Common Mistakes People Make When Starting a Business
Success stories about people who start small businesses and eventually become millionaires may inspire us all, but those people got to realize their dream only because they made the right choices for their businesses from the beginning. Willpower and determination can only get you so far in your business, and although seeking help from the start may be a difficult decision in itself, it will save you from making some costly mistakes.
While there’s nothing wrong with doing things yourself, at John P. Jones Inc., we want to help you get off to the best possible start. To make you aware of the pitfalls, we have compiled a list of the most common mistakes people make when starting a business and how to avoid them.
1. Choosing a business entity. To a new business owner, it may not seem essential to specify the type of business you are starting right from the beginning. This is the wrong move. If you make the right decisions from the start, you may be able to protect your assets better in case of a lawsuit. Whether it's a limited liability company, corporation or partnership, making the right decisions limits your liability. It may also help curb your tax liability.
2. Procrastinating on your bookkeeping. Accounting needs to be worked on regularly as it is a daily process. Waiting too long to decide on a bookkeeping strategy will lead to more work. Accounts will pile up, and you will have to make time to work on your books, which will cost you a lot of time and effort. It will definitely take you away from your business and disrupt your workflow. If you procrastinate, you may also find out too late that you have a huge tax liability. Getting a professional to help you from the beginning will save you from a very taxing process.
3. Not acquiring the required permits and licenses. It is not possible to know everything about a business when you start. This is why you need a professional to guide you through at least the legal and financial process. Licenses and permits are absolutely essential requirements and should not be taken lightly. Failure to acquire the correct licenses could cost you your business.
4. Lack of communication. Your business should not be kept a secret from your accountant. Instead, your accountant should be your confidant whom you share your daily activities with. This will save the accountant a heap of work trying to sort your accounts at the end of the year. It will also help you to figure out better financial plans and spot opportunities in advance and even correct errors before they become a liability. Your accountant is only a phone call away, and that phone call may save or make you thousands of dollars.
5. Making faulty business plans. Remember, “Failing to plan is planning for failure.” You need to be confident and entirely sure that you know what you’re getting yourself into before you start a business. You have to know all the pros and cons and know how to deal with them effectively, but more importantly, you need to have the right qualifications and background. Experience in the business is also required along with sound financial support and a financial plan. You need to seek advice from legal and financial experts, or you could just contact a Small Business Administration office in your community to help you develop your plan.
Some people are born business-minded, but most need a little help getting there. If you want to make that journey a stress-free one, get in touch with John P. Jones Inc. We provide services like tax preparation and planning, accounting and strategic planning that will make your business experience a smooth and profitable one.
As a certified public accountant in Chicago, IL, we are a certified business consulting and advisory firm that provides tax preparation and planning, business accounting, strategic planning, tax resolution services and retirement planning. For a complete list of our services, please click here. If you have any questions about starting a business, we’d love to hear from you. Please contact us here.