By Anita Ginsburg
When you own your own business, every triumph and mistake rests on your head. It can be rewarding to celebrate victories won from hard work, but hard to admit to missteps or blunders. This is especially true when it comes to business finances. Follow these tips to avoid small financial mistakes that can turn into big money problems.
You Don’t Have a Separate Business Account
Many new business owners make the seemingly small mistake of mingling business and personal bank accounts. It makes sense when you’re just starting out. However, not separating funds can make your finances messy and even cause tax problems down the road. Set up a business bank account immediately and order separate debit and credit cards, too.
You Forget to Track Expenses
Another money issue that’s easy to make is forgetting to track business expenses. From the get-go, make it a habit to write down or document business expenses. This can not only help you understand where your capital goes, but will also help you determine tax deductions when the time comes.
You Don’t Pay Yourself
Many fledgling business owners tend to deprive themselves of a salary to ensure true financial success in the first year of a business. However, when you don’t pay yourself, you may lose motivation or be forced to quit the business altogether. Instead, cut expenses in other areas that aren’t necessary. While this may be hard at first, even a small salary will help to keep you motivated.
You Put All Your Revenue Eggs in One Basket
Here’s another small mistake that could cost you big time down the road. Avoid counting on only one source of revenue for your business. Just like in the stock market, it’s risky to rely on an “all-in” mentality. Continuously look for other sources of revenue and you’ll safeguard yourself from unexpected dips in business.
You Create Pay Stubs Manually
Lastly, avoid the tendency to complete small tasks manually. For example, pay stubs. You can spend hours determining calculations, deductions, and overtime. The better option would be to use an online paystub generator to breeze through payroll with accuracy. Mistakes on payroll can cause big problems for you down the line. Keep your budget in order and avoid tax problems and upset employees in the future.
When you avoid these small mistakes, it can save you from larger problems down the line. The world of business finances can seem daunting to a new business owner, but you will learn to master the basics as you go.
Anita Ginsburg is a freelance writer from Denver, CO and often writes about business, finance, education and home. She graduated from Colorado State University in 2004. A mother of two, she enjoys traveling with her family when she isn’t writing.