Small business owners are exceptionally well known for their ability to wear more than one hat around the office. From entrepreneur to marketing director to the occasional role of office handyman, they seem to be capable of doing it all; without letting a twirling plate hit the floor. However, when your business’s accounting is one of the spinning plates, you run a hefty risk of major setbacks.
In this post, we’ve listed some of our customer’s most common frustrations with DIY small business accounting.
The Mixup: How to Keep Personal and Company Finances Separate
As a business owner you are responsible for both personal and company finances. While it may suffice for the first few weeks, months and sometimes years of operation, independently managing these finances may prove detrimental to your company’s financial well-being. Combine this common DIY-method accounting error with the rest of the responsibilities that come with owning a small business and it’s only a matter of time before financial errors begin to appear and spread inaccuracy.
To Zig or to Zag: Accrual vs. Cash-Based Accounting
How hard can it be to differentiate which accounting method to use? Surprisingly, very. At-a-glance differences may appear to be minimal, but the accrual and cash-based accounting methods vary indefinitely. While one accounts for services at the time of operation, the other accounts for revenue when cash has been collected, regardless of the time of service. When choosing the DIY method of small business bookkeeping, selecting the wrong method can cause confusion and ultimately lead to damages.
Is it a Case of Tomato/Tamato?: Differentiating Between Cash Flow and Profit
Off the top of your head, can you name the difference? If not, you may need to reevaluate your current bookkeeping situation. Although the two appear to be similar, confusing cash flow and profits is one of the leading complications small business owners face when handling their own bookkeeping. Having positive cash flows does not mean your business is profitable, but many small business owners make the mistake of thinking so every day.
The Solution: Online Bookkeeping
So, how do we recommend resolving these issues? Through a convenient and secure service brought about by advanced technology: online bookkeeping. Whether you are just opening doors or your business has been operating for years, an online bookkeeping service is beneficial to business owners of all types. As a vital component to your company’s health, bookkeeping and accounting is not an area worth cutting corners. DIY style bookkeeping for small businesses is a way of the past; online bookkeeping is the way of the future. At VAST, the future is now.