If you want your company to be a success, then you need to make sure that you don’t make these financial mistakes. If you do, then you may find that you end up struggling in the future and that your business becomes compromised.
Not Staying on Top of Your Bookkeeping
The first thing you need to do is stay on top of your bookkeeping. Accounting isn’t the most exciting task in the world, but you need to focus on it where possible. Failing to stay on top of basic accounting can lead to a number of problems, such as bad credit ratings, and the inability to make solid financial decisions. Make sure that you avoid all of this by setting aside one day every week, to look through your financial statements.
Adding Fixed Costs
You are probably guilty of splurging now and again. Whether it is dining out at an expensive restaurant, or even buying a new outfit. You may even choose to pay for a cable TV package. Either way, expenses like this probably won’t set you back too much. When you run a business, however, fixed costs can put a major dent in your budget. It may be that you need to pay for your office rent, your team’s salary, or even ergonomic office chairs. One way for you to avoid this would be for you to say no to fixed costs where possible.
Hidden Costs
Sometimes business owners are so focused on the fixed expenses they are paying, that they forget to document hidden expenses. This could include employee turnover, payroll benefits, taxes, inventory reduction due to theft, and even bank or credit card fees. Payment delays are also very common, as is upgrading or repairing your office equipment.
Lack of Planning
Launching a business can take a lot of planning. Sometimes you may find that you are so busy tinkering with your service or your product, that you neglect financial preparations. If you want to avoid this then make sure that you calculate how much money you need to launch your company. Don’t apply for every loan you see, just because you know you are going to be accepted due to your good credit rating. You also need to stick with quarterly budgeting until you know how much you need to get started.
Failing to Hire An Accountant
A lot of small companies avoid hiring an accountant because they feel as though it is an extra expense that they have to pay. This is not the case, as most of the time, an accountant can save you money. When you hire a CPA firm, they can help you with any tax questions you have as well. If you make a mistake with your tax, then you will probably end up paying a huge fee later down the line. All of this can be avoided though, if you hire someone who knows how to navigate the tax system for you, so be mindful of that if you can.