Common Bookkeeping Errors Made by Small Business Owners

Many small business owners often opt to do their own accounting in effort to save money.  Unfortunately, a lack of accounting and bookkeeping expertise can cost them a lot in profitability and success.  In a recent article published on Entrepreneur.com, Lisa Girard shares “Three Common Accounting Mistakes” of which most of your prospective clients may not be aware.  Understanding the struggles they have may enable you to better convince them of just how valuable your services are.

1. Treating sales as revenue before product or service is delivered.

Until the service is complete, don’t count payments as income.  Girard, after talking with certified public accountant at Kroner Gamble &Co., explains, “Great sales in a month that will be delivered to the customer later, but are improperly posted as revenue for the current period, can give a company a false sense of profitability.”

2. Not considering the financial ramifications of a large purchase.

Many small businesses invest in costly equipment that can impact their business significantly, for good and bad.  When costly items are purchased using cash, business owners can depreciate the equipment over time, however, they are unable to claim them as a one-time expense on their taxes.  When taxes are due, these individuals are unable to claim the expense to offset profits requiring a larger tax payment.  One possibility is to secure a short-term loan in order to purchase big-ticket items, a method which doesn’t deplete cash flow.

3. Confusing profits for cash flow.

Many businesses mistakenly reinvest earnings back into their business, leaving them little to no cash flow.  To combat this tendency, Girard suggests, “Always track what you’re spending versus selling—and take a long, hard look at your financials before moving ahead with expansion plans that would put your business too far into debt.”

You help these small businesses succeed when you convince their owners that securing your services will ensure they don’t continually make these same mistakes.  By offering both accounting and tax services, you become a full-service financial provider competent of helping small businesses succeed.

Accounting

Universal’s Professional Bookkeeper Program (PB) will train you in the practical application of small-business accounting while enabling you to earn a professional designation, demonstrating your expertise and true professionalism.  Not only that, but the PB Program will also train you to market your practice, eliminating the competition because of the unique and valuable services you offer clients.

Tax Preparation

And why not offer more than just accounting services?  Many people would like to find a one-stop financial provider where someone will meet their accounting and tax needs.  By learning how to prepare individual and business returns you will become a full-service financial provider.  Not only that, but the income potential for tax preparers is significant.  You can charge $100 + per hour for your tax services!

Like the PB Program, Universal’s Professional Tax Preparer (PTP) Program enables you to earn certification that can put your clients at ease, especially in this day and age of changing tax law and occasional fraud committed by paid tax preparers.

Grow a successful practice by acquiring those skills prospective clients most need.  But don’t take our word for it.  Read from the many testimonials we have received from students, thanking us for the training that has helped them gain the knowledge, skill and confidence necessary to earn promotions, start their practices, and/or secure more clients. Call Universal today at 1-877-833-7909 begin_of_the_skype_highlighting 1-877-833-7909 end_of_the_skype_highlighting to order a program customized to match your current needs.

 

Resource

Girard, Lisa. “Three Common Accounting Mistakes.” 27 April 2011 Entrepreneur.com