Common Business Mistakes made during Start-Up
Getting ready to start your own business? Only a few things can ruin the excitement that comes with starting your own business, like making a big money mistake. Here at Thompson Law, we’re entrepreneurs as well, and we know just how much goes into launching a business. We understand how frustrating it is to feel like it all has gone to waste–we’re hoping this article helps to prevent you from making these money-wasting common business mistakes mistakes while forming your small business.
Mixing Up Your Assets
A simple–and catastrophic mistake a new business owner can make and maybe not think about when they are first starting their company is failing to separate their personal and business assets. An example of this is using one bank account for both personal and business matters. It’ll cause issues if your corporate veil is pierced, forcing harsh tax penalties. Keeping the cash separate is a good thing, as it also gives a better picture of how well your business is doing. And if your company ever goes under–as unfortunate as it is–your credit score won’t drop with different accounts.
Neglecting Tax Obligations
All for-profit companies in Florida have to pay taxes, the only difference is each business’s specifics. Those depend on what type of business entity it is. When you were an employee, whoever you worked for was responsible for all tax deductions and providing your W2 form. Now that you own your own company, you’re on your own, this can get complicated so you should consider reaching out to one of our business lawyers here at Thompson Law for Guidance.
Spending too Much too Soon
The one thing a new business requires is capital–without it, they can’t afford their expenses. But that money isn’t permission to just spend however they want–making money sometimes requires spending it. While it can seem like a good idea to get the big purchases out of the way right at the start, that’s not true, anything may happen in the future and it’s a good idea to wait on some of those bigger-ticket items after you’ve gotten a stable stream of income coming into the business. Otherwise, you may run into debt early on, it’s important to save to improve your company in the future when you have more capital to spend.
Not Prepping for the Hard Times
Another big mistake new business owners are making is not preparing for the hard times–whenever they may come. We understand that starting a new venture is exciting. Even when you have a high-profit margin and excited customers right after the launch, you need to be prepared for what could happen. Natural disasters–other circumstances like an economic recession may impact your business’s future. Just think how a bad storm or hurricane may shutter your business for a few days–or weeks depending on its severity. A lot of smart business owners will save their company credit cards for these kinds of emergencies–but it is also important to have enough savings to cover at least three months of business expenses. Plus whatever one may have in their personal savings account.
Trust us at Thompson Law for your Common Business Mistakes
Some things can be passed over and forgotten about when starting a new company–especially with so much going on at a single time. Let us at Thompson Law answer any legal questions you may have.