is your job. You need to put in the hours without slacking. Only take the breaks that a formal employer would give you. If possible take even less especially in the first years of business.

Taking shortcuts

When doing your tax returns for the first few years, always employ the services of a qualified accounting firm. Don’t do it yourself unless you are a trained accountant. There are details such as tax depreciation, evolving tax laws, acceptable practices and tax increases that you will not be aware of. If you need any help feel free to contact these professionals for tax consulting in Camberwell, Australia. You can avoid paying out too much or too little tax this way.

Taking money from your business

You are the business owner, and the money is all yours. However, you also have a goal of growing your business. You cannot do this while you keep taking money out of the business account for your personal use. Pay yourself a salary and steer clear of the temptation to dip into the business

With the above tips, you should be able to run your business and grow it into the entity that you want it to be.