Wed 04 Feb 2015 | By:

5 Accounting Mistakes Every Connecticut Entrepreneur Should Avoid

Accounting Mistakes to Avoid

Starting a business in Connecticut is something that you need to prepare for physically, mentally and emotionally. Starting a business is a whole lot of work, however, managing and leading it until it becomes a successful business is much more difficult.

A very important aspect of a Connecticut small business that you need to focus on if you want it to grow successfully is its financial management. However, as you may already know, accounting and bookkeeping are not easy; you need to have background knowledge and even experience to do them correctly.

Even the most established and experienced entrepreneurs in the state of Connecticut receive professional help while still being hands-on, they understand that it’s better to ask for help from professionals such as a Connecticut accountant or use the assistance of an accounting software than to do the job with zero knowledge.

Accounting errors can affect the overall health of your Connecticut small business. If you’re still starting out, you simply can’t afford to commit errors, not just in your business’s accounting, but in other aspects of your business as well. While it’s impossible to do everything perfectly, you have to try your best to execute every course of action as error-free as possible – start with keeping track of your business’s finances efficiently.

To help you avoid crucial accounting mistakes, here’s a list of the top 5 accounting mistakes that you should avoid.

 

1) Taking responsibility for all the work

Based on experience, I understand if you want to do all the work during the initial stages of starting your Connecticut small business. As an entrepreneur, we have this sense of responsibility over our startup, it’s like a mother’s love to her child.

However, doing all the work yourself can sometimes cause harm than good. Overtime, too much work will wear your out and you’ll eventually reach a point of exhaustion, resulting in low productivity, inefficiency and poor quality output.

If you want to focus on your business’s finances alone, you may need to give up other tasks on your plate. If you’re handling other administrative tasks, it would be a good idea to delegate them to your employees or team members.

Assess every person working for you, taking into consideration their skill set and strength and weaknesses. From here, delegate tasks accordingly to each person, I’m sure, with this kind of method, you’ll be able to find the right fit for every job.

 

2) Failure to set a budget

A budget is essential for 4 essential reasons: to have a reference when creating financial decisions, to have a basis when assessing and evaluating business results, to help you determine the amount of expenses and savings and to avoid underspending and overspending.

Setting a budget at the start of launching your business will help you immensely. Every financial decision and action will circle around your budget, so you need to set one realistically. If you have no idea how to do so, you can always ask for expert assistance from an accountant in Connecticut.

 

3) Failure to follow an accounting flow

For a new entrepreneur and even for those with experience, I’d never suggest dealing with accounting tasks or decisions as they come. It’s always best to have an efficient and organized accounting flow to guide you.

By having a step-by-step accounting flow, you’ll be able to establish a routine that you can use whether you’re dealing with random financial tasks/decisions or financial problems that need urgency.

Overall, an accounting flow will make your life so much easier. It will ease and lessen your workload and will help you avoid accounting mistakes. Confidently face unexpected financial circumstance and deal with them the best way by following an accounting flow.

 

4) Not paying much attention to financial reports

Ideally, you have to check your financial reports for the day before moving on with your accounting tasks. However, many entrepreneurs neglect financial reports as if they’re just useless pieces of documents.

A financial report contains the summary of your startup’s finances, they may also include your profit and loss, inflow and outflow and daily expenses. Don’t wait until you encounter a financial dilemma because you ignored reading your financial reports, make it a point to understand every detail on your reports.

 

5) Solely relying on outside help

While it’s advisable to seek assistance from a professional Connecticut accountant, or use a small business accounting software, it’s not right to outsource every single accounting task of your startup. Tendency is, you’ll stay too complacent, and you won’t be able to monitor your expenses that well.

If you’re planning to get in some help, you have to make sure that you are still fully aware of what’s happening. You always have to be one step ahead, if not, you’ll not be able to anticipate incoming financial problems.

As a small business owner, you are responsible in overseeing every aspect of your Connecticut small business. You need to be 100% committed and dedicated so you’ll be able to achieve your business goals and objectives.

Cashflow is the heart of any kind of enterprise, thus, efficient financial management is fundamental for a business to grow and expand. If you’ve committed these accounting mistakes in the past, make sure to avoid them and correct them as early on.

If you feel like you can’t handle the task yourself, as I mentioned, you can ask for assistance from an accountant in Connecticut or use an accounting software, however, make sure to still check your company expenses and reports on a daily basis. If by any chance you want to go virtual and take charge of your accounting yourself with a little assistance from a reliable accounting software, I recommend that you check out FreshBooks, it’s simply the best!

About Ryan James

Half hardworking hermit, half avid adventurer, Ryan founded Startup Savant to simplify entrepreneurship and pay it forward by donating a portion of all revenue to support children's education via DonorsChoose.org.