Common Accounting Mistakes People Make When Starting Their Business
While building a business from scratch can be exciting and rewarding, there are several challenges and complexities involved in the process of starting a new business. Careful planning and exceptional execution are imperative to avoid these problems and ensure the growth of your business.
At Real Balance Accounting Ltd., we have seen many new entrepreneurs get busy with planning the operational aspect of their business and make the mistake of sidelining accounting and tax planning, which often leads to unfavorable results. To help you avoid making these financial errors that might cost you a large sum of money or your business, we have compiled a list of the most common accounting mistakes that people make when starting their business.
1. Not enlisting the services of an accountant
Many business owners are guilty of making the mistake of not hiring an accountant and bookkeeper to maintain their financial records. As an entrepreneur, you may be busy managing the operational aspects of your business and may not have enough time to dedicate to the handling of the finances of your business. By working with a professional, you will save an incredible amount of time and stress right from the beginning.
2. Mixing up your personal and business expenses
Maintaining separate records and accounts for personal and business finances eliminates the risk of accidentally mixing up the two when filing your taxes. This could result in severe fines and penalties, as well as an audit. You can mend this mistake by having a bank account dedicated to your business and a separate bank account for your personal finances.
3. Not seeking advice from an accountant when investing
Investing your finances in the right policies is essential in ensuring that your business is set in the right direction. As a novice finding the right policies to invest in can be daunting, which makes seeking advice from an accountant all the more important.
4. Not staying compliant with CRA
To avoid any late charges and penalties, you need to stay compliant with the rules and regulations laid down by the CRA. Make sure that your accountant educates and updates you on these rules regularly and works in conjunction with them.
5. Failing to update your accountant
If there’s any change in your business, it’s crucial that you relay it to your bookkeeper so that they can provide you with adequate advice. It’s best to review your finances with your bookkeeper via email or phone call at least once a month.
To steer clear of these and other mistakes related to accounting, reach out to the experts at Real Balance Accounting Ltd. We offer a variety of back-office, financial services to businesses, including bookkeeping, payroll, management advisory, and tax services. We can help your business grow by strategically planning your capital, minimizing your tax liability, increasing profits, and improving your overall solvency. Our services are available across Richmond, Vancouver, Coquitlam, Maple Ridge, Langley, Surrey, North Vancouver, West Vancouver, Burnaby, Delta, and White Rock, BC.