Avoid These 5 Common Small Business Financial Mistakes

As a small business owner, you have a lot to take care of. It’s way too easy to let some things slip through the cracks. But, try to avoid these common financial mistakes.

Making Late Payments

Nobody likes paying bills, but unfortunately, they’re a necessary. If you’re like most people, you might put off paying your bills until the last possible moment. Unfortunately, waiting until the last minute can make it very easy to pay a bill after its due date.

Forgetting to pay even just one bill or paying it late can lower your business’s credit score, which can greatly harm your business’s reputation.

Not Having an Emergency Fund

No matter how thorough your business plan is, you can’t predict the future. It’s best to have an emergency fund in place, in case something unexpected pops up. Ideally, you should try to have at least three months of expenses saved in your emergency fund. To achieve this, put money in the fund as often as possible.

Mixing Business & Personal Funds

When you’re just starting out, it’s easier to pay business expenses from your personal account because your business hasn’t made any money yet. However, mixing your personal and business funds can make it more difficult for you to balance accounts, file taxes, and figure out just how much your business is making.

You can make your life easier by opening a business account and possibly a business credit card upfront. Just be careful to only use that credit card for actual business purposes.

Making Too Many Impulse Purchases

You have a lot to buy for your business – desks, computers, and basic office supplies. It’s easy to go into your local office supply store and start buying everything, but if you make too many impulse purchases, you’re eating into your bottom line and profit margin.

Before you make a purchase, shop around to make sure you’re getting the best deal and to determine whether you really need to make the purchase.

Not Paying Yourself

You’re probably tempted to invest 100% of your company’s income back into the business since you’re still growing. However, you have to eat and pay your personal bills, too, so don’t forget to pay yourself.