Small Business Mistakes That Can Be Fatal
You are a small business, and you are going to make mistakes. It is all part of owning and trying to build a successful company. The problem is that there are some mistakes you can’t afford to make. If you do, you could put your entire business in jeopardy. Because small businesses make big mistakes the most, your business is the most culpable. The only way to make sure that you don’t make fatal errors is to avoid them at all costs. And, to avoid them, you need to know what they are.
A Can-Do Attitude
For the most part, a can-do attitude is a good attitude because it helps you overcome lots of obstacles. However, you can’t take it too far and do everything alone. There are some things that you should never attempt on your own because they are out of your comfort zone. Instead, you need to outsource them to a team of professionals. For example, if you will be shipping product or moving material in your business, you’ll want to partner with one that can take care of trucking transportation, at least at first. In doing so, your business can flourish safely and securely, and as it does you may find it better for your own business to take this task on itself.
Not Paying Tax
Of course, most businesses pay what tax they think they owe. But, that is an important distinction. What you think you owe and what you owe are two different things. Your business could have payroll tax problems and not even realize it until the IRS knock on the door. Tax is complex and hard to understand, which is why you need an accountant. With their expertise, they can keep you up to date and out of jail.
Borrowing Money From Employee Withholding
The money that your employees pay you in tax and as part of their pension is not your money. It is their money, and you should never touch it at any time. There are business owners that think they can dip into it for a short while until they are back on their feet. And, it may work. But, you are personally liable if it doesn’t work. Not only can your employees sue you, but they can sue the business too. In simple terms, they can take everything you own. Forget about employee withholding and take out a business loan instead. It isn’t as cheap, but it’s much safer. However, if your debts get out of hand, you may need to consult with a bankruptcy lawyer and get professional advice. Since you will starting a business and could probably consider yourself inexperienced, it wouldn’t hurt to do your research whenever you get a chance, and find a bankruptcy attorney you can contact should you start running into serious issues with your startup. Business are very fragile, specially when just starting, so you may want to go for better safe than sorry on that one.
Paying Yourself Whatever You Please
As the big boss, you can pay yourself as much as you want, right? Wrong. You can’t increase your wage without giving the IRS a good reason. Otherwise, they will view it as unreasonable compensation and take it off you. Or, they might distribute it as a dividend so that you’ll have to pay corporate tax on the dividend. Then, the extra money won’t seem like much after they get their hands on it.
Sorry to sound cynical, but you shouldn’t trust people because everyone has an agenda. And, even though you are the boss, your position isn’t safe. Don’t just take people’s word when they tell you their story – demand proof. Otherwise, they could take you for a ride.
Mistakes like these cost businesses a lot of money as they are big mistakes, so try to avoid them as much as you can.