by Lisa Robinson
Entrepreneurs want to succeed more than anything but what they don’t understand is that there are mistakes they are making which are actually causing them to lose money. The good news is that these mistakes are easily avoidable. I am going to discuss 5 mistakes that are made which cause Entrepreneurs to lose money in their business and what can be done to help ensure these mistakes are no longer made.
1. You do not have a support system for your business. What I mean by this is you are growing your business alone and do not have a coach, or any other type of support system to help you and offer advice to you. I know… I know… this has nothing to do with accounting and I am an accountant. However, this mistake is often made by many entrepreneurs, including me, and it makes you lose money big time. Think about it. All the hours and money wasted trying to do something on your own and not really getting anywhere. Money spent that you could have saved. Time lost that if you had a coach you would have been spending that time making money. Believe me, I know, I have been there. Take the time to think about what kind of coach you need and then talk to a few and find the right one for you. I promise, it will help you not only not lose money but make money.
2. Mixing Personal and Business Funds. I see a lot of entrepreneurs doing just this and it is one of the quickest ways for you to lose money and you not even realize it at first. How? Well for starters, there is no real way to know which money in your account is for your business and which is your personal if you have them all mixed into one account. For organizational and Tax purposes you should keep your business money separate from your personal money. On top of that, if the IRS finds that you are mixing the funds – it opens you up to not only a business audit but also a personal audit by the IRS which could in turn cost you a lot more money.
3. Not Tracking All of Your Expenses. No only does the 13 page IRS guideline for business expenses have you perplexed but it gives you a headache so you have decide you are just not going to worry about it anymore. Boom! You have NOW lost money. I guarantee it. Not keeping track of your expenses throughout the year and then trying to gather everything at the end of the year just doesn’t work. For your business you are able to deduct all “ordinary and necessary” business expenses. However, you cannot deduct what you have not documented.
4. Not Claiming the Home Office Deduction. For many entrepreneurs, your office is in your home yet you don’t claim the deduction because in the past it was considered a red flag for getting audited. However, if you are legitimately entitled to the deduction, take it. You are losing money, when you don’t because there are deductions you are allowed when claiming a home office. To qualify, your office would need to be a room used solely for business purposes. And if you do qualify, you are able to write off a percentage of your home expenses including rent/mortgage payments, utilities and insurance costs. Don’t keep losing money by not taking a deduction that you are legitmately allowed.
5. Tax Avoidance. So many entrepreneurs are very often apprehensive to speak to an accountant because they just don’t want to deal with any of the taxes including the quarterly taxes, etc. But here is the thing – you really, really, need to meet with an accountant as it will save you money in the long run. An accountant can do everything from helping you avoid tax penalties (which just saved you money) to setting you up with the right salary to making sure you are on track with your quarterly tax payments (which again just saved you a ton more money). Yes, I know taxes means you pay money, but look at it this way… if you don’t pay the taxes then you will owe penalties and late fees and even could go to jail so yes in the long run talking with an accountant can save you a lot of money.
If you would like more information or other accounting and tax tips, visit my facebook page at www.facebook.com/LisaMarieAccounting.
Lisa Robinson is owner of Li$a Marie Accounting and has over 15 years of Accounting experience. She helps entrepreneurs get rid of the accounting “headache” and helps them change their mindset towards accounting by making sure their accounting books are in order and in an accounting system that works for them so that they can work on growing their business.