5 Financial Startup Mistakes

Ask any entrepreneur or seasoned business owner, and they’ll tell you that when starting their business it was no easy ride.

From getting the idea off the ground to employing your first staff member, there are many hurdles that a young business has to jump before they can feel at ease.

One area that crops up time and time again is the financial mistakes that so commonly trip up small businesses, and not only cause setbacks but also a bit of financial pain as well.

Investing your own or even someone else’s money into your business can be a stressful time, and it’s important that you are clear on the costs that are hidden amongst the mountain of paper work.

• Separate Business & Personal

It can be difficult to get your head around when you’re business is only making a small profit, but before you set off, ensure that you’re separating business and personal costs.

Business expenses can be much higher than your personal ones, and if you keep racking up the costs on a personal credit card this could affect your own personal credit rating.

Continuing to combine the two can lead to a tangled financial web when it comes to doing your tax return, so keep it separate and keep it clear.

If you don’t know how to start do a little research as there are a number of templates available such as this one to help you keep track of your expenses.

• Keep Everything

From receipts to records of sales and transactions, not having a streamlined system for all of your financial costs and earnings can lead to a huge headache when it comes to sitting down with your accountant.

Making the process more complicated than necessary can mean that when it comes to turning in your tax return you can incur extra fees for errors and lateness.

Even if you have a simple excel document that’s regularly updated, this can still help to explain the businesses finance.

• Know the Insurance you Need

If you work from home, one thing you may be unaware of is the Liability Insurance required for business needs.

A standard homeowner’s insurance policy will not cover your business needs, as it is unlikely that expensive equipment such as computers will be valid under particular circumstances.

A general liability insurance is well worth the price for your business needs, and can cause you less stress if anything was to happen.

• Pay Attention

When financing any part of the business many banks or lenders may add additional charges.

If you are borrowing money be aware of these fees as they can include everything from; application fees, contract fees and administrative fees.

Sometimes these can be hard to find as they will be hidden in the small print.

So take your time to read any contracts carefully, and if you’re concerned hire the help of a financial expert to go over the details.

• Look Ahead

It can be easy to get bogged down with current financial issues rather than the ones that are going to crop up at a later time as the business grows.

But being aware of future finances can ensure that you have the room to grow, and room to take any risks should the business need a boost.

Keeping track of your current costs and forecasting future ones is essential for knowing where you want your business to be in the future.

Finance is the biggest part of any business and there are many useful articles about business lessons such as this one, which can clarify such a grey area.

If you can’t manage your finances on your own, ensure to seek the guidance of an expert, as the cost of their help can often out way the costs incurred from your own errors.