Every entrepreneur who starts a business is focused on making a profit within their organization. However, to achieve this good organizational skills are required as well as good managerial skills. This will ensure that one avoids some obvious mistakes that can cost the business millions of cash.
A good management staff will always ensure they remain focused towards achieving the vision of the business organization. There are many financial mistakes that many business owners have made which have even led to the downfall of that company. Below are some of the main financial mistakes that one should avoid in any business.
Failure to keep proper records
Proper record keeping forms a major pillar when it comes to business financial matters. Many business owners have taken record keeping for granted leading to a great mix up in understanding transactions within their organization. Good records always ensure that one can trace any transaction within the business no matter when it was done.
It will also ensure that proper accountability can be done all the time. It is there important to maintain a good system of record keeping especially with this era of improved technology.
Overclaiming or underclaiming expenses
Another huge financial mistake that one should avoid in any form of business is under/over claiming the expenses of their businesses. This is very common in times when one mixes their personal expenses with business issues.
A good example is when you claim a refund for a journey that was more of personal than official. It is therefore important to always separate the two issues to ensure that proper accountability is done. To achieve proper separation, it is advisable to maintain a personal account as well as business account separately.
Failure to save for emergencies and hard times
Unplanned expenses are very common when it comes to businesses. A sharp business person will always plan for unforeseen expenses. This is because when hard time strikes, one may not have any means of alleviating the shortage. The best option according to financial experts is to save three times the monthly expenses of your business. This will always cater for any emergencies that may occur and will serve as a contingency fund.
Failure to plan for tax payments
This is another big mistake that one should endeavor to avoid in their business. Depending on the type and nature of the business, there are the specific taxes that one should remit to the government.
Therefore it is important that one plans and gets information on the taxes that they are expected to pay to the government. These tax obligations if not well planned for can lead inconveniences within the business. Always pay taxes in full in order avoid problems with the tax department.
Making immediate big purchases
Big transactions that amount to expenses for the business should be well planned. Many business people use huge amounts to make big purchases that are not well planned for. This can be a big financial mistake since it can render the business bankrupt. It is therefore advisable to plan well when making huge expenses.
There are many financial mistakes that business people should avoid to make their businesses successful. It is advisable to employ a qualified accountant who will manage all financial matters in the business.