Seven deadly small business sins: #1

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So, did the title catch your attention?

Our first deadly sin is the sin of sloppy accounting.  I know, I know not nearly as exciting as the actual seven deadly sins but what you do, I’m a CPA!

So, how was sloppy accounting a deadly sin you ask?

Sloppy accounting can cost you hundreds, if not thousands, of dollars in an IRS audit. Sloppy accounting leads an IRS auditor to believe that you do not know what you are doing, or that you are intentionally trying to hide something from them. What this means, is that you should have your receipts neatly put away, the clean and well managed accounting system ( something like QuickBooks and a bookkeeper), as well as be able to collect any invoice/check payment/other document that the IRS agent requests within a 24-hour period.

Are you ready for your first audit? Of course, I hope and work towards the facts that you never get into an audit, but considering that the basic percentage for someone who does not even own a business is 7% chance of being audited you should probably be prepared.

As a side note, if your bookkeeping is not prepared, and you are one of the many that have the sloppy accounting deadly sin, we offer a great and affordable monthly bookkeeping service that will allow you to focus on your main priority, your business, rather than staying up late at night to work on your bookkeeping.  (if you would like a quote on your bookkeeping please go ahead and e-mail me here)

Comments

  1. Jerry says:

    I would suggest that the FIRST sign of committing the First sin is NOT establishing a separate checking account for your business and keeping your business finances separate from your personal affairs.
    Owners need to recognize and honor the fact that your business is a SEPARATE Entity than the owner, even if you are the only one doing it.

    If you can’t take this first step, are you really in business? Or just have a hobby?

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