Regardless of the niche or size of your business in New York City, you don’t have the choice but to spend time on accounting and bookkeeping. If you manage your financial affairs accurately and appropriately, you are less likely to face issues while filing your taxes. Unfortunately, small business owners don’t always understand the intricate aspects of accounting and financial reporting, and many of them prefer to do things independently rather than hire an experienced CPA in NYC. In this post, we will discuss typical accounting mistakes to avoid.
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Not seeking expert help
Founders and entrepreneurs should spend their time on leadership and improving company operations. The journey is often tougher for small business owners who often don many hats at the same time. However, when it comes to something as crucial as accounting or filing taxes, it is best to hire an expert, especially when there is an evident lack of resources to have an internal team. Working with a CPA doesn’t have to cost a bomb, and more importantly, you only pay for the services you need. The biggest mistake is waiting until a major mishap occurs before contacting the experts.
Not having a proper accounting system
With advanced software solutions, including QuickBooks, it is much easier to keep a tab on transactions. If you don’t have a bookkeeper or a system to record your spending and income, you are already creating a mess for the upcoming tax season. The good news is a lot of work can be automated, and many cloud-based solutions make it easy to access information on the go. You should be able to know everything about the financial health of your company when required.
Not focusing enough on cash flow
Small business owners often fail to track their cash flow, which eventually can lead to serious financial hurdles. You need liquid cash to run your company, and unless you have a fair understanding of incoming and outgoing money, you may end up in situations where your operations are halted due to a cash crunch. Consider getting regular cash flow statements from your CPA, which will also come in handy to find fund embezzlements, internal fraud, and other issues.
Not hiring a comprehensive accounting firm
It is also a usual mistake to assume that a CPA is only necessary when you are filing taxes. Yes, an accountant or CPA remains your biggest asset during tax preparation time, but they can do more when engaged from the start of the financial year. Instead of looking for piecemeal solutions, find an accounting firm that can do everything. From bookkeeping and preparation of financial statements to payroll, tax preparation, and business consulting, you should have help with everything.
Mixing personal and business finances
Small business owners often fail to distinguish between business income and personal money. While your personal funds may matter when you are launching your business, your venture is a separate identity altogether. For instance, if you are paying business expenses from your personal credit card, that isn’t the ideal practice. Your business expenses and income should be managed separately. If you have already made a few mistakes or don’t know how to keep things separate, talk to your CPA, and they can help address current and future issues.
If you are new to choosing a CPA in NYC, it is always better to look at their service profile and check the range of solutions they offer. Make sure they are well-versed in your industry and have worked with small businesses that have a similar profile. You can schedule a meeting to discuss costs, communication, and other relevant details.
