Is your small business on the verge of collapse? If so, why not take a few minutes to learn from the mistakes of others?
There’s a chance you could turn things around before they reach the point of no return. You might make a grave error by not hiring a professional to prepare the company’s tax filings. Those who do their own taxes don’t usually realize that simple mistakes can be exceptionally costly. Take time to build up entrepreneurial skills so that you have a better line of defense against these common missteps.
The upside of reviewing the most common ways owners harm their own businesses is that it’s educational to study how and why things go wrong. In addition to the tax situation, entrepreneurs fall into the trap of not getting the right education, choosing the wrong legal entity as the company’s official structure, giving up the ghost before the operation becomes profitable, and engaging in legally questionable practices.
Of course, there are other ways to sabotage your own company, but those are the most frequent traps people fall for. Review the following points to learn more about how owners can sometimes become their own worst enemies.
Doing Their Own Taxes
Unless you’re a trained tax professional, hire someone to do the heavy lifting of this rather complex task. The error many tend to make is in assuming that a small enterprise translates into a simple tax return. The harsh reality is that the filing process and paperwork involved can be tricky and voluminous, even for owners of smaller entities. Luckily, CPAs (certified public accountants) who specialize in these kinds of chores are affordable. Additionally, by hiring an expert, you automatically have the peace of mind that comes with knowing that the paperwork was properly completed and sent to the IRS on time.
Ignoring the Importance of Education
For unknown reasons, large numbers of entrepreneurs feel that it’s just not possible to earn a college degree while operating a business venture full-time. However, many have done so. The wise way to proceed is to take online classes, study at a school that allows flexible scheduling, and pay for the degree by taking out a student loan. Applying for loans online is a fast and simple task, and leveraging the power of borrowing means you won’t have to divert any funds from the small company you own and operate. One of the main advantages of taking out a student loan is that you can concentrate on learning and studying instead of worrying about where the next semester’s tuition money is coming from.
Using the Wrong Business Entity
Is it better to create a sole proprietorship, partnership, corporation, or another kind of entity? The form you choose has a huge impact on how you’ll conduct daily operations, share profits with others, file tax documents, acquire customers, raise funds, and do dozens of other important tasks. What’s the trick for avoiding this frequent mistake? Hiring competent legal help is the most assured way of selecting the right entity.
However, most lawyers who specialize in this area of law can help owners wade through the questions and settle on the right entity in a short session. That means the expense is not high, and the advice comes with a guarantee from a licensed professional.
Engaging in Shady Practices
What are the borderline illegal practices that many are tempted to engage in? Spamming is probably the most common one, mainly because it’s so easy to do, and people wrongly think they can get away with it. Unfortunately, most spammers get caught and end up facing fines and other penalties that are much worse. Another shady activity is mixing personal and company bank accounts and finances.
Likewise, selling customers’ private data is another huge problem that is widespread. Entrepreneurs who do it can end up out of business, broke, and in jail. On the bright side, it’s easy to avoid all such activities by following your industry’s basic operational and ethical guidelines. When in doubt, consult a lawyer and don’t take any action until you get all your questions answered.
Quitting Too Soon
It’s human nature to want to succeed quickly. The brutal truth of the commercial world is that it takes time to acquire enough paying customers. There are no solid statistics on how long that period lasts, but most entrepreneurs should be prepared to wait for up to a year before passing the financial break-even point. In general, smaller organizations can move from the red to the black in a shorter amount of time, typically within a few months from the time of launch.
1876 Views
