Small business finance is one of the most difficult roles, a company owner has to deal with. Most don’t have the experience or the training to take on such an important task and even if they do, what business owner has time to tend to finance and run a company?
Of the small business owners who do attempt to run the financial end of their business on their own, most find that it’s best to hire professional accountants and increase revenue.
Most common money mishaps small business owners make:
Some of the financial mistakes small business owners make and learning experiences:
1. Tax Preparation and Planning – Finance Essentials
Tax preparation and planning are essential in any company – no matter how large or how small your firm is. Failure to get it right the first time can end up costing a fortune or even costing the owner’s freedom. If you hire a professional to do your taxes, they will often times to find deductions you didn’t know existed. Once you have that in place, you’ve already paid for your Certified Public Accountant.
2. Insufficient Cash Available
You might be surprised to learn how many small businesses go under due to insufficient cash. It’s imperative to know how much cash flow you have in order to prepare and stick to a budget. One mistake leads to yet another when you don’t have a clue how much money is available. Knowing the difference between sales and cash flow is vital. You can have tons of sales but no available cash due to accounts payable liabilities, delayed payments, and other reasons. A Certified Public Accountant is a professional who keeps up with all aspects of finances including the cash flow. A CPA is skilled in the area of finances and will keep your books and records straight, so you know how to budget accordingly.
3. Failure to Create a Budget
A budget is a necessity for all types of businesses. In sales, payments must be cleared before you are free to spend them and money needs to be invested back into the company too. Failure to create a budget is a prime reason small businesses don’t make it. Unless you have ample time and plenty of financial skills, you’ll need a professional to help you in this area.
4. Failure to Stick to a Budget
Just having a budget isn’t good enough. You will need to adhere to it as well. If any adjustments have to be made, so be it but disregarding a budget is never wise.
5. Startup Cost Miscalculations
When you are first starting your small business, it’s easy to overspend. Even though it may not be on purpose, the consequences remain. A Certified Public Accountant will make sure you are aware of the balance of your startup fund and will keep you abreast of what expenses you have and how much money you have available to cover them.
6. Delay in Seeking Credit
If you need to take out a loan to cover expenses, it’s wise to do so before you run into late fees. Require a credit line to purchase merchandise that you’ll be selling or to cover payroll or any other crucial payment, it’s better to seek a lender or credit line sooner rather than later.
7. Mixing Business with Personal…or Pleasure
Your business budget and business funds should be exactly that. You never want to mix business money with personal money be it for pleasure or for necessities. A CPA will keep you on track in that area by keeping accurate records so you know what your business account has in it and the budget thereof.
The Bottom Line
Browsing for a “small business consultant near me?” If so, simply search online results until you find a Certified Public Accountant with great reviews. Even if you think you can’t afford one, remember that those who hire professional accountants increase their small business’ chance of success and are more likely to increase their revenue too. Set yourself up to succeed by considering a Certified Public Accountant today.