One of the biggest mistakes small business owners make is not talking enough with their accountants, according to a new survey in the U.S.
The survey, by the accounting software developer Xero, polled a group of accountants, some of whom use the software and some who don’t. When asked what is the most common mistake small business owners make when it comes to their finances, 32 percent said it was only talking to their accountant during tax time (up from 25 percent last year and 18 percent in 2012), 20 percent said it was a lack of understanding when it comes to their tax obligations (up from 18 percent in 2013 and 13 percent in 2012), and 20 percent said it was not having real-time insight into their finances (up from 13 percent in 2013 and down from 26 percent in 2012).
Another 12 percent said the biggest mistake of small business owners was neglecting to set up a cash flow forecast (down from 13 percent in 2013 and 17 percent in 2012), 8 percent said it was not linking their financials to business goals (down from 11 percent in 2013 and 15 percent in 2012), and 4 percent said it was having little knowledge of their customer payments and debt (down from 8 percent last year and 5 percent in 2012).
When asked whether having a real-time view into their client’s finances would enable them to provide better financial advice for their customers, 75 percent of the accountants surveyed said yes, up from 72 percent in 2013 and 71 percent in 2012.
Asked about what is the most common mistake that businesses make that could trigger an audit by the IRS, 36 percent cited excessive deductions to income, 14 percent said it was misidentifying their workforce (as in employee vs. independent contractor), 9 percent said it was with home office deductions, and 35 percent it was mixing business and personal expenses in deductions. Similar issues in Ireland!