Whether you’re the boss of a budding startup or a small business, managing your company’s finances on your own is never an easy feat. Coming up with a financial plan and implementing it perfectly and accurately can be challenging. It’s quite normal to make accounting and other money mistakes every now and then, especially if you’re in charge of many other responsibilities.

Still, it’s better to rectify these money mistakes from the get-go. Small mistakes could accumulate and lead to bigger errors that could impact your bookkeeping, and if not corrected immediately, the overall financial status of your company, as well. In fact, a study in CB Insights revealed that 29% of failed startups suffered from poor financial planning, which is the second topmost reason.

It’s vital to identify and understand these accounting mistakes to improve your company’s financial stability, as well as your own planning skills. This could also assure potential investors that you’re careful and meticulous and that you won’t be wasting their capital.

Once you acknowledge that you could commit money mistakes even with your good intentions, it will be much easier to draw up a smarter financial. We’ve rounded up a list of small business accounting mistakes you can easily avoid in the future.

1. Avoiding Outside Accounting Help

You may have closed a seed round of funding, managed your expenses, and earned real revenue all on your own because you’re a self-taught accountant. However, doing these without the expertise of a chief financial officer (CFO) could cause significant backlog. While you don’t need to find a CFO immediately, time will come when you need to consult the services of an accounting professional. If you start making significant accounting errors, this could end up costing a lot more.

If your business is still small, one solution is to practice staff leasing or outsourcing, which could get you the reliable support you need while reducing your labor costs. Finding an outsourced associate who could do your taxes ensure you that you won’t make errors in your bookkeeping. A consultant could also meet up with you once every quarter to make sure that your business is on track.

2. Relying on Your Gut and Intuition

Being a flourishing entrepreneur means that you’ve relied on your gut and intuition and took some risks. However, when it comes to your company’s finances, it’s best not to assume anything and stick to the facts. A mistake that you could make is to trust that everything is under control just because the numbers look good. Yet, it’s also equally important to see how much money is going out.

You need a system that can track revenue against expenses to project monthly cash flow. In the early stages of your business, it’s critical to monitor daily cash flow. You can use Excel to set up a cash flow management dashboard to help you keep a record of your expenses.

3. Forgetting to Balance Bank Statements and Keep Transaction Receipts

The best advice that experts give out when it comes to managing a business is to be organized and keep your files in order. More importantly, you and your finance team must always save receipts, even those that are seemingly meaningless. This helps reconcile your books or account for expenses.

It’s also essential to balance bank statements by cross-referencing your accounts with statements you receive from the bank. The same goes for bills from the vendors you often transact. Immediately ask for a follow up if there are any discrepancies.

4. Forgetting to Assign a Certain Budget Before the Start of a Project

Most of the projects you handle may go smoothly as planned, but sometimes, unexpected things happen. This unpredictability could affect the project’s budget. If you choose not to assign a certain budget for an endeavor, it could become a problem in the future.

What you can do is to allocate the appropriate value to a project. This way, if you foresee an issue and you understand that you will need more funds, you can reassess everything and solve the problem immediately. It’s best to find alternative solutions to issues and analyze what went wrong before expanding the budget. The project could benefit from a different approach and strategy.

5. Making Bad Hires and Hiring Too Quickly

One of the greatest assets of a small company is its people, but a large workforce also means high expenses. One big mistake that startups make is hiring too many people quickly.

There are physical and psychological costs that come with hiring staff. For instance, you need a bigger office space and more equipment. Additionally, if the growth of your startup is slow, you may need to lay off some employees. Another common hiring mistake is making bad hires. You must hire employees for their potential, not for their experience. Always think long-term.

6. Failing to Understand Your Marketplace

As you direct your startup towards success, it’s important to understand the nature of your target market. If you don’t, you may end up mispricing your services and products. Consider your market position, plus the value of your offering, and then start with the price and work backward.

Always consider who your client is, what needs your services or products fulfill, what your startup has to offer, who your competition is, what distinguishes your offering to that of others, and how trends could affect your market.

7. Miscalculating Your Cash Burn

Lastly, keep in mind that you should understand your company’s financial burn rate or the amount of capital that goes through every month to maintain your business. Along with your financial consultant, create a bottom-up projection of your monthly burn rate by using real-world variables. Bottom-up forecasting can provide you with more realistic expectations of how much money you’ll need to keep your business thriving.

At the end of the day, we learn from these money mistakes and become wiser when it comes to handling accounting matters. To become an expert on doing business, you will commit errors and miscalculate projections, but these mistakes will become a solid foundation for your future transactions and projects.

Want to learn more about what not to do? Browse this collection of articles on common and often avoidable business mistakes.