Proper accounting is vital in business. It must be done carefully, strategically, and in a highly organized fashion. If one element of your accounting system breaks down, it can cause a devastating ripple effect. Many small businesses fail due to poor financial planning.
Weak or Incomplete Business Plan
If you’re planning to start a business, you need to have a plan. It is totally unreasonable to expect any business success if you do not plan ahead, no matter how great your product or idea is. Before you even start doing business, you have to decide how to classify and structure your business, file for licensing, obtain a tax ID, and other administrative tasks. That’s just day one. Your business plan needs to be clear, comprehensive, and professional to attract investors and ensure you are operating toward your goals, not working against them.
Having a well-designed budget helps your business stay on track and help you monitor your results. Lack of capital and poor financial management are business killers. If you don’t plan ahead and make realistic financial decisions, you can get into trouble very quickly. It is very easy, especially early in a business’ development, to get excited about growth and overspend. Having an effective budget for your business can help you stay afloat and reach your goals.
Record keeping may not be the most exciting or glamorous job, but it is absolutely essential. How can you understand your small business accounting if you don’t have records? How are you going to make sure your taxes are filed properly? Incomplete bookkeeping paints an incomplete picture of your business. For example, you may think you’re doing great and invest extra money only to discover you missed a return or unpaid invoice, leaving you in trouble. What if you miss a tax deduction that could save your business money? Avoid these risks and make sure your decisions are well-informed by keeping your records accurate.
Too much DIY
The entrepreneurial, do it yourself spirit resonates with most business owners. While this is a great, arguably essential quality to succeed as a business owner, it can be harmful if not kept in check. It is important that you focus on the things you do best. Unless you run an accounting or financial company, chances are that accounting is not your greatest strength. In the early stages of business, it may seem like a good idea to save money and manage your accounting yourself, but mistakes could cost you more than you might have saved. Doing this will definitely cost your time and energy, which is probably better spent focusing on your business. Don’t be afraid to outsource your small business accounting to an experienced CPA from a company like AC Financial, it just might be the best decision you make for your business.
If you’re looking to make sure your business accounting is well-managed and compliant so you can spend more time on your business, please give us a call at 1-847-517-6373 for a FREE consultation today.