Nobody said that running a business would be a walk in the park. Small, seemingly harmless mistakes that business owners often make can have huge ramifications. Luckily, you can reduce the negative impacts of these mistakes on your business’s bottom line by noticing them, correcting them, and learning from them. Let’s look at some common mistakes that are costing your business money and how you can remedy them.
Mixing Up Your Business and Personal Expenses
Keeping your business and personal expenses completely separate isn’t always easy, especially when you’re just starting out. There’s nothing wrong with investing a little of your salary back into your business, but there should still be a clear line between your business and personal finances. Using your business accounts to pay for non-business-related expenses will look suspicious to the IRS and complicate your business’s numbers. By setting up a business checking account and a personal checking account, you can physically separate these different funds. Your credit cards should be separate, too. Keeping your funds separate makes it easier to keep track of your business’s profits, expenses, and losses. It also simplifies the process of filing your taxes.
Not Taking Steps To Prevent Lost or Damaged Products
Most business owners will accept lost or damaged stock as an inevitable part of running a business, but it doesn’t have to be that way. You can take preventative measures to reduce freight damage and other common shipping mishaps. Ensure your loads are secure and adequately wrapped will cut down on damaged and lost stock. Try to improve communications with your business’s shipping facility, and make sure they’re taking the necessary measures to ensure your products’ safe and timely delivery. Bad loads will cost your business money, but they don’t have to be a common occurrence. By working together with your shipping facility, you can decrease the number of bad loads and increase the number of good ones.
Confusing Profit and Cash Flow
Another common mistake that’s costing your business money is mixing up profit and cash flow. Your business’s profits and cash flow are two different things. You’ll want to keep track of how much money you’re bringing in compared to the amount you’re spending on business development. If you’re making a lot of money on paper but find yourself struggling to make ends meet by the end of the month, you may be miscalculating your business’s expenses and earnings. If you don’t fix these discrepancies, you could wind up having to repay an inordinate amount of debt. Hiring a certified CPA is one way to keep track of your business’s profits, expenses, and losses, but you can also monitor your business’s expenses and earnings yourself.