In my experience, most small business owners want to know their numbers, but they lack the proper bookkeeping system.
Additionally, many business owners lack the general knowledge and skill set to actually know their numbers. Financial reports can be confusing and nauseating to some people. Very few business owners know their numbers in and out, but those who do tend to run super successful businesses.
As a business owner, it’s natural to want to oversee every aspect of your business yourself. But even the savviest business owners make mistakes, especially when it comes to bookkeeping. There’s no question that maintaining accurate financials is a fundamental part of doing good business. Being aware of the most common bookkeeping mistakes can save you from sloppy financials, unnecessary stress, and potential penalties.
Here are the top bookkeeping mistakes made by small businesses:
Far too many business owners make financial decisions based on their bank account balance. But that figure is constantly in flux. It only represents the funds you have at that moment but not the funds that will soon enter and exit your bank account as you pay your expenses and revenue is received. Instead you should base your decisions on your business’s cash flow – the figure that accounts for the funds you have at the moment, in addition to the funds you will eventually pay and receive.
Bills are easy to handle since it’s up to you as the business owner to pay them before their due dates. But in order to have the necessary funds to pay your expenses, you need your clients to settle their invoices in a reasonable time frame. Collecting your revenue in an efficient and timely manner is the key to maintaining a healthy cash flow.
Here are five tips for getting your invoices paid faster and keeping your cash flow strong:
When you’re operating an online business, running a bakery, an interior decorating practice, or a restaurant, a tornado, earthquake or hurricane may seem like the last of your worries.
Living in earthquake and wildfire country I am constantly reminded that an effective business emergency disaster planning will make all the difference when disaster does strike.