I saw this posting recently, “Tax Hell: Our Accountant’s Mistake Almost Ruined our Business,” and was reminded of one of the things we stress in the LaunchX System. That no matter whether you plan to do accounting in-house with hired staff or outsource to a professional accountant, that it is still your business, and you must understand the details of how things are set up, where costs are coded, and what those pesky financial statements actually mean.

In this example, the business owners almost lost their entire business due to a mistake by an outside accountant that caused a huge tax bill that they couldn’t pay in one payment. It took almost two years for the original mistake to be identified and corrected, however, their business had suffered from reduced business credit, a much tighter cash flow, and reduced lines of credit from their bank.

It is easy when starting a business, and seems efficient, to do some research, hire an accountant, and then put the details of the finances in their hands. After all, they are the experts in all things accounting and you, well, are not. Unfortunately, they are also people who can make mistakes, use software that makes mistakes, and just plain drop the ball. As the business owner, it is imperative that you understand the fundamentals of accounting prior to hiring an accountant or accounting firm, and then keep an eye on all the details after they are hired.

The owner in this example, Diane Carrier, now says, “I’m done relying on financial people to take care of things completely for me. Now I know every dollar that comes into and out of our business.” Sound financial advice from the school of experience!

Starting a Business? Start Here. Go Far. LaunchX.com