As a CPA focused on helping Arizona small business owners and entrepreneurs, I get to work with some of the most hard working and creative people around. Unfortunately, I’ve also seen my share of accounting and bookkeeping challenges. I often get calls when the books are in a bit of a mess and need cleaning up. Of course, the best policy is prevention.
How can you avoid some of the most common mistakes in the accounting and bookkeeping process?
In my view, many of the mistakes or problems come down to lack of proper planning and lack of adequate resourcing to make sure that the accounting and bookkeeping function is aligned with the current and future needs of the business.
When you first start your business, the accounting and bookkeeping process is straightforward and many owners are tempted to follow a DIY approach or find inexpensive help. That can seem to be a right plan in the beginning as things are chugging along and all is working smoothly. Then your business starts to take off. You, as the owner, are thrilled with the growth that your business is seeing, and you are swamped with things to do. And by now you’ve come to know your bookkeeper, and they’ve been doing a good job, so you just keep that part of your business status quo. You might think, don’t fix it if it isn’t broken. Unfortunately, that is where the problem can often begin. As your business starts to take really off, it is very likely that your bookkeeping and accounting needs will become more complex, and you will need more strategic input to help set up the structure that is best suited for your business over the coming years. Things can quickly get out of hand. Inaccuracies and a structure that is not aligned with your business needs can not only lead to a big headache but can also end up costing you money and hurting your business.
To avoid these pitfalls, a good place to start is to include a review of your bookkeeping and accounting process during your annual planning cycle. (You are doing annual plan, right?) As you plan for the next year or even 3 to 5 years, make sure your bookkeeping and accounting process and resources are aligned with the rest of your business. That will save you time and money in the long run, not to mention headaches. The last thing you want as the owner of a growing business is to divert time away from growing the business to dealing with bookkeeping errors.
For more tips, you might want to check out this article that I recently ran across. It does a good job of outlining some of the most frequent mistakes that I see. You can read the full article here Avoid These 5 Common Small Business Accounting Mistakes
If you have any questions about setting up your bookkeeping and accounting or revamping for the future, give me a call.