6 Myths Small Business Owners Believe About Accounting

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By guest writer Laura Moses 

Unless you’re fond of number crunching, the task of accounting might not appeal to you, like several business owners. A lack of familiarity with bookkeeping may lead to misconceptions about what the job entails. A dislike for the job may also contributes to various falsehoods. Whether you’re operating a small, personal business or involved in managing a large company, accounting remains a necessity, and comprehending the facts may spare someone the possibility of encountering serious consequences. Paying your colleagues using a payment portal is vital to ensure they receive the correct payment in a timely manner.

MYTH #1: ACCOUNTING IS SIMPLE MATH.

Fact: While numbers are definitely involved, accounting is more akin to a puzzle than merely addition and subtraction. The occupation does involve computation. However, accountants must visualize the entire picture by regularly analyzing records. In this way, business owners and stockholders gain insightful information. The numbers represent various aspects of the business or company that include basic operations, assets, expenditures. Over time, the numbers also indicate trends pertaining to past, current and future revenue and profitability.

MYTH #2: BUSINESS OWNERS DO NOT NEED TO WASTE TIME WITH THE ACCOUNTING PROCESS. PROFESSIONALS HANDLE THE JOB.

Fact: Professional accountants only function as a resource. While companies may hire an accountant to enter data, monitor the books and file taxes, these educated individuals do much more. Accountants also function as consultants and financial experts. The knowledge that financial advisers possess include ensuring regulation compliance, exploring and recommending financing possibilities, managing cash flow and developing ways to reduce unnecessary expenditures. Despite all of these services, business owners must still understand and be involved with the company’s finances.

MYTH #3: SOFTWARE IS NOT NECESSARY. MANUAL ACCOUNTING IS SUFFICIENT.

Fact: Software created to perform accounting tasks, offers many different benefits. Business proprietors spend the day performing many different functions within a company. Accounting is simply one of the functions requiring an owner’s attention. Having an appropriate software program for the company saves time and money in the long run. Software solutions are tailored to meet various types of businesses and each program features customizable tools that further increases the product’s value. Using accounting software helps minimize errors and improves efficiency There are also options to streamline your accounting services even further by integrating it with other useful services like Salesforce, however, there are loads of services that you could take a look at. A lot of companies are looking into quickbooks integration with salesforce.

MYTH #4: ACCOUNTING SOFTWARE IS BASIC AND NEEDS NO SPECIAL TRAINING.

Fact: While finance based programs are relatively simple to use, getting the most out of the software requires learning as much as possible about the product’s capabilities. Whether taking the time to read an instructional manual, taking a class or exploring the product in depth, the software is only as valuable as the user who has a good working knowledge of the program. Equipped with this knowledge, companies access a wealth of financial information related to the business when needed.

MYTH #5: TAX TIME IS THE ONLY TIME OF THE YEAR WHEN ACCOUNTING IS IMPORTANT.

Fact: Understandably, tax time is a busy time of year for accountants. However, finances must be monitored and managed all year long. Staying on top of financial information provides business owners with the opportunity to make decisions concerning production, expenses, expansion or conservation. Managing finances all year also ensures continuity and actually makes filing at tax time easier.

MYTH #6: VIRTUALLY ALL EXPENSES ARE WRITE-OFFS.

This belief is absolutely false. Personal expenses in particular should not be included in business expenses or used for tax deductions. While business owners have an abundance of write-off options, including the wrong expenditures may increase the likelihood of flagging an audit. Allowable deductions typically include the multitude of expenses required for business operation. Computers, software, facility rent or mortgage, utilities, employee wages, insurance, advertising and outside contractor expenses are some basic allowable deductions. Vehicles may be included if only used for the business. Remember that all deductions must have adequate documentation to connect the expense directly to the company’s function.
About the author: Laura Moses works for the accounting firm JD Main, which specializes in small business accounting and offers services such as bookkeeping, software implementation, accounting and part time controller services. Laura served as a controller for a number of privately held companies before starting her own firm.

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