Accounting is an important part of your business. If you own a small business, you probably think of handling your own accounting to save some money; however, doing so could cause you more than when you hire a Phoenix, Arizona CPA. The reason is that accounting mistakes can cost your business a great deal of money and stress. Errors in the numbers can hamper your business’ growth. Unless you are an accounting expert yourself, you may not be knowledgeable about proper accounting procedures. Trying to handle your business accounting can lead to the following mistakes:
Making Poor Spending Decisions
When you run a business, you must make investments and buy products and supplies. However, you should ensure you can get that spending back. It is imperative to be aware of the amount of money you are bringing in against the amount you are spending on initiatives to develop your products. What you can do is to hire a CPA to monitor your profits, losses, and expenses, so you can get a clear picture of your business’ status.
Not Keeping Receipts
While most things to do are done digitally, paper trails still hold value in terms of deducting expenses. You need to save all purchase records for all purchases your business makes. You will need these records should IRS require you to provide them with proof of purchases. Today’s best accountants use online programs for digitizing receipts and saving copies to minimize clutter and make it easy for you to find records when you need them. Also, they can keep track of your expenses to earn tax credits.
Not Separating Personal and Business Expenses
If you want positive outcomes from your business endeavors, you should not use business accounts for paying personal expenses. Apart from complicating things, this could also raise red flags with the tax department. The best thing to do is to keep separate bank accounts and credit cards for personal and business use. With this, you can easily monitor your business profits, losses, and expenses. A good accountant can help you in this matter.
Failing to Check Invoices and Vendor Statements
Did you know that employees can easily steal from you by creating phony invoices that look legit on the surface? If you have an accountant, you can easily dig to make sure your invoices are associated with real deals. They can keep track of all charges your company handles.