accounting

My Top 5 Accounting Mistakes

Note: I’m no professional. Please seek accounting and tax guidance from a professional. This is only my own opinion based on the mistakes I have made in my own business.

You know, I’ve run small businesses for a few years now. Since 2011, I’ve had some sort of small business. Being specific, I was on Etsy from 2011 and then “gave” this business to my mother in 2015. In 2013, I started Amazon and have been running it since. Up until 2014, I thought, I can do this all by myself. Load me up with Excel and bookkeeping software and it’s “game on!” In 2015, I tried new bookkeeping software and wasn’t really a fan. When I tried to match up entries, it looked doubled up, and forums can only clear up so much. I quit doing this software about 3 months into 2015, and then chaos.

My Top Accounting Mistakes

So, here’s my top mistakes and how you can save yourself the heartache.

  1. Keep up with the books today! Don’t go any further into 2016 without organizing your expenses, payouts etc. I have spent hours fixing my books, printing statements and scavenging for receipts. Don’t waste your time doing this. Your time is valuable.
  2. Invest in an accountant, or bookkeeper. Pay the professional. You don’t think you have the budget right now, but trust me, when your time is worth a lot more later- you don’t want to spend your time rifling through the mess. Pay someone else to do it. It’s their strength, not yours.
  3. Don’t use personal credit cards. Ugh. I made a big mistake in 2015, using cards for capital when business was growing and now I’m paying that price. We all need an influx of capital sometimes. It happens. Just do yourself a favor and keep it simple.
  4. Open a business bank account. If you don’t have one right now, and you’re pulling in sales – time to get a bank account in the business name. It doesn’t cost you (well, in most cases, you may have a small bank fee) but guys let’s be real – the theme is keeping everything organized. Get the account. This isn’t necessarily a mistake I made, but many moons ago I did mingle personal bank with my business money. Spell it with me, folks! M-E-S-S!
  5. Make estimated payments. If you’re turning a profit, make estimated tax payments. I’ll be getting slammed with a nice tax bill, and small penalty this year. Save yourself some cheddar and make the payments throughout the year.

2016’s Fixes- How I’m Making Changes

Well, 2016- I said “focus” was my framework for the year.

  1. Registered with Xero. I had a consult with an accountant on February 9th. He’s going to look over my books and tell me how much of a mess I’m in. We’re focusing on getting 2016 up to speed, and then we’ll work back into 2015. I told myself I’m not going to spend energy on this at the beginning of 2017. I want to know my bottom line at any time throughout the year without stress. Our long term goal is to have him help me with monthly reconciliation, and then we’ll optimize products with profit and ditch the low sellers. For now, it’s “clean up Valerie’s mess” time.
  2. Opened a business credit card. I’ve opened a business card today and said if I really need to use personal cards- I’ll only use one specific card so I can keep it straight. I can still rack up airline miles, or choose to get cash back. Now, it will just be easier to keep track of the expenses.
  3. Purchased the book Profit First. You’ll find I don’t spend a ton of time reading business books.The ones I do, may be recommended highly, or never heard of before. It’s always pretty extreme on the spectrum. I purchased Profit First after listening to a Mixergy podcast (Andrew Warner is a favorite podcast host of mine.). It basically discusses paying yourself, cutting expenses and making sure you aren’t working for nothing. This is by far one of the better books I’ve read in a while concerning business matters. If you seem like you’re never making a profit, or have little cash after you pay the bills – read this book. 
  4. Keep up with the books! I already covered this as my number 1 for my top accounting mistakes. Please, I beg you- do it. Once a month, a couple of hours, reconcile your books. Your future self will thank you.

So, this wraps up my top accounting mistakes and how I’m making changes. Do it, make the changes – you will not regret it.

 

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