1. Mixing business and personal expenses. It is best to keep business and personal expenses separate from day one. Open a business bank account and a business credit card and only use those accounts for business. This keeps your books clean and avoids large clean ups in the future.
2. Not keeping accurate records. Using accounting software like Quickbooks is the best way to keep accurate records. Make sure all income and expenses are being accurately recorded. This will help you when making financial plans in the future.
3. Not reconciling accounts. Every month you should be reconciling your accounts to your accounting software. This makes sure the information is accurate and helps catch any mistakes made by the bank.
4. Misclassifying expenses. Make sure your expenses are being classified correctly. Misclassifying expenses can give you inaccurate financial information for planning and tax time.
5. Not recording cash transactions. It is best to record all transactions. So make sure you are recording your incoming and outgoing cash transactions.
I always say the BEST time to start good habits with your business finances is day 1. If you are months or years into your business and you have been making any of these mistakes you can fix it starting today! Hiring an awesome fractional CFO and/or bookkeeper is the first step to getting on track financially.
Written By Leah N. Miller, MBA
My name is Leah N. Miller, MBA, founder and CEO of Firmly Profits. Starting as a paralegal, I worked my way up to become a firm administrator and CFO of a personal injury law firm in Fort Myers, Florida.
