Common Mistakes People Make When Starting and Running Small Businesses

Starting a business isn't always easy. There are several things to think about to make sure your choices do not negatively impact your business in the long run. However, sometimes the pressure can force you to make a poor decision that can hurt your potential for success, or at least set you back.

While there isn't a foolproof plan to reach small business success, working with professional tax accountants ensure that you receive fast and reliable tax preparation and accountancy services that will help propel financial aspects of your business further.

If you’re in the process of starting your own small business, here are six common and dangerous mistakes that you, as a new business owner can avoid.

Choosing the wrong setup for your business. Whether it is a sole proprietorship, a partnership or a corporation, think it through. Read about the difference and think ahead of where you are right now; choose a setup that will work for your business, now and later. Not setting up the structure of the business correctly from inception could affect the business. A good accountant or lawyer will be able to advise you with the best way to structure your business to achieve your business goals. It may initially cost a few thousand to get this right, but it is one of the best insurance policies you will take. It is vital to understand the pros and cons of being a sole trader, company, trading trust or limited liability partnership at the beginning of a business’ life. Good accountants and lawyers know this and will guide you towards the right setup.

Waiting too long to seek accounting and tax planning help."Accounting isn’t most people’s strong suit. As your business grows, you might be tempted to hand it over to a bookkeeper and stop paying attention. This puts you at risk of cash flow problems, embezzlement, or worse.” says Rieva Lesonsky in the Fundera Ledger. These are words to live by.

Losing track of your paperwork. Always ask yourself “Will I be able to stand strong in an audit situation?” If you do not have a strong ‘yes’, review your bookkeeping, filing and paperwork management process and adjust it to meet your business needs, also do not forget to follow the industry standards and tax standard when it comes to record keeping.

Not always looking for ways to improve."Continuous improvement is how organisations develop and enhance products and services by constantly looking for ways to improve how and what they do. The owner should always review the internal processes of developing and delivering products and services in an effort to identify improvement opportunities. Whether it’s delivering a service to a customer or manufacturing a product, it is important to look for improvement opportunities,” says Patricia Lotich in Small Business. Again, these are words to live by.

Doing it all alone. “A small business owner may be willing to learn how to be a jack of all trades, but it doesn't have to be that way. Effective delegation can be one of the best ways for new small business owners to build their businesses, free up their time for business activities that require their unique expertise, and build a team positioned for future success,” says Alyssa Gregory in the Balance and we completely support her statement.

Failing to adapt to change. “I have seen many multi-generational companies (i.e., companies that were handed down from father to son, or grandfather to son to grandson), with the newer generation failing to adapt to the changes in their industry. Instead, they adopted the thinking of the previous generation which is: “that is how we always did things”. Now with the rise of the digital age, businesses that fail to embrace technology or to see how to exploit it in their business are falling behind,” says Chris Martinez | Jul 21, 2016 | Finance, Leadership, Management, Resources |

There are many details to consider while starting and running a small business and while hiring a tax professional isn’t mandatory, it can make a big difference in your success story.

If you’re looking for a tax professional in Kitchener, Waterloo, Cambridge and surrounding areas, contact Prudent Tax Services. Tax accountants at Prudent Tax Services, handle online accounting and tax preparation needs. They provide a variety of tax services such as tax preparation by e-file, accounting services, HST return and late return to support personal and corporate clients. To learn about their services, click here.