The common mistakes made by business owners.

When some people start a business, they do not realize the vital things they need to learn about setting up a business, growing it, and maintaining the growth in the long run. They must be aware they could make severe mistakes and let the company to the ground which will severely impact them and the business. Ultimately, they will lose the business, assets, and family problems that result in everyone around them losing confidence in them. The reasons for making mistakes are lack of planning, not knowing much about the niche, no marketing plan, and no financial plan. So, I will let you know in detail the mistakes that could happen in any business.

These are the common mistakes that business owners miss out on in the operation of the business.

   1. Cash

When you sell things, you receive cash and pay cash for some purchases. The bookkeeper has to maintain a journal for cash receipts and payments to prepare the monthly accounts

2. Accounts Receivable.

 Your company might be selling goods or services and might not collect cash immediately. As a result, you will have receivables. That is the money due to you from your customers which needs to be accounted for by sending out invoices.

3. Inventory

You will have stocks in your company to sell, but that need to be counted and balanced with your records on a regular basis otherwise your business will lose money. If you allow it to get accumulated without checking records, your money will be sitting there doing nothing.

4. Account payables.

This is a vital part of any business because you will not like to pay more than what you owe to your suppliers and you should not delay your payments as well. When you use a proper recording system and make a regular payment, you might have some benefits like discounts on your purchases.

5. Loans payable.

In any business, the owner borrows money for several reasons, maybe to buy equipment, machinery, and any other things. You need to keep proper records to know what is owed to the company and what is due when you are making the payments.

6. Sales

Sales journals have to be maintained properly. Otherwise, you will not know how your business is performing whether you are reaching your target or not.

7. Purchases.

 Purchase journal will show you the amount of money you have spent for a period as you don't want to buy more than your needs and that will block your money. This account will help you to calculate the cost of sales to find the gross profit.

8. Payroll Expenses

It is usually a significant expense in any business, maintaining this account accurately is crucial as you will not have any issues with the tax office that will put you in serious trouble.

9. Owners’ equity

This account will show the amount of money that owner has put into the business; the money will be shown in capital accounts, and money taken out of the business will be shown in the drawing’s accounts. If you have more than one person contributing to the business, it is fair to maintain the owners' equity accounts properly.

10. Retained Earnings

This is the business profit after all the expenses are reinvested in the business and not paid to the owners. It gets accumulated over time and will be helpful for the investors and lenders to know how much is there in the accounts and also how well the company has been doing.

Many entrepreneurs think that accounting is a tedious task and do not like it, but that said if they really take some interest and learn some part of it, they will enjoy in the end when they know their method to run the business effectively