top 10 accounting mistakes to avoid for small businesses

Top 10 Accounting Mistakes to Avoid for Small Businesses

Being an entrepreneur can be a beautiful and fulfilling journey, where you are your boss and watch your business grow from strength to strength. However, it also comes with its fair share of challenges. You are the CEO, the marketing manager, and the event director, all wrapped into one. There is a constant juggle of wearing many hats, including in areas where one might not necessarily have any experience whatsoever. One such area is Accounting! Let’s look at the top 10 Accounting mistakes that Small Businesses can avoid in this domain.

Doing it on your own. 

Imagine this! As a patissier, you run a business baking artisanal cake. Your value-added tasks are those for which customers are willing to pay you. To run a successful baking business, however, you will also have to undertake some support tasks, such as marketing and maintaining financial and accounting records. Although support tasks are necessary and essential, they can divert some of your focus away from your core business activities. However, with support activities, one has a choice to either work on them independently or outsource them.

Not using Cloud Applications.

Accounting can be daunting for a business owner, but the advent of cloud computing has ensured that everyone can have organized, user-friendly, and secure accounting software at their fingertips. Using cloud accounting software provides reliable data with less room for human errors. A large amount of sensitive data can be stored, which can be easily accessed by business owners, thereby giving them the power to know their business’s financial position at any given point in time.

Creation of Multiple Chart of Accounts. 

A coherent COA is the foundation of the reporting that the business will be required to perform. From a record-keeping perspective, a Chart of Accounts is the most fundamental planning requirement for a business. Creating multiple Charts of accounts can be one of the most serious accounting mistakes a small business could make, as the Chart of Accounts is the framework on which reporting, whether for bookkeeping, GAAP, or Tax, will be based.

Delay in Accounting.

Regular accounting helps you track the movement of money in and out of your business, which enables you to make informed decisions and leads to a thriving business.

Focusing on Revenue and not Cost.

Most small businesses want their revenue numbers to show a steady rise, and who doesn’t? However, in the rush to achieve significant topline numbers, many small business owners tend to overlook the importance of focusing on Cost. To put it simply, your Revenues – Cost = Profit.

So, while the topline might look good, the bottom line, which is the profitability of the business and is more valuable for a healthy, thriving business, gets ignored. How does one achieve a balance between focusing on costs and revenues? Ask yourself questions like: Is there a way to save on taxes? Is there a way to standardize the processes? Are you managing your inventory efficiently?

Not segregating personal expenses and business expenses. 

Small business owners oftentimes do not segregate their personal and business expenses, given that they might be the sole proprietors of the business. This can lead to challenges when tax time arrives. Underreporting or overreporting of business expenses results in an unclear picture of the business’s income.

Not reviewing Profit and loss accounts on a monthly basis. 

A Profit and Loss account shows the health of your business in terms of what is your income and what is your expenses. You can identify the costs that need analysis, as well as whether your Revenue is in line with your goals.

Just focusing on cash management.

Cash is undoubtedly one of the most crucial financial metrics. Hence, the goal of good management should be to eliminate surprises related to cash and ensure that there is sufficient cash for the business to meet its daily cash needs.

Additionally, while excess cash may seem beneficial in the short term, it may indicate that the business did not utilize it effectively to generate more profits, and it may also suggest that the business missed opportunities due to its short-sighted cash management.

Too much inventory.

While a business would always want to maintain an optimal level of inventory to avoid future raw material shortages, it runs the risk of being too cautious and being stuck with excess inventory, which can eventually lead to cash flow issues.

Excess inventory is also more susceptible to theft. More than optimal inventory also means there might be slow-moving stock, which is a source of working capital loss. The ideal way to manage inventory is to be proactive and on top of the requirements, which means accounting and recording of data must be up to date.

Being unaware of compliances.

Legal compliance is an integral part of any business. Businesses need to meet compliance requirements to run their operations smoothly without incurring any penalties. Knowing the compliance requirements not only helps businesses to be on the right side of the law but also brings in a lot of customer trust.

