Three Common Accounting Mistakes

Great article for small business owners that drives home a number of the the viewpoints I’ve shared in the past. – T.C. Wright

 

Three Common Accounting Mistakes

Expert advice and lessons learned from financial missteps of small-business owners.

By Lisa Girard 

Tax time isn’t the only time business owners should review their accounting practices. Experts say small-business owners often make seemingly simple accounting mistakes that — which at their most extreme — could mean the difference between a good and bad fiscal year. Here are three common missteps entrepreneurs make and the lessons you can learn from them.

Mistake No.1: You treat sales as revenue before the product or service is delivered.
Stuart Reisch, co-founder of Transform, a company that makes custom storage units, learned this the hard way after unwittingly counting deposits as income his first year in business in 1999. The New Rochelle, N.Y.-based company had $1.2 million in expenses versus about $1.4 million in sales, resulting in what looked like a $200,000 profit. However, $200,000 worth of products that were sold weren’t actually installed until January of the next year. As a result, Reisch ultimately had to revise the company’s financials and realized the business had only broken even — not earned a profit after all. He then decided to temporarily halt plans for growth.

Go to Entrepreneur.com to finish the article.

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About Tiffany C. Wright - The Resourceful CEO

Tiffany C. Wright is the author of “The Funding Is Out There! Access the Cash You Need to Impact Your Business” and “Solving the Capital Equation: Financing Solutions for Small Businesses.” She is the founder of The Resourceful CEO, which helps owners of small/medium-sized businesses prepare their businesses for sale. Tiffany has an MBA from the Wharton School of Business, sits on non-profit boards and serves as a business mentor with the Cherie Blair Foundation.
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