LUTZ BUSINESS INSIGHTS
Are You Making These Five Common Accounting Mistakes?
ERIN BAAS, CLIENT ACCOUNTING SERVICES DIRECTOR
You’re busy running your business and handling your finances. Bills are getting paid. Invoices go out, and you receive payment for them. Employees collect their paychecks on time, and you’re up to date with payroll taxes. Your accounting operations seem to be running smoothly.
But are they? Just because the day-to-day stuff seems to be working nicely doesn’t mean you’re not missing some of the big-picture problems. Here are five questions to ask yourself.
1. Are you running critical financial reports regularly?
If you’re doing your accounting work manually, this will be challenging. But you need a way to keep a close eye of things like aged payables and unpaid invoices. As you grow, this will become even more important.
Accounting applications make it easy to create such reports. Still, there are complex reports like Profit & Loss and Balance Sheet that should be generated periodically, especially if you need to deal with investors or financial institutions. An accounting professional can create and analyze these.
2. Are you using an accounting application that “fits” your business?
Accounting software or a cloud-based solution should meet your needs easily and accommodate expansion by integrating add-ons or moving up to a more sophisticated application in the same family.
3. Are you using the tax structure that best matches your company?
If you launched your business on your own, you probably called it a sole proprietorship. But maybe it should have been a Limited Liability Corporation (LLC). If you started out as a larger organization, did you designate your company as a corporation or a partnership? Your choice in both these cases has great impact in two areas primarily: taxes and liability.
4. Are you keeping your business plan updated?
If you don’t have one, think seriously about assembling one. Business plans contain multiple written sections, but also incorporate historical and current financials, as well as projections. Like standard financial reports, they’re usually required by banks or investors. They can be of great value to you, too, as you plan out your company’s future. And they should be evolving documents. Revisit yours periodically.
5. Are you doing your own accounting work and neglecting business management tasks and planning?
Many entrepreneurs fall into this trap. They don’t want to lose control of sales and purchases, so they hang onto the accounting work and don’t leave themselves enough time for running the business and planning for its growth.
You started a business because you had an idea for products or services that would solve professional and/or personal problems. And you’re the best person to see that your business thrives. If you see yourself in any of these five scenarios but don’t know what your next steps should be, we can help. Contact us, and let’s explore how we might work together to tackle these or any other accounting problems that are keeping you from accomplishing your company’s mission.
ABOUT THE AUTHOR
ERIN BAAS + CAS DIRECTOR
Erin Baas is a Client Accounting Services Director at Lutz with over 15 years of experience. She provides business accounting and advisory services to a wide variety of industries with a special focus in private physician medical practices.
AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
- American Institute of Certified Public Accountants, Member
- Nebraska Society of Certified Public Accountants, Member
- Nebraska Medical Group Management Association, Member
- Certified Public Accountant
- BSBA in Accounting, Creighton University, Omaha, NE
- Nebraska Wildlife Rehab, Treasurer
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