Small businesses are no exception when it comes to meeting compliance requirements. The compliance requirements can range from Legal (entity-specific compliances for businesses, depending on whether they are a Sole Proprietorship, private limited company, or Partnership) to Human resources (Labor laws) to Tax (including income tax, National Insurance, corporation tax, and sales tax).

Conclusion

Accounting mistakes can be reduced to a great extent only if you get to experience hands in managing this task. While working with multiple clients, we have noticed that businesses have profited from the experience of accountants by avoiding costly mistakes. Hiring an experienced accountant is a significant investment, but it has long-term benefits. If you cannot recruit one, you can avail of their services through an accounting outsourcing service provider.

To get hands-on with the best accountant, you will have to choose the best service provider, like E2E Accounting. It has established its reputation by providing experienced and talented accountants to many of its competitors, which has helped them reduce accounting errors and increase efficiency. For more information on our services, please write to us using our contact form, and our executives will be in touch with you.

All the best and looking forward to connecting with you soon.

why should landlords have an accountant

Why should landlords have an accountant?

There are many moving parts in running a successful rental business. A great bookkeeping and accounting system is a crucial element in managing a property portfolio. Having a robust accounting system will help you plan for tax implications in advance. Not only will an accountant be of help at tax time, but they will also provide on-demand financial help, which will safeguard your business against debt or fraud.

Forecasting future expenses will help you plan better and save time. This can help one focus on managing property and expanding the business. Historical financial data will help you forecast various costs with greater accuracy, thereby ensuring that you are not financially derailed. For instance, this data can help determine what needs to be done when maintenance costs increase in winter months or when internal or external walls require repairs.

Ensure rentals are being received on a timely basis.

Rent receivable reports, prepared by accountants, show the amount of rent the landlord has earned but not yet received from the tenant. At the same time, the prepaid rent report shows the rent that has been received in advance. These reports help to identify delinquent tenants ahead of time. When the balance of the rent receivable ledger is nil, it means the landlord has received all the rent that was due to him from the tenant.

Take advantage of available tax benefits.

Even with the flurry of activities surrounding getting the property ready for rent and choosing the right tenant, the landlord must stay on top of taxes, such as capital gains tax, stamp duty, and corporation tax, among others.

Taxation planning should be done beforehand rather than afterward, as it will ensure a hassle-free cash flow. An accountant makes certain that the landlord enjoys tax-effective property ownership. 

Also, in various scenarios, where the landlord incurs expenses wholly and exclusively for property rental business, claims part expenses, incurs maintenance and repairs costs, is required to calculate a profit or loss for more than one property, or has tax implications on account of a jointly owned property, the accountant can work out the documentation required and the tax liability in the different scenarios.

Ensure surplus money is adequately invested.

Owning a property is owning a long-term financial asset, the benefit of which can be enjoyed for years to come. A rental property typically provides the landlord with residual monthly cash flow, which, if invested wisely, yields not only a guaranteed passive income for many years but also an opportunity to build reserves. Hence, hiring a good accounting professional to help one develop financial discipline for such investments is advantageous. Some of how the landlords can invest the surplus funds are as follows:

a) Maintenance and Safety: With the change in every season, the landlord should look at which items need to be cleaned or replaced. Ensuring fire alarms and emergency lighting are in good working condition and investing in the best quality for these systems not only keeps the property safe but also ensures that the landlord doesn’t incur liabilities on account of faulty systems. Any white goods requiring repairs and replacement can be done through the residual cash. These small changes make the property attractive to the tenants.

b)   Prepayments: Applying the surplus cash flow to paying down the principal balance helps reduce the loan term by a few years. This can eventually give the landlord the flexibility to invest in more buy-to-let property on the mortgage.

Ensure all expenses are correctly accounted.

Landlords need to ensure business and personal expenses are accounted for separately. It is best to have a separate credit card and bank account, which are used only for rental property expenses. In the case of multiple properties, particularly when one has more than 3-4 properties, it is best to have a separate bank account for each property you own.

