Having a knowledgeable team of finance professionals helps your business take advantage of many tax benefits, small business benefits and are essential to providing you with necessary documents when seeking funding for your business.

Many small business owners or executives in large companies or investors alike are often tasked with making responsible decisions that affect the bottom line of their business. And as such, financial literacy is essential to prevent operational inefficiencies that will cost their business money and squander resources.

Financial statements are recorded business transactions used to show the activities of a business, financial performance and stability of the business. These transactions are summarized to provide a complete picture of the business that anyone, owners, managers, the government, investors, creditors, pretty much anyone with a stake in the business’ performance, can read, analyze and understand. Being aware of how every decision affect cash flow as you would to revenue and profitability.

1. Not keeping business and personal accounts separate – First mistake most small businesses make is not setting up a business bank account that helps you control all cash flows, apart from personal finances. Being able to closely monitor the levels of cash flows allow a business owner to run day-to-day operations and track profits. business cash flow is one of the most important aspects of running a business, as it tracks the movement of cash.

2. Not registering the business under your own name – As a merchant financing advisor, this is one mistake I’ve seen being made by small business owners over and over again. While you do have to assign a Registered Agent when incorporating your business, most owners have the business registered under the company’s accountant or bookkeeper, which is a HUGE problem when it comes to acquiring capital for your business, and a business owner must show proof of ownership. Majority of all lenders look to the Secretary of State filings to verify business ownership.

3. Not Having a Professional Financial Team – Though we aim to equip you with understanding basic business financial statements, it’s highly recommended that retain both a bookkeeping service and an accountant. Duties of a bookkeeper are complimentary to the accountant, therefore there needs to be effective communication between the two parties.

4. Not Tracking Accounts Receivables – Failing to maintain accounts receivables when is one of the most common mistakes businesses using the cash method of bookkeeping make. a business that extends credit to its customers will lose money if there isn’t a system in place to keep track and collect money owed.

5. Not Tracking Cash Transactions – When a business using the accrual method of accounting, which requires that all transactions be recorded as soon as they happen, a business may forget to track smaller cash transactions.

6. Not Using Proper Accounting Software– Accounting records must be accurate and reliable; a good accounting software determines the quality of records kept. Automated software helps record transactions in real-time to prevent fraud.

7. Not Keeping Track of Documents & Receipts – A business bookkeeping and accounting methods must be straightforward and provable; in case the business gets audited by a government agencies or internal auditors. It is important to keep all purchase receipts, cash payments, file and digitize all to prove the occurrence of transactions. Failing to keep accurate records will also leave the business vulnerable to internal misappropriation of funds.

8. Not Consolidating Subsidiary Books With the General Ledger – a business may neglect to quickly summarize the subsidiary book of entries making it more difficult to consolidate at a later time and they pile up and can become unmanageable.

9. Not Having A Trial Balance – (How to prepare the trial balance) Preparing financial statements without preparing a trial balance first can lead to many errors that will later cause the business to pay more on taxes. The trial balance is important because it validates the authenticity of general ledger entries.

10. Financial statements have to be reliable, simple and must follow certain guidelines, rules and regulations. It is advisable that a business gets professional bookkeeping and accounting to help set up and prepare financial statements to ensure reliability and compliance with accounting rules, principles and concepts.