Running a small business means wearing a lot of hats—from marketing to sales, to customer service, and everything in between. But it’s important to make time for your finances and to make sure your accounting tasks are up to date.
Proper financial accounting can make or break a business’s success, and keeping your books balanced can save you big. It can protect you from tax liabilities, overdrafts, or employee embezzlement.
Whether you’re a new entrepreneur, or you just want to set your business up for success, the following SMB money mistakes are common errors you don’t want to make.
1. Not Having Separate Business and Personal Accounts
Separation of work and play—one of the pillars of financial accounting.
Many new business owners make the mistake of consolidating their personal and company expenses. However, this can lead to a huge headache when tax season comes around.
Failing to keep company and personal finances separate makes accounting much harder. Plus, it can cause you to run into problems with the IRS.
2. Not Tax Planning
Nobody wants to be surprised by Uncle Sam. But the truth is, business taxes can be complicated. That’s why planning is key.
Tax planning is an important part of setting your business up for success. It can help you anticipate how much you’ll owe at the end of each tax year. In planning ahead, you can set aside quarterly payments.
If you’re a new business owner, there may be a lot you don’t know about business taxes. This is why it’s important to consult a professional accountant. They can help you avoid being surprised by a large tax bill.
At MI Tax CPA, we offer many business tax services from planning to consulting, IRS representation, and more. We can make sure you’re taking advantage of certain deductions and tax credits (that you may not even be aware of). Our mission is to minimize your bill. By working with our team, you can rest assured that your taxes will be filed properly.
3. Not Having Savings
Just like personal finances, it’s important to have some savings stashed away for a rainy day. A business savings account can protect your business if you experience a bad month or quarter. It can keep your business from going into the red if you run into a large expense.
4. Not Managing Debt
Many businesses have to start with a loan to get off the ground. That’s fine, but it’s important to pay off your debts as soon as possible. You should only take out what you can afford.
Many small business owners make the mistake of digging themselves into a hole. Only later, they realize they can’t afford to get their way out of it. Avoid this common small business money mistake by minimizing your debts from the start.
- Not Having Budgets
One of the most important aspects of financial planning is budgeting. As a business owner, you should have multiple budgets that can be scaled as your business grows. You need to plan for a myriad of factors, including:
- Operating expenses
- Owner income
- Business savings
- And any other recurring expenses
At MI Tax CPA we want to simplify the budgeting process. We offer real solutions for small and large businesses alike. We can help with everything from new business start-up services, to SMB accounting, payroll management, and more. Let us help you keep track of your budgets, so you can focus on what’s important—running your business!
6. Not Keeping Up with Bookkeeping
Last but not least but arguably one of the most important and most tedious tasks: bookkeeping.
Bookkeeping is important because it lets you and the IRS know that your finances are balanced. This is especially important if you are ever audited or if you suspect issues of employee embezzlement.
While bookkeeping is very important to a business’s financial success, it’s also very time-intensive. It takes a lot of man-hours and number crunching to make sure your books are balanced and up to date. That’s why many businesses rely on the help of a professional bookkeeper.
At MI Tax CPA, we are proud to offer bookkeeping services in Bloomfield Hills. Our experienced accountants are here to save you time and money by taking bookkeeping off your hands. This will allow you to focus on improving your business while we work on maximizing your tax savings.
If you want to avoid these common small business money mistakes, contact our team of accountants today. Set up your business for a bright financial future.