Common Mistakes Small Business Owners Make (and How you can Avoid Them!)
Starting a small business can be exciting, but it's not without its challenges. After all, there isn’t really a manual to this entrepreneurship thing! As your number one cheerleader, resident CPA and fellow entrepreneur, I wanted to provide some insight on common mistakes small business owners make that can lead to huge headaches down the road.
In this blog, I’ll discuss some of the most common mistakes I’m seeing, such as not having contracts in place or using a personal bank account for business transactions, and offer tips on how to avoid them. By staying organized, investing in your business, and seeking help when needed, you can set your small business up for success. Let’s get started!
Common Mistakes Small Business Owners Make
Mistake #1: Contracts for Small Business
First up, let's talk about contracts. It's crucial to have them in place to protect both you and your clients. If you're not sure where to start, I highly recommend checking out the Contracts Market for contract templates vetted by a Canadian lawyer. I’ve used them in my own business and I can assure you that their easy-to-use contract templates will save you time and headaches in the long run. See for yourself here! Full disclosure: these are affiliate links so I will earn a commission if you purchase through my link at no extra cost to you.
Mistake #2: Personal vs. Business Bank Account
Next up, let's talk about using your personal bank account for business transactions. I get it might seem easier at first, but trust me, it's a one-way ticket to the hot mess express! Instead, open a separate business bank account to keep everything organized and make tax season a breeze. Having a separate bank account dedicated to business transactions will save you time and stress come tax season. Plus, it will give you a better perception of the money coming in and out of your biz. I talk more about separating bank accounts on this bookkeeping tips blog.
Mistake #3: Using Cash for Business Expenses
Another common mistake is using cash to pay for business expenses. Not only is it hard to track, but you could also be missing out on write-offs and tax deductions if you’re not keeping the proper receipts. So, put away that cash and start using a business credit card or debit card to keep track of your expenses.
Mistake #4: Not Registering for GST
Last but not least, charging sales tax without being registered or charging the wrong sales tax can lead to some serious problems. Make sure you're registered for sales tax and charging the correct amount. If you're not sure where to start, refer back to our GST 101 blog for all the information you need.
Now that we've gone through some common mistakes, let's talk about some ways to avoid them and set your small business up for success.
Avoiding Common Business Mistakes
Tip #1: Get Organized and Stay There.
Firstly, organization is key. Whether it's organizing your finances, keeping track of expenses, or having contracts in place, staying organized will help you save time and avoid headaches down the road. Use tools like accounting software, project management apps, and even old-fashioned to-do lists to keep everything on track.
Tip #2: Invest in your Business.
Secondly, invest in your business. This doesn't mean you need to spend thousands of dollars on fancy equipment or marketing campaigns. Instead, invest in education, training, and networking opportunities to help you grow your skills and expand your business. Attend webinars, workshops, and conferences, and connect with other small business owners in your community (many of which have healthy tax write offs, ay!)
Tip #3: Ask for Help.
Finally, don't be afraid to ask for help. Running a small business can be overwhelming at times, but you don't have to do it alone. Reach out to mentors, coaches, and advisors who can offer guidance and support. Join online communities and forums where you can connect with other small business owners and learn from their experiences.
Don't let common mistakes hold your small business back! By following the tips and advice in this blog, you can set your business up for success. But, if you find yourself in need of extra help with your accounting, don't hesitate to reach out to me! I'm here to help you overcome any financial struggles and make your business thrive. So, let's work together and take your small business to the next level! Holla at me here.