Last Updated on April 4, 2023
People make the same finance mistakes again and again in business. Here’s a run down to ensure you’re not making them.
1. Keeping Your Personal and Business Finances Together
Many new entrepreneurs make the mistake of not opening a separate business account when they set up their company. They think it’s going to be easier to manage everything from their personal account, at least in the beginning, when they don’t expect to make a lot of money with their business.
This is not the best idea ever, even though you can use your personal account for business purposes. By keeping the business account separate from your personal one, though, you’ll find it easier to track your business expenses and to manage your budget more efficiently.
2. Not Tracking How You Spend Your Money
When you first start a business, you may not have lavish budgets to invest in expanding your operations. This is exactly why you must track your expenses with the greatest care possible to ensure that you don’t run into cash flow problems that could affect your company.
When you don’t track your expenses, you can easily end up spending money you don’t actually have. For instance, you might decide to use your personal credit card to make purchases for your business. This will generate additional expenses, as you’ll have to pay not only the used amount but also the interest that comes with it.
Being sloppy when it comes to managing your finances can easily turn into a huge mess, as you keep accumulating debt, to the point where everything will collapse. Fairfigure.com can help you to manage your finances by knowing where you stand.
3. Not Budgeting
Healthy financial management starts with setting a budget for your business. This is the only way you can ensure you don’t spend more money than you make.
If you don’t keep tabs on your finances, you can easily make costly mistakes. For example, you can set up advertising campaigns for new products without making sure that you’re going to make a profit out of this effort. If you spend thousands to make profits in the range of hundreds, you’re just throwing money away.
Furthermore, you must budget for future expenses, in order to avoid unexpected costs that could shatter your world.
4. Not Keeping Tabs On Your Business Credit
The healthy growth of a small business starts with maintaining good business credit. If you overlook this detail, you’ll run into a wide array of problems later on.
Accumulating debt leads to paying more in interest than you want. The result will usually be a poor business credit score that will make it almost impossible for you to persuade banks to offer you loans. As growing a business usually relies on loans, you could find yourself in the impossibility to finance your most daring and lucrative projects.
Start by assessing your current situation. Once you’re clear about the status of your finances, take the necessary action to restore and improve your business credit. Here’s what you should do:
- Pay off credit card debt and business debt;
- Always pay your monthly bills on time;
- Keep an eye on your credit report to track any unauthorized changes;
- Make less use of credit to buy things.
5. Not Paying Your Business Taxes In Due Time
If you want to take your business to the next level, you should start by paying your business taxes in full and on time. Ignoring this important aspect of business finance management could cost you dearly.
Always file and pay your taxes on time, ensuring that you comply with the law. At the same time, remember to include these taxes into your budget, in order to make sure you’ll have the needed cash when the time comes.