Today, in the spirit of Halloween, we are reviewing terrifying business mistakes and how to avoid them.
Hi, I’m Bette Hochberger, CPA, CGMA and let’s get into it.
Mistake #1 – Mixing Business & Personal Banking
The first mistake I see way too many businesses make is mixing business banking with personal banking accounts. If you know anything about me, you know that accurate record-keeping and organization are essential for financial success. Aside from the absolute chaos that incurs from this practice, it is crucial for you to keep your business separate from your personal life for reasons of balance and health. When business owners make the mistake of mixing their business with their personal bank accounts, it complicates your taxes and could mean having to pay extra money for a bookkeeper and potentially missing out on deductions. Overall, when you make the mistake of commingling finances, you make the financial picture of your business unclear.
Mistake #2 – Not Planning for Tax Responsibilities
The next mistake I see business owners make is not planning appropriately for tax obligations or being aloof to the fact that the tax you owe is not your money; it’s the government’s money. Your tax obligations will depend on your business structure, type of business, and location. The best practice for avoiding penalties and a hefty tax bill at the end of the year is to pay your estimated quarterly payments to the IRS on time. Staying on top of the tax you owe is fundamental to having a successful company and an accurate understanding of your entire business. It doesn’t have to be difficult either, just read your prior year’s return, mark your calendars, and talk to your accountant about any questions you may have.
Mistake #3 – Doing Their Own Bookkeeping & Tax Planning
The last but certainly not the least terrifying mistake I see businesses make is when they try and do everything themselves. Now, we are all guilty of taking on more than we can handle, but do not do this when it comes to your bookkeeping and tax planning; please leave it to a professional. I know there are tons of resources online aimed at helping you understand accounting concepts, but they are not a replacement for actual accounting. If you didn’t go to school for accounting, there is a 90% chance you will mess up your taxes. I can’t tell you how many times clients have come to me with messy bookkeeping and I’ve had to charge them extra just to clean up their books before I can even get started on the project they came to me with. Wouldn’t you call this a terrifying business mistake?
Anyway, that is all I have for today. Thank you for tuning in! Let me know on social if you’ve seen any terrifying business mistakes or if you’ve made them! If you are looking for an accountant to help you avoid these mistakes, set up a zoom meeting with me to find out if we are a good fit. See you next time.