Small business accounting: 10 Costly mistakes to avoid

How you record and manage your small business transactions largely determines how accurately you file your tax returns. Bookkeeping and accounting are two aspects you cannot afford to ignore as a small business owner in Seattle. Both require expertise and accuracy and if you find yourself overburdened with responsibilities, the best approach is to get help from a professional. Working with a CPA or accountant in Seattle can help minimize mistakes and maximize profits. In this post, we are discussing some of the most expensive mistakes related to small business accounting. 

• Mixing personal and business expenses: Your business is a separate entity and should be treated accordingly. Small business owners often mix personal and business transactions, which can eventually lead to serious issues and inaccurate reporting in financial transactions. 
• Waiting too long to hire an accountant: Many small businesses in Seattle often try to have a hands-on approach to accounting, delaying the critical decision to bring in a professional. If you decide to contact a CPA when things are already in a mess, they might not be able to help to their best extent. Instead, consider getting them onboard from the start of the financial year. 
• Not spending time on reconciliation. Reconciling your bank statements with your accounts is essential, and it is best to do this periodically. This not only helps detect internal fraud and other issues but can also help address discrepancies in cash flow and prevent financial losses. 
• Not having a proper system: If you aren’t using an accounting software solution, the chances are high that all transactions, including expenses, aren’t being recorded accurately. The moment you hire an accountant, ask them whether you can consider options like QuickBooks and how you can implement a seamless process. 
• Trying the DIY way: DIY accounting for small businesses is often risky, as teams often rely extensively on guesswork with their limited knowledge. The most appropriate time to hire an accountant is when you launch your company. Don’t waste your valuable time on something that can be delegated to a professional for a nominal fee. 
• Not spending time on checking financial reports: Your accountant should ideally make profit & loss statements and balance sheets every quarter and after each financial year, and these reports can offer valuable insights. If you aren’t checking financial reports or aren’t reviewing whether the company is performing as per expectations, you are losing profits. 

• Not backing up financial data: While it is possible to store everything on the cloud, you have to consider the ideal ways to back up records and financial data. You don’t want a technical glitch to land your business in a severe situation. 
• Not recording more minor expenses: Some expenses are inevitable, and while the amounts may seem really small, you must have records. Ensure every bill that is paid is recorded, and you will have a better idea of your business performance. 
• Not spending time on tax planning: If you use the right strategies and leverage all the available deductions, you should be able to reduce business taxes significantly. Your accounting firm can help with the process, ensuring you are capable of minimizing taxes and maximizing profits. 
• Not getting regular financial advice: Whether you intend to expand your operations or acquire a new business, you have to evaluate the economic health of your business. Your CPA or accountant can offer advice and solutions based on available data, and if you aren’t leveraging their expertise, you are missing out. 

Do your homework and select an accounting firm in Seattle that can offer comprehensive services at the right price. Consider getting ongoing help and support rather than one-time, quick-fix solutions.