COMMON ACCOUNTING MISTAKES

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It is common knowledge that running a business and mistakes gO hand in hand. But accounting mistakes will not just affect the success of your business, it can create rooms for allegations of fraud. Here are few mistakes to look out for and avoid.

Failing to low income projects

It is really easy to forget to record little income because little transactions are easy to be overlooked. When little income projects are not recorded, you open up your business to discrepancies which will be highlighted during an Audit. So make sure you record all transactions and projects that yield income no matter how little they are..

Failing to keep your books up to date

An easy mistake can cause your books and bank transactions not to tally. Most times, entrepreneurs neglect to update their books when a transaction is being made and this makes their books not to match with their bank transactions. Thought it might be an honest mistake, it'll look like you are hiding something when an IRS agent starts looking into your business. It is easier to update your books with your bank transactions as you go than to explain where a money to so many years ago..

Failing to keep receipts and Invoices

It can be tempting to get rid of old receipts and invoices as your business grows in order to keep your office or desk tidy. But those receipts serves as legal evidences of how you run your business. When the time comes, those receipts will be presented to IRS as proof of your legal transactions and you can look guilty if you can't present them. So make sure you keep those documents for 7-10 years at least..

Failing to separate business and personal accounts

This is very common among small business owners, they fail to create different accounts for their business. It is important to have 2 different bank accounts for your business and personal finances for easy accountability during an Audit. It is also easy for the IRS to differentiate what is a business transaction and what isn't.

Failing to consult an accountant

Most small business owners find it difficult to break out of being a micro manager. They try to solve everything on their own. Accountants have been trained to solve issues with finances, so when you feel that you are loosing track of your finances, contact a reputable accountant to help out.