As a Business Management Consultant, I found lots of business owners may wear those strategic and customer-relations hats well, but many have a much more difficult time when it comes to donning that accounting/financial chapeau.
Monitoring your financial performance: Financial mistakes can actually stunt growth or adversely impact your bottom line, clog cash flow, attract undue attention from the CRA or damage reputations with suppliers, customers and staff.
To avoid those scenarios, here are 10 accounting/financial mistakes business owners commonly make as below:
Hiring the Wrong Person
Do You Need a Bookkeeper or a CPA? Bookkeepers and CPAs both extend their services to small businesses that are ready to outsource their accounting. Although you could hire just one, it makes sense to use both to keep your accounting costs low and finances in order. Over 15 year’s accounting/financial experience, CTL Business Group, www.ctlinternational.ca have several CPA and senior Accountants/Bookkeepers to help your business grow. An accounting professional can perform tasks more efficiently, meet compliance requirements, and convert accounting data into useful information. This allows business owner to refocus your time on growing and managing your business.
Making Math Mistakes
More advanced bookkeeping, sometimes referred to as “full charge bookkeepers,” can also book routine journal entries, including month-end journal entries, and prepare internal-use financial statements. Math mistakes can also result from posting entries to the wrong account or even just making typos.
Mixing Business and Personal Finances
One of the most common accounting mistakes business owners make is to mix their business and personal finances. Keep these separate and distinct to provide a more accurate track record of what was really used for business and what specifically related to personal use only.
CRA need to understand that a certain number of meals throughout a month might be business-related, those tickets to a concert or video games on the business credit card clearly do not. The business can also be impacted because more money is being spent on the owner’s life rather than being reinvested to grow the company. In the long run, this will help the business to grow and still provide a business owner with significant income.
Receipts provide answers to any mistakes or gaps in accounting records, and many offer additional deduction opportunities come tax time. If the CRA comes calling, those receipts deliver proof to validate the numbers on financial statements.
Not Seeing Financial Report for the Tools
Financial statements are fundamental to any business, large or small. They are actually “report cards” on the performance of the business. When reading them, you will encounter odd terminology, strange calculations, and of course, big numbers. That’s why a big mistake is not using the plethora of business reports that can be made from the financial data, including accounts-payable aging, accounts-receivable aging and reports about company profitability. These reports can show where issues are, including determining where clients are not paying in order to maintain cash flow. If these aging reports are not produced, a business owner will not know who is behind on payments and may miss clients who are not happy with quality.
For further information, please contact our Certified Management Consultants and CPA:
CTL Business Group:
Telephone: 587-3538067 (Canada); 626-8176528 (USA); 02-29883876(Asia)