Staying on top of business finances is most important, just like getting new customers and retaining the existing ones. But for most of the business owners and entrepreneurs, bookkeeping and managing business money is probably not a strong suit. While working on the ultimate success and growth of the business, business owners make mistakes all the time. Some of them are minor and can be amended easily. But some can ruin your empire easily.
Since there are many reasons startups can fail, making common financial mistakes is one of them. If you are about to launch a startup or struggling to grow your small business, below are the biggest money mistakes you need to avoid at any cost for better business growth and success.
Not Setting a Business Budget Plan
Without having a business budget plan, you’ll have a very hard time succeeding. A budget plan shows you a clear picture of what you can and cannot afford to spend business money on. As a business owner, your responsibility is to drive your business towards greater profitability and growth. A well-planned business is an integral tool that can help you a lot in this matter. It shows that what part of business money will go towards overheads like marketing, operational costs, employee salaries, and so on. Without a budget plan, you are likely to travel to a strange place without having a map. That’s why you must create a budget plan for your business to stay on top of incomes and expenditures.
Not Having Separate Business and Personal Accounts
Mixing both personal and business accounts together is the worst mistake most business owners make. And there is no shortcut on this money problem. If you don’t keep personal accounts separate from business ones, you will pay it for later. You should ignore the call of convenience and create separate accounts for your business. Doing this right at launching your startup will make it easier for you. Creating separate accounts for business also provides you with a clear picture of business finances and help you make informed decisions. It also shows that what your personal monthly incomes are and what your business is generating every month.
Choosing the Wrong Credit card
As applying for a business credit card is one of the easiest ways to fund a small business, it could be hard to pay off if you have chosen the wrong card. With so many credit card companies out there on the market, choosing the right credit card for your business can be tricky. However, you can use credit card compare services to apply for the right card as per the individual financial needs of your business. Just find out the top credit card providers around you and compare them for perks and benefits offered for your business. Picking the right credit card can help you manage business finances effectively by offering benefits like balance transfer, sign up bonuses and cash backs.
Lack of Cash Reserves
Not planning for larger cash reserves is one of the biggest money mistakes new business owners usually make. Those cash reserves can be used in the time of emergencies to keep business operations running smoothly. Not having enough reserves for your business can have a direct impact on the overall progress and growth of your business. Since there are a variety of ways to finance startups and small businesses, pick the right one to raise funds for your business and have adequate cash reserves to meet emergency financial needs without applying for an emergency loan.
Not Planning for Future Tax Obligations
All businesses have different federal and state tax obligations based on the nature and type of business. Not planning for your tax obligations as a business owner is the worst financial mistake you make while running your own business. As you plan to minimize the tax liability in your personal life, you need to make sure you are on top of tax obligations and doing your best to plan for taxes accordingly. It not only helps you save business bucks but also keeps your business afloat. So, be quick to take the initiative and create a plan to pay the whole tax amount every year without having an effect on your business finances.