For a given property, one can have rental receipts deposited into one account, along with any taxes and repairs for that property, being debited from a single bank account. The expenses that can be reported include but are not limited to advertising, auto and travel expenses, cleaning and maintenance, commissions, insurance, legal and other fees, management fees, mortgage interest, repairs, taxes, and utilities.

Typically, lenders are less tolerant of buy-to-let mortgage arrears and treat them to a certain extent on par with commercial loans. Hence, missing out on Loan EMIs can have some serious consequences.

Management Reporting.

A monthly property management report outlines the property’s performance and identifies areas that require attention. By and large, the following reports should be covered in the monthly management report:

Balance Sheet: helps you track your current assets and liabilities, showing you how much money you have to work with.

The monthly Income and Expense statement tells you how much money you made during the reporting period and how much you spent,

General ledger transactions are the backbone of all financial reports. General ledger scrutiny provides a comprehensive overview of your rental business.

The accounts payable report tells you how much money you owe against the property. Tenant receivables: tells you how much you are due to receive from the tenants and

The prepaid report tells you how much of your expenses you have prepaid

The monthly bank statements with reconciliation ensure that your bank accounts match your ledger accounts penny by penny.

Conclusion

In conclusion, having an experienced accountant will have a positive impact on your retail business. It is their experience and knowledge of the latest U.S. accounting standards that will make your business more compliant and put you ahead of your competitors.

If hiring an accountant directly is not possible, you can avail yourself of their services through a professional service provider, just like others do. Among the many service providers offering their accounting services to businesses based in the USA is E2E Accounting, which become quite a name. The reason for its popularity is its talented team of accountants, who are well-versed in the latest accounting standards and utilize the latest processes to streamline the accounting process. Please find out more by writing to us on our contact form and get an immediate response from our executive.

Hoping to see you soon.

Bookkeeping Tips for eCommerce Companies in UK

Bookkeeping Tips for eCommerce Businesses in the USA | E2E

The shift from brick-and-mortar businesses to eCommerce has been the highlight of the business world over the last two decades. The United States of America has the most advanced eCommerce market, with eCommerce sales reaching $1.29 trillion in 2025. More and more retailers or product manufacturers are looking to establish an online presence for retail distribution and sales. While this trend is here to stay, let’s look at some of the bookkeeping tips for setting up a financially stable and viable eCommerce business

Integration of Amazon/Shopify to Accounting Software.

Managing your Amazon FBA account or Shopify account using Google Sheets or MS Excel can be a daunting task, given the various items involved, such as Chargebacks, Shipping fees, Promo Rebates, Sales Tax collected, and FBA inventory reimbursement. Listed below are a few accounting software tools designed to integrate with sales channels, making accounting easier and more efficient.

Xero: Xero boasts a user-friendly interface, along with a wide selection of add-ons. It can be easily integrated with A2X or Stitch Labs for a customized Amazon Seller experience. Additionally, it features a mobile app, allowing access on the go.

A2X Accounting: The A2X app connects systems to cloud accounting, automating bookkeeping for Amazon Marketplace transactions. When Amazon creates a new settlement file, A2X can generate a summary for it, along with the ability to split multiple-month settlements on a per-month basis for multiple years. It works excellently with Xero, QuickBooks, and Shopify.

NetSuite: For accounting software to integrate with Shopify, the use of apps like Zapier and A2X is required to set up the integration. Alternatively, you can find an app connector in the Shopify App Store. Another way to streamline your operations is to integrate NetSuite with your online Shopify store, which offers a scalable solution that seamlessly handles financial data and sales channels.

Clarity on Accounting for Sales- One single Invoice per month by sales channel/ Geography.

One of the key functions of good bookkeeping is to assist in creating projections that forecast future business activity. One area that has a significant impact on the eCommerce business is sales. A detailed understanding of sales will help inform decisions such as which products to promote, when to increase a product’s price, and how to recognize seasonal fluctuations for each product.

