As a relatively new business owner, I sometimes worry if I am doing something right or wrong. No, I’m not losing sleep over it, but sometimes I question if I could be doing something just a little better.
And, since I used to work with business law, I saw a good amount of mistakes that businesses made. Some were probably just honest mistakes, but others made me cringe.
Below are some mistakes that business owners make:
Throwing away receipts.
Receipts are important, and you should keep them. If the receipt is for a business expense, then you should definitely keep them. At the end of the year, you shouldn’t just be guessing what your business expenses were. You should have hard proof.
If you get audited, the IRS will want hard-proof as well. They won’t want just estimations of everything.
Keeping business and personal accounts intertwined.
If you are a business owner, or if you have a side job, do you keep your sales and expenses separate? Using your personal bank account for everything can get difficult, and it’s almost always best to just keep your business accounts completely separate from personal accounts. This also makes it a little easier for when tax time comes around as well.
Not hiring an accountant.
I’m going to guess that most business owners don’t have a background in accounting, so why is it that most business owners do most of their own accounting and taxes?
Never hiring help.
When I worked in retail management, there was a fairly large business next door which never hired a single person. He worked open to close and did everything on his own because he could not trust anyone.
This then led to his downfall because there was only so much that he could do with a high-quality level of service. His store completely closed down soon after he opened and he went out of business. And, this was after he sunk hundreds of thousands of dollars into his business.
Starting a business without a plan.
Having a business plan may be the last on your mind, but it should really be the first. Do you know who your competition is? How long will it take you to make a live-able income? What type of funding will you need? Will you need to rent a space or can you work from home? Will you need employees right away? What will you be selling? How will you sell it?
Will your business allow you to eventually retire? I’ve been reading up on retirement on Suncorp’s website and this is something very important to think about when starting a business.
What other business mistakes have you seen? Have any horror stories to share?