Avoid These Mistakes With A Small Business Accountant
As a small business owner, it’s incredibly important to understand your business’s financial position. Knowing this provides valuable insight into your company’s status and its capabilities to grow in different ways. It also tells you where you can save and when you can start scaling your enterprise. While some business owners love diving right into the accounting process, others feel completely overwhelmed. That’s where a small business accountant comes in handy.
A financial professional that specialises in small and medium-sized enterprises (SMEs) is the expert you need to manage your finances. They help you make the right calculations, record your cash flow, and keep you tax compliant. Otherwise, you’ll risk making costly errors that can quickly tank your business. Here are X common small business accounting errors that an accountant can help you avoid:
1. Not Budgeting Properly
Although this may be an obvious mistake, it’s one that is very common in small companies. However, improper budgeting can often break a business. Failing to scrutinise your expenses can often make you feel like you’re financially secure when the reality says otherwise. A proper analysis of your accounting tells you the amount you need to profit or at least break even; without this, you’ll risk making expensive business decisions.
Fortunately, a small business accountant knows how to make the best budget for your needs. They have the skills to conduct a comprehensive scan of your expenses, giving you a clear picture of what you need to do to push your business forward.
2. Confusing Employees and Contractors
Expanding your business by hiring staff is exciting, but things can get complicated if you aren’t familiar with the different payment systems. There are two ways to engage people: as employees or as contractors. Even though they may perform similar functions, there are vast differences when it comes to legalities, insurance, payroll tax, and other aspects. Not knowing this can land you into trouble, making this knowledge incredibly vital.
Luckily, a small business accountant knows how to handle these contracts precisely. They understand the implications that come with hiring an employee or contractor, ensuring you pay them properly and adequately.
3. Being Messy and Disorganised
Having a well-organised file system is crucial when it comes to taxes. Putting this off can be tempting, primarily since you’ll be focusing on running your business. However, doing this can quickly get you delayed on filing financial reports, paying sales tax, and other obligations. You might find yourself in hot water before you even know it.
A business accountant is more than familiar with the best ways to organise necessary documents. They’ll likely know the right software that will make this task more straightforward for both of you. It’s essential to keep track of these files since the Australian government legally requires you to hold onto financial documentation for seven years. This quality is one of the many reasons your business needs an accountant.
4. Sharing a Personal and Business Bank Account
Another mistake that many entrepreneurs make is having one account for both their personal and business needs. However, this can be an incredibly risky situation. Mixing up these accounts can make it more challenging to identify personal expenses from your business transactions. When it’s time to do taxes, this system will cause you more stress and headaches.
Having a separate account for your business activities will eliminate this problem. It also makes it easier for an accountant to track finances without worrying about them seeing your own expenses.
A small business accountant is a cost-efficient way to keep your finances on track. They’ll help you identify the right time to invest in more growth opportunities while ensuring you comply with tax regulations. These four mistakes often sink many companies, but with the help of an accountant, you’ll do more than stay afloat—you’ll thrive.
If you’re looking for bookkeeping services in the Gold Coast, you have come to the right place at New Wave Accounting! We offer end-to-end accounting and bookkeeping services that help small businesses scale and grow. Our professionals know how to help you minimise tax and maximise profits. Contact us today to see how we can help your business succeed!