6 Bad Money Habits And How To Break Them

white pigThe Most Common Mistakes Beginning Entrepreneurs Make

When starting a business, entrepreneurs become so “overwhelmed” with abundance of ideas and enthusiasm to realize them that don’t give much importance to what seems to be details at that point. However, these “details” may gradually grow into a serious problem it may cost time and money to fix.

Here are several of the most common mistakes beginning entrepreneurs make.

Failing to keep accurate financial records. A considerable part of expenses can be written off if businesses keep proof of payment. And the best way to do it is to file away all receipts, which a lot of businesses neglect to do. This way they will be able to keep track of their expenses and have better control of their cash flow. As a solution, it is recommended to keep a file to capture all your expenses, as well as to run an accounting or financial software to track you cash flow easily.

Failing to maintain a spending filter. Prior to going into a big expense, give yourself some time – up to a few months in case of a major spending – to weigh up carefully, whether it is worth while the money (especially borrowed money) you are going to invest into it, and how it can impact your other expenses and future earnings.

Neglecting tax implications. When hiring someone, new businesses are often unaware of a whole bunch of tax implications like unemployment, payroll and many other taxes they have to face along with ever changing tax laws. As a solution, it is recommended to hire temporary help or independent contractors if you can do without full-timers. And in case you can’t, you should meet regularly with your financial adviser of CPA to avoid hurting your bottom line with regard to this issue.

Failing to manage the credit score. You should always be aware of how much your credit score may be affected by even a single late bill payment. Your credit score also falls every time you apply for a loan. So, the recommended solution is to check and review your credit score for accuracy every year – particularly before applying for a loan – and dispute errors if there are some.

Failing to keep personal expenses separate from business ones. The consequence of this kind of a mix will be major headaches when tax time arrives. The recommended solution is to keep a separate business credit card and bank account. Otherwise, in order to deduct business expenses you have to separate your personal expenses from the business ones and that may be not such an easy task to do.

A Few Mistakes for the Beginning Entrepreneurs to Avoid

The enthusiasm about the new business sometimes pushes certain details of it to background. Over time these neglected details grow into problems you might as well avoid.

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