CPA Mistakes That Could Be Costing Your Business Money

When running a business, you will need to constantly keep track of its finances, ensuring that it is financially healthy. Furthermore, you will have to keep all the records successfully, especially accounting ones, so as to ensure compliance, as well as that financial health we’ve mentioned previously. All of this means, naturally, that you will need to work with a certified public accountant company that will provide you with all the services you need.

You may have thought about doing all the financial planning alone, as well as handling all the small and big tasks on your own, from tax filing to creating an entire financial strategy for your business. Yet, this is certainly not something that you should do if you don’t have the necessary experience and if you aren’t really an accounting expert. The bottom line is that you should always hire professionals, and let them handle the hard work for you, doing it all accurately and successfully. Going for a CPA firm is, thus, the best idea here.

Even though you are going to hire professionals and have them do all the work on your behalf, that doesn’t mean that you shouldn’t be at all acquainted with how it all works, and with what it is that you’ll need to do accurately and successfully to keep your business running and growing. In other words, you have to be aware of some accounting tasks that need to be completed correctly in order for your company to succeed and thrive. And, is there a better way to learn than learning through mistakes?

To put it differently, what we are going to do right now is explore some common CPA mistakes that could cost your business money. This way, when you learn about them, you will be sure to avoid them, which is basically the main task. So, without any further ado, let me start listing some of those most usual mistakes that businesses tend to make in this process, and that you should absolutely never repeat. Here we go.

*Not Keeping the Records Accurately

Clearly, one of the most fundamental responsibilities of a CPA is accurate records keeping. If they wind up making mistakes in the bookkeeping process, that can further result in incorrect financial statements, and thus potential tax issues, as well as cash flow problems. Not to mention that inaccurate financial records can also lead to you making misinformed business decisions and thus putting yourself into even more trouble.

Since this is not what you want, you should always inquire about the process of keeping records when trying to hire the right CPA firm and let them tell you what they do. Among other things, they will tell you about the software solutions they are using to ensure accuracy. Then, they should also be regularly reconciling the audits, as well as schedule periodic audits with the aim of finding and correcting any mistakes that may have been made.

*Incorrect Categorization of Incomes and Expenses

This may seem like something nobody could ever do the wrong way, as it is so simple and straightforward. But, you’d be surprised. Incorrectly categorizing incomes and expenses does happen, and it can cost your business money. For instance, your accountant could make the mistake of categorizing personal expenses as business expenses, which can further raise some red flags and lead to tax filing errors, as well as IRS audits and even penalties. Since you certainly don’t want this to happen, make sure to establish clear guidelines on the classification of expenses, and perhaps even have your CPA rely on a software solution that will automatically and correctly categorize those.

*Not Analyzing Financial Reports and KPIs

When you hire a great CPA firm, you will definitely expect them to regularly provide you with financial reports, aiming at offering you an insight into the financial health of your business. Yet, doing those reports is one thing, but actually analyzing them is another. Meaning what exactly?

Meaning that your CPA firm should also always analyze KPIs and financial reports, so as to ensure both financial health and compliance. Furthermore, doing this could help you easily spot any signs of financial troubles on time. And, by doing the analysis, you will also know how to make the right business decisions in the future, which is definitely of crucial importance. So, don’t make the mistake of not analyzing the reports and KPI, and instead review the reports on a monthly basis, track the KPIs, and regularly meet with your CPA to discuss any financial trends.

*Poor Cash Flow Management

Poor cash flow management doesn’t really sound good, does it? And, well, that’s because it isn’t. It can lead to liquidity problems, thus making it difficult for you to even pay your bills, and let alone invest in certain growth opportunities that could come your way. In order to avoid this, you should make sure that your CPA firm is implementing a good system to track your cash flow, as well as that they are doing their best to anticipate your future financial needs, thus ensuring financial health at all times.

*Missing Tax Deadlines

As you understand already, not paying taxes on time can lead to interest charges, as well as penalties. So, this is another mistake that could cost your business money. The good news, though, is that, when you have the right CPA firm on your side, you won’t have to worry about this, given that they will be focused on actively managing compliance and meeting all of those deadlines. Furthermore, a great CPA will also maximize tax deductions, thus helping you save some money in the process.

*Not Hiring the Right Firm for the Job

The biggest mistake that you, as the business owner, can make, thus, is hiring the wrong firm for the job. Clearly, all the other responsibilities will lie on the CPA you’ll hire. So, focus on this. Research different companies thoroughly, check their experience levels, their reputation, as well as the quality of communication, and, of course, the fees. Then, compare everything and make your final choice.