Four Big Mistakes That You Can Make When Handling Your Business’ Finances

Accounting can be tiring and tedious work. Crunching numbers can take up too much of a business owner’s time. Many times their efforts are less than fruitful, hence the need to retain a CPA. Often, entrepreneurs make the mistake of taking on these responsibilities themselves, which can be foolish when trying to juggle the hustle and bustle of the marketplace. As one of the top accounting firms in Chicago, Accounting Solutions Ltd. (773-267-7500) strongly recommends against handling your own taxes without the advice and review of a proper CPA.
For years we have provided quality service to business owners seeking to maximize their profits and competently manage their assets. It is important that we stress the pitfalls of doing one’s own taxes. In very few cases, there are only small downsides to managing one’s own finances. But these cases are few and far between. Unless you are at least a lettered accountant with years of experience in taxation, you will never know if your taxes were competently prepared. In most cases, particularly as one’s small business begins to properly grow, the consequences of making mistakes can be dire. Serious errors can often lead to penalties that have the potential to eradicate the capital-producing foundations that have taken so much time and effort to build. Although there exists an infinite number of blunders that one could make when attempting to handle one’s own financial work, we only have enough room in this blog to list four. So please understand these, before you decide to board the train best suited for the pros:
Watch Those Receivables: Cash is king. Managing your receivables properly can either keep you in business with a solid cash flow, or put you into bankruptcy. A properly prepared set of financial statements can provide you with the ratio of sales to receivables. Many think that they should simply see if their receivables increase or decrease. But this measure, by itself, is irrelevant. If your sales increase, your receivables should increase as well. It’s the ratio between the two that’s important. Keeping the ratio constant as your sales increase or decrease will help to maintain a healthier cash flow. Also making those ever important decisions about which clients deserve credit and which should be cut off, is crucial to the success of your business.
Expense Receipts: Tracking expenses, whether they involve a company ‘team building exercise’, or a series of expensive software upgrades required for the office, is something that can often get out of hand. Sometimes small investments end up going under the radar. Without someone monitoring your receipts and expenditures, you may soon be left scratching your head and wondering exactly where your money has gone. A properly produced set of financial statements done under public accounting standards can help you save money.
Cash is A Fickle Beast: Keeping track of your cash can be difficult. If you have a multiple location retail operation, making sure that all of the cash collected goes to the right place can seem relatively impossible. Putting the proper opening and closing procedures in place can solve this problem. No one likes a thief, especially one that you are already paying. The correct controls can either limit or eliminate this issue entirely.
Failing to Hire A Professional, Then Failing To Listen To Them When You Finally Do: The professionals at Accounting Solutions Ltd. (773-267-7500) aim to provide you with the most comprehensive analyses of your finances. The previous three points are only a few of the dire mistakes that you can make from not hiring a trained public accountant. The biggest mistake of all, however, can occur once you actually hire one. Many times business owners have the unfortunate habit of not establishing a proper connection with their accountant. By simply assuming that a CPA will handle all of the work, an entrepreneur can fall into the trap of failing to properly heed advice. Even worse, they might attempt to take matters into their own hands anyway! Being attentive and working alongside your CPA is certainly the best way to maximize your profits and ensure the ongoing growth and success of your enterprise.
Four bullet points is certainly not enough to cover all of the blunders that we have seen as people try to handle their business’ accounting and taxation needs. We do know that you are likely a busy person, and thus only shared a few. Are you still unsure about whether a professional accounting firm can help your business or personal finances? We offer free consultations that can lay these concerns to rest. With the help of one of Chicago’s top accounting firms, you can bring your enterprise to new financial heights.