Running a small business can be very rewarding. But, there are certain things you need to be aware of as a business owner that can cause problems down the road, especially when it comes to accounting and keeping good order of your books. The year is nearly over, so before you close out the year, let’s take a look at some business accounting problems and the solutions you can work on to finish out the year strong in the fourth quarter.
Common Business Accounting Problems
While not an exhaustive list, we find that businesses most often struggle with:
This sounds simple, and most of time it should be. However, many small businesses fail to work within a set budget, especially when they are first getting their business going. The tendency is to decide yay or nay on expenses as they arise, rather than planning ahead and setting aside money. You should be budgeting for payroll, property costs if you have them – rent, utilities, etc. – projects, and emergency funds for those unexpected costs. You may not know what those specific costs are, but making sure you have an emergency fund to be able to deal with them is a must. Additionally, as we come into the fourth quarter, data should be analyzed from this year to begin creating the budget for next year.
Your budget should also be somewhat fluid, depending on your revenue levels. It is much safer to budget based on your lower projections rather than setting your budget based on the based case scenario.
Probably one of the biggest mistakes small business make is not accounting for and saving receipts. If the Internal Revenue Service comes knocking on your door, insufficient accounting of receipts can garner some serious penalties. But there is good news! Saving receipts does not mean you have to have file cabinets full of manila folders stuffed with receipts strewn around your office or business. These days there are plenty of platforms available for you (and any employees who may incur company costs) to scan your receipts and keep digital records of them. More than likely, if you are using decent accounting software for your bookkeeping, it has the feature built in. If you are unsure of how to or if you are utilizing the feature correctly, consult with a business accounting professional to get to know best practices.
Not knowing software
In a similar vein, many business accounting problems arise from managers or business owners who commit to an accounting software and do not realize that they are not using it correctly until the fourth quarter is upon us and it is time to run reports and start thinking about tax returns. While we pride ourselves on our ability to handle accounting for all businesses big and small, we also totally understand that outsourcing is not for everyone. If you are convinced that in-house business accounting is your best bet, do consider a quick (free) consultation with one of our business accounting professionals. Business accounting problems are a scourge that we are happy to help rid from the world, even if that means we do not get to work with you on an ongoing basis!
Hopefully this late in the game, any mistakes you have been making with your software can still be easily remedied. This is another reason to consult with a professional. Talking through the specific processes you use (or do not use) can help to deduce what issues you have with your books that need to be addressed before the fiscal year ends.
Letting the paperwork pile up
Unless you are a giant nerd like us over here at PayTech, you likely did not start your business because you find reporting, invoicing and the like to be a completely sexy task. So it is little wonder that business accounting problems commonly arise from small businesses who continually backburner these types of task in favor of revenue-generating activities they enjoy more. However, the hassle of dealing with the repercussions during the fourth quarter can be anxiety inducing. Between sales tax payments, delayed billing, reports that need to be filed and financial statements that need to be reviewed, there is a lot that needs to happen all at once. Furthermore, the problem is compounded by the fact that invoice mistakes are more likely to occur as more time lapses between the time service is completed and the bill is sent. Late reporting can leave your business vulnerable to certain penalties and the overall rush to catch up can lead to mistakes all the way around.
If you have already made the mistake of letting the paperwork pile up, the first thing you need to do is take a deep breath. Then, take advantage of a free consultation where we can go over what needs to be done and help you prioritize and make sense of the task at hand. Then use this as a lesson for why you should eat the frog and do all of the paperwork promptly in the future.
Finding yourself with business accounting problems we didn’t talk about in this post? Call us up just the same. If it turns out you have a problem that stumps us, we’ll owe you a cup of coffee — though it hasn’t happened yet! We love a challenge and pride ourselves on simplifying this aspect of business operations so that our friends and partners can spend time on the parts of the business that should matter most. Contact us for a free consultation today!