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Oops—Avoid Common Small Business Missteps
Professional bookkeeping companies like MSBP are designed to help small business professionals like you avoid and correct mistakes. What—you say you don’t make any? Sorry to break the news to you, but you’re not perfect—no one is, but it turns out even the smartest small business owner is prone to the occasional oops.
Now, the good news: recognize the mistakes you tend to repeat, and you can stop making them, avoid them in the future, and set your organization in the right direction. The professional bookkeeping expertise of MSBP can help you correct course, and stop doing things like below.
Taking money you haven’t earned
Just because there’s a multi-digit number showing on your company bank statement doesn’t mean that money is free to spend. That dough often is spoken for—you’ve got utility bills, payroll and payroll taxes, sales taxes, rent, amounts owed to vendors, and more. Let’s focus on those vendors—you have a great relationship with them, and you need to keep it that way. If you let a regular payment to a vendor slide once or twice, that good faith can fade, and they’ll be less inclined to deliver you the goods and services you need, at a good price, and on time.
Spending company money on personal stuff
Owners too often think, “Hey, it’s my company—so it’s my money, right?” then spend business funds on personal gear. Sadly, that can get you into a giant hole, finance-wise. One, the whole intent of setting your company up as an LLC is to protect your personal assets should trouble occur. A CPA colleague once gave a client a heavy dose of reality in this arena, pointing out that in the case of a lawsuit, audit or other legal trouble, any decent attorney on the other side of the table will be able to extract those personal expenses you’re running through the business and then boom—you’re on the hook, your business is in trouble, and your personal assets are in their sights.
Additionally, mixing personal and business expenses can make tax time an expensive nightmare. It’s difficult or impossible to tackle your tax returns without huge tangles and headaches. You could end up with huge fines and penalties, surprised when items you were expected to be able to deduct are disallowed, and more. Finally, if your personal and business expenses are a jumble, you can never accurately track your business’s necessary expenses and income, and that’s something you must be able to do if you want to succeed and grow.
Skipping payroll and estimated taxes
No one has ever said, “I love paying taxes—it’s so much fun!” It’s a necessary part of doing business, even if paying them can be painful. It’s also confusing, but taxes are something you have to sort out, so get the help of a financial professional if you must. If you don’t take care of them regularly and on time, you could be socked with penalties, interest and other hits. If there’s anything worse than giving your hard-earned money over to the government, it’s writing them a check for money that you didn’t need to be sending them, because of an oversight on your part.
Failing to reconcile accounts
This is something we’ve talked about before, but it bears repeating. Every small business professional needs to keep on top of their checking accounts, invoices, expenses, taxes, and other places their money comes from and goes to. It might be tempting to just trust that your records are accurate and that the bank has put your deposits where they’re meant to land, but that’s a dangerous assumption that could bite you in the you-know-what. Checking in regularly with whoever handles your money is a wise idea, because it can catch mistakes before they snowball and turn into disasters.
Recently a client thought they’d deposited $1,700 payment in the bank. When I tackled reconciling for them, the money wasn’t in the account. After a long, wild office frenzy, we determined she hadn’t actually deposited the money—it turned up in a misplaced envelope at the bottom of her tote. I’ve also seen banks funnel a deposit into the wrong account (i.e. personal instead of business), or even deposit it in the account of an entirely different person (for example, a business account held by a company with a similar name or an account with one different digit). Reconciling your accounts can catch such mistakes—if you don’t reconcile, you could start bouncing checks or conceivably lose that money forever.
Doing it all yourself
Small business owners by nature tend to be self-sufficient, to a fault. Their pride can get in the way and they take on too much. With all due respect, GET OVER YOURSELF. You’re great at the day-to-day details of a restaurant, or fixing pipes, or making handcrafted furniture, or whatever the specialty of your business happens to be. To succeed and grow your company, you must delegate the things that aren’t among your core capabilities to others and leave the talents you haven’t spent years honing to other people. Successful owners recognize their weaknesses, along with their strengths, and surround themselves with people who are smarter in the areas that aren’t their forte. For example, the trained, expert professional bookkeeping talents of MSBP can handle the financial aspect of your organization, pinpointing potential profit and problem areas, and streamline your money, so you can focus on what you do best: connecting with clients, delivering superior products and services and growing your business.
Do you know what your weak spots and common mistakes are? If your answer is either “no” or “I don’t have any,” you need a professional bookkeeping expert to help you see the light. Contact me at Daliah@MySmallBusinessPro.com and I’ll help you straighten things out.
What solution can Fritz Financial find for you?
Schedule a meeting with Daliah Fritz