Five common accounting mistakes new businesses make
- Do not consult with proper professionals such as CPA’s, Lawyers, etc.: Your CPA firm can guide you on what you need for your city and state. Do I have to file taxes for anything in my city or state? How do I register my business? How do I get a tax id? The main reason businesses do not consult with the proper people is to save money, but over and over I have seen this cost more money in the long run than the savings in not consulting professional services.
- Do not have accounting books set up correctly: Setting up your accounting correctly in the beginning saves you a lot of time and money in the long run. What kind of accounting software are you using? There are professionals out there that can help you set up your books specific to your industry. For example, our office has certified professionals on QuickBooks software and Microsoft Accounting software that can review your set up and train you to use your software.
- Pay themselves too much money: Remember, in order to show a profit on your business there has to be money in the business. The first day they business owners open a business, they want to pay themselves the very next day.
- Under Capitalized: A lot of great businesses fail because they do not invest enough money into their business or they are capitalized by credit cards which have higher interest rate.
- Not knowing how much the IRS will be paid: Many people we talk to just do not realize how much money they will pay in various taxes to the IRS. They have never looked at their own pay stub before to realize all the taxes being paid and a lot of individuals are not even aware that their employers also pay a portion of their payroll taxes.