If you are just about to launch your new business, you have surely planned every aspect of it down to the last detail. Doing this is essential because how can you expect it to grow and succeed otherwise? Nowadays, starting a business is fairly easy. All you need is a good idea and a business plan.
You can even manage every part of it on your own for a while. Yes, there are numerous apps and programs you can use to work on marketing, product development, bookkeeping, and so on.
Managing these tasks may appear to be easy at first, but as your business develops, the number of customers will increase, meaning that things will get complicated. Here are the most common bookkeeping mistakes new business owners make.
1. Combining funds
Without a doubt, the most common mistake people make is that they use business and personal funds interchangeably. These can include small things, like paying for a corporate trip with a personal card or taking the money from the business account to meet unexpected expenses.
The biggest issue with this practice is that people forget to record the transfer of funds, and as you can assume, this can turn into a significant problem in the future. Due to this reason, you should never draw the funds directly from either account.
Instead, make sure to transfer them and then use that money. This way, it will be easy for you to maintain all the records straight and avoid any future complications.
2. Not hiring experts
As already mentioned, many people try to complete these tasks on their own when they first launch the company. The tasks are pretty simple, and doing this work doesn’t take a lot of time. However, this will soon change. As you start developing your business, you will attract more clients, meaning that the number of transactions will increase.
It won’t take long for you to feel lost. Because of this, you need to employ a professional the moment you launch your business, and you can learn about the services they offer on https://www.pmpservethailand.com/. Similarly, some people just don’t feel comfortable letting control over their finances and giving access to it to strangers.
Due to this reason, they choose to do it themselves even though they know they are not really qualified to do it. Finally, some business owners want to save money, so they take on as many tasks as possible. Obviously, saving money on bookkeeping can actually prove to be the worst thing you can do, so make sure to hire an expert.
3. Not differentiating cash and profit
Many people believe that the cash they get and the final profit are the same, but this is not the case. It is a simple mistake, but you should not be one of the business owners that make it. It is absolutely one of the worst things you can do, and it can actually destroy your company pretty quickly.
4. What are we talking about?
When you make a deal with a customer, they will pay you for your services or merchandise. However, you cannot consider that sum of money to be the profit your business gets. The reality is that you will have to spend a significant portion of it.
You have to pay for materials and production of the goods, employees’ salaries, and additional utility expenses. Only upon paying all of these off will you be able to understand what your profit exactly is.
Many business owners don’t follow this logic, so they take the customer’s payment and immediately invest it in something. In most cases, this is when they understand they cannot afford to make that investment and that now they cannot meet all the monthly expenses. As you can assume, this is how this issue snowballs and why many companies fail.
5. Failing to input small transactions
When it comes to these, most managers only focus on large transactions. This is somewhat natural since they include a lot of money, which, in some cases, can take your company to the next level. However, the problem occurs when they forget to record the small ones.
At first, these may seem insignificant, and what’s more, sometimes they can be. Still, this doesn’t mean you should not record them. By doing this correctly, it will be easier for you to avoid problems and stay on top of your finances. You will always have a clear and accurate overview of your company’s financial health.
6. Not assigning budgets
If your business has been doing really well lately, you may be tempted to start spending more money than usual. Yes, some managers do this, but it is the biggest mistake you can make.
We are not even talking about the money you spend on unnecessary things but instead about the funds you invest in new projects. All bookkeepers agree that not assigning a clear budget to each and every project is the last thing you should do.
Spending money can easily get out of control since there are always some unexpected fees. The only way to avoid these is to set a budget before your project even starts, and the best way to do this is to consult with your bookkeepers, go over all the records, and see how much you can afford to invest.
7. Not communicating with the bookkeeper
We have already explained why it is essential to employ a bookkeeper as soon as you launch your company, but now we have to warn you that proper communication with them is critical.
Not only do you and your employees need to keep track and record all the transactions, but you also need to inform your bookkeeper about each of them. We cannot stress enough how vital it is that they are familiar with every last detail regarding your company’s finances.
It is the only way to be sure they will do their job perfectly. At the same time, you will always have complete control over the funds you receive and spend. Therefore, the chances of you making a bad investment are kept to a minimum.