If you rely on your small business to put food on the table, clothe your kids, and make that monthly mortgage payment, you can’t afford to make accounting mistakes. That’s why you need online accounting software to keep you on track.
Accounting software for small businesses can help you accurately organize expenses, easily produce small business reporting, and give you a clear picture of your company’s overall fiscal health so you can plan for future growth. Efficient accounting is an important aspect of business, and financial errors can be very costly, especially to new endeavors. But first-rate online accounting software can help you avoid the repercussions of these common mistakes.
Mistake No. 1: Going it alone
Though it may be tempting to handle your own business accounting, it’s likely not the best idea. We know your entrepreneurial spirit is going to tell you otherwise: “You can handle it yourself and save money!” That conclusion may have the opposite effect, or worse, cost you money.
After all, you simply can’t do everything and do it well. Having a certified public accountant or bookkeeper in your corner helps you concentrate on producing quality products and services — the backbone of your business’s success. Plus you can rest easy knowing a trusted professional is focused on your business’s financials, which not only includes analyzing small business reporting but also staying on top of taxes.
Mistake No 2: Using cheap online accounting software
It’s true: You get what you pay for. And if you’re working with free or cheap online accounting software, chances are you’re not getting the full arsenal of tools you need to successfully strategize your business. Look at it this way: You wouldn’t hire a less-than-professional accountant with messy hair and a dirty office to handle your books, right? Are they actually organized enough to file your quarterly taxes on time so you don’t lose money on a late penalty?
The same is true for accounting software for small businesses. You may pay a little more, but at least you know you’re getting a quality product that won’t let you down when tax time rolls around or, better yet, if you need financial data to explore potential growth.
Mistake No. 3: Lack of cash flow
You’re good at what you do. That’s why you’re running your own business. But more than likely, you’re not running an accounting firm. While you may know how to properly seam drywall or produce a perfectly plump bundt cake for your bakery, your expertise may not lend itself to business finance. In fact, many business owners may not understand how to properly strategize their cash flow, and that is one of the main reasons for business failure.
Let’s say you own a restaurant that experiences a slow winter season. If you don’t have a plan to put money away during those busy summer months, you may be left scrambling to pay your tax bill by April 15. The combination of a certified public accountant and quality online accounting software can help you assess your annual cash flow to plan for those big expenses.
Mistake No. 4: Not separating your personal and business finances
One of the first things you should do before opening your doors creates a business checking account. This will allow you to keep accurate financial records from the get-go. If you run your business from your personal account, it can be tricky and time-consuming to separate expenses. It also leaves room for more mistakes, which restricts you from accurately tracking your profit and loss or developing more precise future budgets.
Running your income and expenses through a business-only account allows you to easily view small business reporting regularly so you know where your company stands financially.
Mistake No. 5: Avoiding software or cloud technology
If you’re like most small business owners, you probably started out using Microsoft Excel spreadsheets. While those can be good for brainstorming your budget, they’re not efficient enough to manage your long-term finances. Online accounting software can streamline your financial tasks. Here are just a few examples:
- Use a time tracker app to keep tabs on individual project hours and seamlessly transfer those hours to customer invoices with the click of a button.
- Grant your accountant access to your cloud-based account so they can file monthly, quarterly, or annual taxes without taking your attention away from paying jobs.
- Avoid human error with an online accounting software that allows you to enter amounts into your ledger and checks those same amounts against your monthly reconciliation, ensuring you don’t transpose numbers.
Mistake No. 6: Forgetting to regularly back up your files
Accounting software for small businesses will automatically remind you to back up your files. That way you’re protected should something happen to your computer in the short or long term. What if your laptop unexpectedly crashes? What if a pipe bursts above your desk in the middle of the night and drowns your computer? What if the IRS audits you but your financial files from five years ago are on a nonfunctional CPU?
Small business owners must be prepared for everything. Online accounting software allows you to remotely store your files so you never have to worry about something happening to your hardware.
Thanks to advanced accounting software for small businesses, it’s easier than ever to keep accurate records and be prepared for whatever comes along, whether it be an audit or business expansion. Having easily accessible small business reporting allows you to schedule time each week to quickly check your budget without wasting time adding up numbers. That way you’ll know your business is running smoothly, enabling you to focus on what you do best.
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