Opening A Small Business? Don't Fall For These Common Small Business Errors
As a first-time business owner, it is easy to get caught up in the idea that is driving your new business. However, make sure you don't get so caught up in the big idea that you forget about the little details. Here are the three most common errors that new small business owners tend to do when they don't take the time to really think out the financial side of their business.
Error #1: Mixing Your Business & Personal Money
The first error you need to avoid as a new business owner is mixing your business and personal money. Make sure that you have separate bank accounts set up for your business and for your personal use. You also need to make sure that you keep your credit cards separate as well.
Sure, you can use your business credit card for a personal purchase and then pay back your business from your personal account; however, this starts to get tricky quickly and you have to keep really close accounts of how you are spending your money. The easiest way to keep things straight is by setting up separate and clear boundaries between your personal and business accounts and spending.
Error #2: Failing To Review Your Finances On A Regular Basis
It is easy to get so caught up in the areas of your business that you enjoy that you forget to set aside time to look at your finances on a regular basis. When you are not aware of your financial situation, you cannot make sound business decision.
However, you need to take the time to sit down and look over your finances at least once a week. It doesn't even need to be for very long – fifteen minutes is all you need. Just sit down and look at everything that you paid out in the past week and look at everything that you brought in. This gives you a chance to make sure everything adds up, and to file away in receipts or related documentations you will need for tax purposes down the road.
Error #3: Failing To Collect Overdue Payments
Finally, don't forget to or put off collecting payments that are owed to your business. It can be uncomfortable to call up business associates and ask them to pay you for the goods and services that you provided them, but it is something that needs to be done. If you just let overdue payments build up, you will not have the overhead you need to run your company.
If you find this task unpleasant, you can always assign the task to another employee or you can outsource this task to a debt collection agency that helps small businesses collect on overdue bills.
As a small business owner, don't forget to take care of the details. If you want your big idea to succeed, you need to make sure that you keep your finances in order. By establishing healthy financial habits as soon as you open your business, you will be able to avoid the three common errors many first-time small business owners make.
For professional financial services, contact an individual such as Don Lamb CPA Inc P.S.