Most businesses like to believe that they have their accounting practices under control. But the truth is often very different from reality. Firms think that they have their house in order. But many times they are making basic mistakes that will damage their brands in the long-run.

Here are some of the most common accounting errors companies make and what to do about them.

Failing to Separate Personal and Business Finances

Separating personal and business finances seems like a no-brainer. But you’d be surprised how few executives and top company managers actually manage to do it.

The problem with merging accounts is that it muddies the water. It makes it difficult to see what your actual cash flow is. And it leaves your private wealth vulnerable to creditors if your firm fails.

If you’re not doing it already, have two main accounts: one for your business and another for your personal finances. Don’t mix the two.

Failing to Get Industry-Specific Advice

Accounting practices sound generic when you go on an accounting course. But when you’re actually working in a specific industry, they can differ wildly. No two sectors are the same, a point made clearly by sites like https://www.copas.org/.

Thus, if you’re an accounting professional, your priority should be to learn the specifics of your industry. Don’t assume that the rules are always the same. Usually, they’re not. Plus, you could be missing out on opportunities to help improve the financial performance of your firm, according to https://www.investopedia.com/.

Failing to Keep Documents for Seven Years

The government says that you have to keep documents for at least seven years so that they can check you’ve been paying the right amount of tax. It’s not a pleasant thing to have to do as a business owner. But it is the current reality, and without major changes in society’s values, it is likely to persist for a long time yet. Just keep your records in a file under your desk every year and give yourself peace of mind.

Failing to File Taxes on Time

Unfortunately, filing taxes late can result in hefty fines for businesses – higher than for private individuals and sole traders. Make sure that you get them done on time. And if you’re struggling, farm out the task to accountants who can do it on your behalf.

Not Reconciling Your Books With Your Bank Statements

Sometimes, your books and your bank statements can say two different things. For instance, you might jot down an expense in your books that you don’t actually incur on your bank statement.

Before you submit any accounts, make sure that you have an accurate record of your expenditure. And discrepancies could trigger an audit.

Failing to Budget for Every Project

Before you begin any project in your business, you need to budget for it fully. Failing to do so could lead to a cash flow squeeze, putting your business at risk. You need to know ahead of time just how much money you have on standby to make the project a reality.