As always say, Accounting is the language of business. This is a statement of fact not a mere say. Without quality accounting information, it is very difficult to take operational and strategic business decisions. The growth and sustainability of any business is hampered if there was operational inefficiency and taking inappropriate decision. Not maximizing where costs can be saved means you need to work on existing accounting practices that boast profits to stay in business.
The rule is to first identify those poor accounting practices and undertake necessary improvements to address the problem. You really need to take charge of your business.
Poor Organization of Your Accounting System
The main objective is to monitor the flow of your accounting system. Organization is the key to save your business from terrible costs and waste of capital. Organizing the system starts from your accountant who can evaluate the process in place and make necessary improvements to monitor your books. Most business owners make the common mistake of neglecting the role of an accountant in their business growth efforts.
Inadequate Tracking of All Financial Transactions
All business transactions that result to revenue, expenses, assets and liabilities, and subsequent net assets must be recorded and tracked accordingly. Standard definition in the classification of these items is critical for adequate representation during reporting, this is where your accountant is mostly needed. Most business owners attempt to track business transactions with no error proof system in place for tracking. Even when there is one, they are not sure of the tracking need of certain transactions. If you aren’t sure what to track, get advice from an accountant.
Failure to Save Receipts and Document
Receipts and document are evidence that transactions were for the business, without which you cannot have adequate prove for those business transactions in the nearest future. Keep your receipts and document as long as reasonable. In most cases, you hold unto them for as long as 7 years, for your accountant to know your business transaction history especially your tax history.
Commingling Personal and Business Finances
This is common in small-business. Most Small business owners do not keep business finances separate from their personal finances . Sometimes, this happens simply because the business grows organically, but other times the business owner does it intentionally because the believe, which is not the case, that the funds are all going “to the same place”. Commingling funds makes it very difficult to track where money is going, and even harder to make sense of things if the IRS audits you. Keep a separate business account for all business related transactions.
Other Poor Accounting Practices include;
- Not Filing Taxes Returns on Time
- Failure to Track Labor and Not Paying Employees Accurately and on a Consistent Cycle
- Neglecting Monthly Bank Reconciliation Bank Accounts, etc.
Do You Need Accounting Help?
Consistent up to date and cleaning of accounting records for sound business decision making, may be posing some difficulties when you are preoccupied with other business functions. Is it time to consider independent professionals because of certain technical complications that could occur along the line? It could also be daunting, time-consuming procedures. Not recording correctly and poor monitoring can cause complications and confusion.
we @Fritznoble assist our clients on the best available options that suit their businesses…Reach out/ Outsource With Us… If Accounting works are bothering to you, then it’s time you outsourced your accounting and bookkeeping requirements, this will help you concentrate more on core competencies of your business; with a team of professionals to help.
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