How to Avoid Common Small Business Financial Mistakes

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    Keeping Your Minneapolis Business Safe from Accounting Errors

    As a Twin Cities small business owner, you have plenty on your mind with the day-to-day running of your operation. It can be easy to relegate analyzing your finances and keeping track of all the pertinent records to late-night, sporadic hours. Unfortunately, this makes financial mistakes more likely, much harder to catch and more time-consuming to fix. By taking steps to avoid financial mistakes, you can make sure you actually spend more time running your Minneapolis-area small business rather than fixing issues that never had to come up in the first place. Read on to learn to recognize and avoid issues like:

    • Record-keeping mistakes
    • Improper expense tracking
    • Account reconciliation failures

    Plus, explore the benefits of hiring an accounting firm to help keep financial mistakes at bay.

    Record-Keeping Mistakes

    There are a slew of record-keeping mistakes that can make life tough for Minneapolis & Saint Paul small business owners, from incorrect accounting practices to simply not keeping accurate, well-organized records on a consistent basis. Record-keeping mistakes can result in problems such as:

    • Incorrect income and expense statements
    • Inaccurate information when making decisions about your business
    • Missing opportunities for improvement
    • Increased risk in the case of an audit

    Avoid making these and other mistakes by developing a consistent, organized way of keeping your records or hiring a qualified accounting firm.

    Improper Expense Tracking

    When expenses are not properly or thoroughly tracked, it can warp your financial records, including important business health indicators like your profit and loss statement. Inaccurate statements lead to an inaccurate understanding of performance and profitability, which could result in unnecessary or costly decisions. Failing to track expenses correctly could also lead to your taxable income being wrong, possibly resulting in a higher tax payment than necessary.

    The first step towards correctly tracking your expenses is to read up on how the IRS categorizes different expense types. After that, developing and adhering to a clear categorizing system will make keeping track of expenses more streamlined and easier.

    Failure to Reconcile Accounts

    While you may be keeping a close eye on the money your business has in the bank, failing to reconcile your accounts could lead to discrepancies in financial reporting and statements that are often very difficult and time consuming to go back and solve. Additionally, unreconciled accounts can make it easy for fraud or incorrect charges to slip through the cracks.

    To avoid account reconciliation issues, take the time to regularly reconcile your accounts. Doing this monthly is a common cadence for many Twin Cities small businesses. This will make the statements for all your accounts accurate and give you a clear idea of how your business is performing, both in that month and over time.

    The Benefits of Hiring an Accounting Firm

    In the long run, hiring an accounting firm might be one of the best decisions you can make for your small business. A few of the benefits include:

    • Saving money
    • Organized, up-to-date financial records
    • Gaining more time actually running your business
    • Staying compliant with tax laws
    • Getting all possible deductions
    • Guidance on business decisions

    It may seem counterintuitive to consider paying an accountant a path to saving money, but when considered in the context of the other benefits, it becomes obvious that having an expert keeping your records in order, making sure you file taxes correctly and weighing in on potentially influential business decisions will result in savings in the long run. In addition, if you hire a local Twin Cities accounting firm, you will be able to draw on a wealth of localized knowledge and experience that you wouldn’t be able to find anywhere else.

    Get in touch with us to learn more about the small business accounting services Corneliuson & Associates offers in the Minneapolis area, or set up a free consultation for your small business today. Our expert team is standing by to help you in any way we can.