When you have a small business, you likely rely on a small group of employees to cover many tasks. While a big company with a large budget can afford to hire a larger staff who are assigned more specific tasks by the job titles they hold, the lines are sometimes blurred with a small business when it comes to tasks that people in certain jobs take on. Whatever the case may be in your company, you will be sure to mess up the accounting for your small business if you make the following mistakes.
Mistake #1: Allowing Multiple Employees Access to Petty Cash
When you have a business where you need to do a variety of small cash transactions, it can seem like the easiest course of action to allow multiple employees to access the petty cash in your company. Unfortunately, though, that can cause mix-ups, arguments, and disagreements about who took what cash amount out of the petty cash stash at what time. In order to prevent this problem, designate one person to be in charge of the petty cash with an alternate in case that person is not there. Also set up policies to always place receipts in the storage place when cash is taken.
Mistake #2: Running Your Business Without a Budget
If you are very hands-on and have money in your savings that can be accessed for business expenses, it can seem like the easiest thing to do is simply to run your business without a strict budget. After all, you are in charge and trust your own judgment on what will be best for the company. Unfortunately, that can ultimately spell disaster, since it's easy to lose the perspective of the bigger picture, and not having a budget is one of the easiest ways to overspend. Avoid disaster for your bottom line by creating a budget for your business and sticking to it.
Mistake #3: Choosing the Cheapest Methods
When it comes to running your own company, you may think that you will ultimately make the most profits by choosing the cheapest methods for getting things done. That certainly seems to make sense at first glance. However, whether it's avoiding the use of a small-business accounting service or hiring underqualified employees who will work for lower wages, going for cheap methods in your company can result in the ultimate destruction of your business. If you give your customers a subpar product or service, it can be hard to recover from that. No matter what your intentions may be, that is almost always the result when you try to go for the cheapest methods.
Finally, keep in mind that there are no universal, black-and-white rules for business owners. You ultimately have to trust your own judgment and make the best decisions you can. When it comes to your finances, err on the side of caution and be careful with your accounting practices to ensure that your bottom line will be healthy for many years to come.Share