A trend in the business world is people wanting to work for themselves. Owning a successful small business is a part of the American dream. The sad reality is that a third of small businesses don’t make it. It takes more than talent and a vision to make a small business thrive. You don’t want to become a statistic. Therefore, you want to be aware of any potential mistakes that could cause your company to crash. Keep reading for the five mistakes that small businesses often make.
1) Not Having a Business Plan
Your business plan is your blueprint. Without it, your company has no foundation. A business plan gives you structure while giving you a premise for how you should run your business operations. It also helps you assess and measure progress. A common misconception behind business plans is that they are only used to persuade investors and banks to help finance your business. However, they help with marketing and business milestones. A business plan helps with past, present, and future storytelling and helps with recruitment when you’re just starting. For startups, you should have a five-year business plan mapped out.
2) Not Having a Business Financial Account
If you can report your earnings on a 1099 form, then you need to separate your bank account from a business account. Regardless of if you’re a freelancer or small business owner, this matters because when tax time rolls around, you don’t want your bank account messing up the option. You want to have a clear view of finances as they relate to your business.
3) Ignoring Tax Liability
When evaluating the tax deduction from your paycheck, things can be quite straightforward. However, as your small business grows, keeping up with transactions can become more challenging. Therefore, hiring a bookkeeping firm such as PL Consulting is necessary to keep up with tax mandates.
4) Being Overly Optimistic
You should take pride in owning a business. You set the schedule and tone, and you create the culture. However, if you don’t plan for a rainy day, then this could cause your business to fail. You should have emergency funds for the days when sales aren’t going well or when you unexpectedly run out of stock.
5) Underestimating Debt
Taking out a loan won’t hurt you. Some grants are even available to small businesses. While you may be great at saving, running a business, whether small or large, is costly. If you find yourself running into debt, assess it right away versus letting it pile up.
PL Consulting Can Help You Plan Your Budget!
PL Consulting offers a diverse range of bookkeeping and other financial services. Each of our services is customized to fit the needs of our client and his or her business plan. Our team can help you with each step of your business from organization, to budget, to financial maintenance. We are located in Pikesville at 119 Old Court Rd Baltimore, MD 21208. Contact us at 410.764.3731 or firstname.lastname@example.org so that we can assist you with your bookkeeping needs. Remember to stay up to date with everything PL Consulting by following us on our social media platforms via Facebook, Twitter, and LinkedIn.Posted on