From One To Many: Tips For Hiring Your First Employees

New business owners may have a lot on their minds, and these accounting mistakes are easy to make when you're starting out. Here are four things to avoid in your new business' accounting system. 

Not Tracking Cash Flow Carefully

One mistake that many new business owners make is placing a lot of weight on profits while neglecting to monitor cash flow. While a lot of profits will eventually increase your bank account, it's still important to keep a close eye on your daily ledger so that you know how much money you have to work with for payroll, new purchases, and overhead costs. An accountant can help you set up a semi-automatic system that will help you estimate your bank balances each day. 

Using Personal Accounts for Business Transactions

Another business no-no is using your personal accounts for business purchases, or vice versa. While it can be convenient in the moment, it can create a headache when it comes time to do your taxes or provide paperwork for an audit. If you do slip up and cross these accounts, speak with your accountant to help you notate which expenses came out of the wrong accounts; this can prevent a lot of confusion down the road. 

Neglecting Checks and Balances

Another important thing to set up in your business accounting is a system of checks and balances, where you can double check the accuracy of information that you enter into your accounting system. In case your main bookkeeper enters information incorrectly, make sure that there is a second person to check and catch any mistakes. 

Not Hiring an Actual Accountant

When you're just starting out with a small business, a qualified accountant should be one of your top priorities. Although it's just a small amount of money, and you might be able to manage the bookkeeping and accounting on your own, the start of a business is the most critical time to get your financial plan in order. Your accountant will help you set up a strong financial system that is orderly and takes advantage of all the tax regulations and other rules that you'll need to follow in case your business is audited. And, frankly, it can take a lot of the headache out of learning about money management when you're worried about getting a business off the ground. 

Each of these tips is crucial to starting your business with a health financial future. Be sure to avoid these pitfalls when you're planning your money management. Talk to a Padgett Business Services Accountant or a representative of a similar company to learn more.