Many small business owners have plenty of work on their hands. From ensuring that orders are fulfilled, to hiring staff and marketing the business, the list is endless. It gets even more challenging if your small business is a side hustle and meant to supplement your employment income as that can take up a lot more of your time.
In the course of running your business, you will inevitably make mistakes. Some mistakes might not be all that costly for your business and can be resolved in the long run. However, some errors, especially concerning finances, could set your business up for failure. From mingling business and personal funds to not investing in proper accounting services, slip-ups in your finances could be severe.
Fortunately, you can avoid these pitfalls as a small business owner. Here are some of the key financial pitfalls you need to know and what to avoid.
1. Failing to budget
Raising the initial capital to start the company can be a challenge. However, it is important to budget for that amount of money and ensure that they are applied and used in the right ways. Whether your funds were long-term savings or received from fund-raisers, you need to be accountable to your investors and use the money wisely.
If you fail to budget, it can be difficult to steer the business back to profitability. One way to solve your budgeting issues is to reach out to firms offering accounting services in Singapore, like Ackenting Group. We can help you to create a comprehensive budget for your business. Our priority is to ensure that your business is able to properly budget right, as well as understand the importance of where the funds are being spent. Not only that, but our experienced and professional accountants can help you to maintain the integrity of your books so that you can have a clearer picture of the financial management aspect for your business.
2. Mixing up personal and business funds
This is a common pitfall for many businesses. Whether you are a sole proprietor, a freelancer, or running a company, you cannot afford to mix up your personal and business funds. For starters, the IRAS has many deductions and exceptions for businesses. However, you could forego these tax benefits when you mix up your funds. On the other hand, separating the accounts enables you to:
- Obtain a better picture of the financial health of the company
- Avoid tax penalties arising from improper personal use of business funds
- Develop a more objective perception of how the business contributes to your life
3. Not investing in accounting services
Many small business owners fall victim to this pitfall. They assume that because the company is small, they should keep the bookkeeping in-house. While that is still a feasible option, investing in professional accounting and bookkeeping services allows them to tap onto the experience and expertise of qualified accountants to help in their business. This saves time and money from having to hire new talents.
Investing in a professional SME accounting services firm, like Ackenting Group, ensures that you will have access to accurate records, keep track of your business finances, and maintain the integrity of your books. Our accountants have a wide range of client portfolio, with experience in many different industries. By helping your business with audit service, financial management, and updates to your financial records, you can continue to expand and grow your business worry-free.
4. Not mastering your numbers
Most importantly, you should be paying attention to the financial status of your company. Rather than only paying attention to your business income, you could end up neglecting other crucial financial parameters. When this happens, you are likely to:
- Dive into new ventures or products without understanding the risk
- Develop incorrect estimates of expenses
- Have unrealistic revenue estimates
Thus, you could be setting yourself up for failure. By reaching out to a reputable corporate accounting services firm, they can help you master your numbers and stay on top of your financials. This way, you can avoid these common pitfalls and set your business for success.
If you require any assistance on accounting services, feel free to drop us an email at johnwoo@ag-singapore.com or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.
