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5 Really Bad Business Finance Mistakes to Avoid

Here are some quick tips about your business finances that will help you avoid the problems others have learned "the hard way"...

Mistakes
  1. Are you buying into the concept that doing your own bookkeeping is a good idea?

    It's not.

    Unless you are going to be a bookkeeper or you have an accounting background that is.

    Otherwise, you will quickly discover that keeping your books is an exercise in frustration and futility.

    Keep this in mind - even though bookkeeping will be a pain in your asset, it is an absolutely essential function within your business. In fact, doing it timely and doing it correctly may be the difference between success and failure.

    Can't afford a qualified bookkeeper or accountant to restore order to the mess you have created? Maybe you're running a hobby instead of a business then...

  2. Thinking of doing your own payroll in-house?

    Don't.

    Consider this - the minimum expectation for payroll is that you get it 100% right. Every time. If not, you have employees telling you their checks are wrong. Or worse, the government politely telling you that "you owe penalties and interest" because your were late on a deposit or filing. Who needs those headaches?

    Read more about why you should outsource your payroll to an expert.

  3. Don't let your accountant bully you into using QuickBooks because that is the only accounting software they know.

    Get a new accountant.

    No question - QuickBooks is a very, very solid accounting package. That is why I offer consulting and training services on QuickBooks.

    However, it may be complete overkill for many small businesses. There are some other terrific packages out there like FreshBooks and Less Accounting that are far less intimidating for a small business.

    There would be nothing better than having your business graduate from one of these packages into QuickBooks. Accountants are there to help you with your finances and taxes, not dictate what software you have to use.

  4. Do you wait until the end of the year to get your shoebox in order?

    Bad idea.

    Every January, I see countless tweets and Facebook posts that discuss how behind the person is with their bookkeeping. Many of them have missed updating their books for six months, nine months, or even the entire year.

    A monthly profit and loss report is essential to keeping your business on track. Any of the packages mentioned above can provide those with the click of a button. But the information in the report is only as good as what you put in.

  5. Do you regularly mix personal and business expenses in your business accounts?

    The IRS is eager to talk with you!

    They love to send out personalized invitations to discuss this issue in great detail.

    One simple way to keep this subject off the radar is to keep your business and personal expenses completely separated. If you must perodically combine them, make it very clear in your accounting records the who, what, and why behind the expenses being set up that way.

    While that won't guarantee the IRS won't challenge it, at least you will remember the details behind the activity. "I don't know" isn't usually a good answer.

Do you have some tips to share about things you've learned relating to your business finances?

Your comments on this topic are welcome.

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Comments

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Hello Brisbane Bookkeeping Services:

Thanks for your feedback on the post - appreciate it.

As I'm guessing you have, I have seen so many small businesses get derailed by bad bookkeeping I have lost count.

It simply doesn't have to be that way...

Scott Gregory

I just love your post. The way you communicate in a brutal and honest kind of way. No technical terms just plain unadulterated English. Anyway, I agree with your tips, that we should hire professionals for our bookkeeping and/or accounting, this will help us to budget and not get in trouble with the IRS. And keeping separate accounts will make our lives hassle-free. My dad even keeps his accounts in separate banks.

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