Many business owners especially those that are new often feel like they also have to be a bookkeeper as well as accountant besides knowing about their business in order for it to be successful. In some ways this is true but fortunately there are experts in these fields who can take control of this segment of the business. This doesn’t mean that some element of responsibility doesn’t remain with the owner.
One of the biggest mistakes that business owners make is not keeping the right records for these experts to work from. The bookkeeper needs all of the documentation to prepare the ongoing accounting records. He then in turn needs to be able to summarize the financial year’s events in order to pass this information onto the accountant who in return compiles the year end documents for proper tax filing.
One major concern for every business owner is the accounts payable. In a busy company that hasn’t been set up properly in the administrative sector the owner focuses on making sure the company’s payables are done on time. If time is limited then it can mean that the receivables’ are not receiving their share of attention. As a result more money can seem like it is going out rather than coming in. Proper billing and tracking is just as important as paying the accounts payable on time.
Another major weakness of some company owners is not tacking the miscellaneous expenses. Almost every business has a certain amount of expenses that are classed as miscellaneous and they add up over the year. Without the receipts being kept it is hard to be able to claim these. Not only do they need to be kept but a notation of what they are for, and how they were paid should be written on the back of the receipt. It is much easier to track these types of expenses when they are paid by credit card or bank account, but there are times where cash is used and this is where the problem lies.
As mentioned there are resources like good tax accountants and bookkeepers to rely on. Your first responsibility comes with choosing the right one. You want to use experts in both these fields that have experience and are going to take an interest in your particular type of business. That doesn’t mean that every accountant is an expert in every industry, but there are common guidelines for all businesses then specifics. A good accountant will ask you pertinent questions so as to gain a better understanding of your financials, and what potential tax credits you may be missing out on.
