The health of a new business or start-up is heavily dependent on bookkeeping and accounting. Unfortunately, most entrepreneurs, professionals, and founders are inexperienced and undertrained to follow proper accounting practices. Revenue recognition and inventory costing are two areas where erroneous reporting surfaces. When companies ultimately discover them, they come across the most challenging situation.
Sans the proper knowledge on how to handle the errors, their goals go out of the track, and their foundation destabilizes. Given the fact that most of them begin on a shoestring budget, they cannot afford to commit such mistakes. Thankfully, expert Chartered Accountants (CA) offering accounting and taxation services exist! Businesses can get their financials fixed by taking the help of professionals. For now, let’s only focus on the missteps.
Below, you will come across three of the most committed mistakes. We share them in the hope of making new companies realize it beforehand to avoid costly errors later.
- Manipulating cash flows
We can understand that this business is your dream, and it’s well capable of achieving success. However, most new business owners lengthen the route to accomplishment by counting their chickens before it hatches. Not literally, but assuming from beforehand the profits the moment they successfully make a sale or secure a contract. Now, imagine the client returns the product/ service. In such a case, you will have to adjust the profit.
What if the contract takes more time to secure than expected? Again, a part of the profit is lost. The sole way to inhibit such problems is by being conservative about business profits. Begin by having an in-depth understanding of your business health so that your decisions are future-proof.
- Maintaining an in-house accounting team
A young and inexperienced business owner already has too much on his plate. Dealing with bookkeeping and accounting can make him feel burned out. He ought to make mistakes and provide a wrong financial overview of the business. Despite the adversities, many choose not to engage a professional offering accounting and taxation services as it’s an expense they think they cannot afford. However, the trade-off between service and service charge can benefit your firm in the long run. With their knowledge and expertise, you can accomplish your goals and ultimately save money and precious time.
- Mixing up personal and business payments
It’s a common practice among new business owners to blur the line between the two payment types, making it challenging to manage their bookkeeping. Those who fail to pay attention to the overall spending, find it hard to figure out the profits. The repercussions can reach out to personal finances and not only business payments. Therefore, always maintain a strict boundary between the two to avoid financial problems in future.
MPVD & Associates, the renowned CA firm in Kolkata, which also provides accounting and taxation services believe, it’s unjustified to seek a professional who charges the cheapest rates. A boardroom partner, a dedicated team, the quickest response time and scalability are things you cannot anticipate to enjoy without spending generously. Partnering with an accounting firm may cost you a portion of your profits, but it’s worth spending every penny as the results are outstanding.
The author here specialises in writing informative Blog posts and articles on taxation, accounting, GST, company formation, corporate law, etc. She has developed many such write-ups on behalf of GST consulting companies in Kolkata. Her motive is clear – educate her readers so that none can deceive them.