As a small business owner, it’s important that you’re on top of your finances. There are steps you can take to avoid common mistakes or you could always look for a small business consultant near me. Here are seven of the major money mistakes small business owners make in the first 5 years.
Combining your savings, checking and credit card accounts for your business may be the easy route but it is anti-beneficial. Separating these accounts will make it so much easier to do the accounting for your business and plan for quarterly tax estimates. Anything you can do for tax preparation and planning is positive.
Starting a new business is exciting. That doesn’t mean that you should run to Best Buy to immediately buy all the best equipment, pay top dollar for a website or software. If you’re considering making a big purchase early on carefully think it over. Some expenses are going to be mandatory but always ask yourself if a big purchase is a luxury or a necessity.
Starting a new business is a huge personal and financial commitment. Early on, there are a lot of unknown variables roadblocks that you will experience along the way. Spending a lot of money on unnecessary personal purchases could prevent you from being able to afford to work around these roadblocks.
Using a credit card on your new business is a responsible business practice, but it also exposes you to the risk of debt. Since credit cards are so convenient, many new business owners fail to see the debt they are incurring. Certified public accountants recommend using a debit card if you’re looking for convenience.
As mentioned earlier, when your business is young you’re going to experience unexpected roadblocks and potholes. Many financial planners advise that business owners keep at least three months’ worth of expenses in an emergency fund. Covering the cost of an emergency on your credit card can be shortsighted and Don’t get into these patterns with your business, or it can cause you to fail. Instead, practice good financial decisions from the start. ost you in the long run.
Before starting your own business, you were probably used to receiving an easy-to-decipher W2 form that walked you through the tax process step by step. As a business owner, you now have federal and state tax obligations you need to be ready for. As a small business owner, you must make estimated quarterly payments to the IRS to avoid paying a massive tax bill in April.
Before even starting your business, it’s important that you set your budget. It makes it easier to guide your business into being profitable if you know how much you have to spend on a monthly basis. Failing to do so can lead to confusion.
Don’t get into these patterns with your business, or it can cause you to fail. Instead, practice good financial decisions from the start. Learn more about how you can benefit from Complete CPA accounting services by contacting us at (941) 926-4687 OR schedule a free consultation online today.