Using A2X helps automate eCommerce accounting by connecting your accounting software to your sales channels, allowing you to track sales based on different tracking categories, such as sales per month, per channel, or by country. For example, suppose you are looking for accurate sales data from Amazon. Still, the backend report provided by Amazon does not bifurcate the numbers by categories such as FBA fees, shipping fees, warehouse fees, and chargebacks. In that case, it may all be recorded as “Sales,” which would be incorrect. A2X can avoid this problem by automatically updating your books from Amazon’s backend.

Daily bank Reconciliation to identify failed payments.

Massive volumes and speed of exchange typically characterize an eCommerce business. Fierce competition and marketing innovations have prompted eCommerce business owners to complement their product offerings with a range of complementary services, including gift cards, trial periods, flexible payment options, and reduced shipping costs.

The complexity of completing a transaction multiplies in a digital environment. One single online order requires the action of at least four parties other than the customer and merchants themselves – their banks, the payment processor, and the parcel delivery company. In the event of cancellations, refund requests, or supply chain glitches, the complexity level doubles.

This requires a three-way reconciliation between payment processors, banks, and the ERP systems, which is performed in two steps: processor to bank and processor to the internal system. This will not only reduce any risk of fraud but also identify any unauthorized withdrawals or bank errors.

Analytics report- Geography, product, etc.

Using analytics to uncover customer insights is a game-changer for an eCommerce business. Yet, having a vast amount of data to mine is different from gaining clear insight into customer preferences. The difference lies in the ability to extract the most value from your data. You can choose from various analytics programs, such as Google Analytics, Mixpanel, Adobe Analytics, and Statcounter, among others. In addition to an Overview Dashboard, some valuable analytics reports include:

1.Sales by Channel. The data in this report will help you identify which channel sources are successful and which are underperforming

2.Sales by billing country. This report helps you identify which countries contribute the most to your revenue so that you can determine where to invest in new markets.

3.Sales by Product. This report helps you identify the bestselling products by season or period.

These reports enable you to see margins on an item-by-item basis. When you total the cost of goods sold and link it to relevant suppliers, you can see how much money is being spent on each item and which items you need to focus on. Having this kind of data is a solid negotiating tool.

Portal for suppliers to extract invoices.

Accounts payable automation enhances efficiencies, enabling finance to scale and adapt to their business-changing needs. Using a supplier’s portal reduces supplier payment frictions, as these are web interfaces for collecting and displaying information pertinent to suppliers. This information includes, but is not limited to, payment histories, Tax IDs, and invoices.

Using a suppliers’ portal reduces data entry errors as well as the dependencies on the accounts payable team. When a supplier payment system is integrated into the supplier portal, it centralizes the supplier management system, allowing for ease of reconciliation and reporting.

Pay invoices of suppliers ahead of time to gain discounts.

Reducing the cost of sales is a sure-shot way to increase the profits from your eCommerce business, and paying invoices ahead of time to gain a discount helps you achieve that. If your supplier doesn’t offer you any benefits for advance payments, you could work on striking a deal with your supplier’s competitors to get a better rate. While it is evident that to avail of this benefit, you need to close your cash flow gaps and increase your working capital, any gaps in the cash flow can be fixed by using tools such as credit cards, bank loans, and capital advances for eCommerce or marketplace sellers.

Conclusion: Expert Bookkeeping Tips for Ecommerce Business

By understanding these areas and how they impact your eCommerce business, you can make the best decision about managing the bookkeeping of your eCommerce business and find the bookkeeping software or service that’s right for your business. To further support your eCommerce business, you can partner with professional accounting service providers offering bookkeeping and various other accounting services.

We are certain you have heard frequently about E2E Accounting from your competitors. After all, many of them have chosen us to help them in their bookkeeping work. Our accounting services, especially bookkeeping, have helped streamline their processes, bringing in cost benefits and an increase in the quality of work. For further information, please provide detailed information on our website contact form, and you will hear from our executive soon.

Wishing you luck and success and looking forward to future association.