Top accountant Pauline Ho founder of Orlando’s Laus Consulting Services LLC in Orlando, FL outlines the common accounting mistakes made by small business owners. For more information please visit https://lausconsult.com
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In a recent interview, leading CPA Pauline Ho, head accountant at Laus Consulting in Orlando, FL, revealed 4 common accounting mistakes made by small business owners.
For more information please visit https://lausconsult.com
When asked to comment, Ho said, “With new bookkeeping and accounting software on the market today, it’s become much easier to keep track of a company’s finances – but it's also become easier to make mistakes. Here are some common missteps that could seriously harm the financial health of your business.”
One of the most widespread small business accounting errors is counting profits as cash flow.
“Let's assume that you struck a $60,000 deal that will require two months of work to complete. To do the project, you'll need $20,000. Now, it's tempting to write this $40,000 profit as cash flow. However, an endless number of things could happen – there could be delays to the project, or you might need to increase your overhead costs.”
Ho added any setbacks could seriously disrupt cash flow when it’s calculated this way, leading to further problems down the line.
Failing to have a robust bookkeeping and accounting system can also negatively affect the future of a business.
“It’s important to remember that the cornerstone to good accounting is keeping track of everything – no matter how small or large the expense or transaction. Good accounting practices allow you to understand how well your business has performed in a given period,” Ho said.
She added that, as an indicator of success, a solid accounting system helps inform small business owners in setting targets and goals, such as expansion and growth plans.
Another widespread misstep among small business owners is not outsourcing their accounting needs.
When asked to elaborate, she said, “Many small business owners with a smaller revenue stream are tempted to handle all their bookkeeping and accounting needs in-house, because they don’t want to pay the expense of hiring an accountant.”
“While it’s true that hiring an accountant will be more expensive than doing it yourself, a seasoned accountant will be able to identify tax savings tailored to your business structure as well as accounting errors that could end up costing the company more in the long run," she added.
Failure to reconcile bookkeeping balances with bank account statements is another common error made by small business owners.
"You'll want to make sure at the end of each month that the balance on your books matches the balance in your bank account. Often, smaller transactions and expenses are left unaccounted for – but this could mean a big discrepancy by the end of the month."
“Having a mismatch between the books and the bank can provide a distorted picture of your company's financial health, and you’ll spend more time and energy trying to find and fix the errors,” she added.
Source: http://RecommendedExperts.biz
Contact Info:
Name: Pauline Ho
Email: Send Email
Organization: Laus Consulting Services LLC
Address: 879 Outer Rd B, Orlando, FL 32814
Phone: 407-401-9768
Website: https://lausconsult.com
Release ID: 89098763
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