While large businesses may have the resources to bounce back from financial blunders, small businesses, on the other hand, may not have that cushion. For entrepreneurs and small businesses looking to keep their cash flow steady, there are some steps they can’t just skip trying to make the leap. In this blog post, we will discuss some of the most common mistakes that can sink and destroy small businesses.
No Rainy-Day Fund
Failing to save for emergencies is one of the biggest financial mistakes that even the savviest business owners go wrong with their small business financial management. A rule of thumb is to have at least six months of running business expense as your rainy-day fund to avoid any financial shortcomings. The last COVID-19 pandemic did a number on many high-profile companies in the US, and this is a case in point on the importance of saving for emergencies and planning for the unexpected.
Going for DIY taxes software to quickly cross off your to-do list can simply lead to costly tax issues. Managing your business taxes is an entirely different ball game than managing your personal ones. You need an expert well-versed in local and business laws to help you with your taxes. As a small business owner, you already have a lot on your plate, which is why hiring a tax expert can be a smart investment for your small business.
Being Oblivious to Fraud
Small business owners often wear many different hats and accounting might be one of their skills. While it’s a good thing that you’re able to handle your small business finances on your own, there is a risk of failing to catch the signs of fraud. Specialized accountants like forensic accountants have keen minds and it’s their job to ensure your business activities are legitimate and everything is in order. In cases of fraud detection, we believe that one can never be too careful. Hiring an accountant will minimize the risk for you.
Related: Learn more about how forensic accounting can save your business from fraud here.
Starting a Business without the Backup of an Accountant
Having your business see the light of the day is a big step. However, 20% of small businesses fail in their first year and being one of them is the last thing you want. That shows the importance of having a good business plan and the backup of an experienced accountant. No business can survive without a solid long-term plan and a vision to execute it.
An accountant can assist you with market forecasting and analyze the current situation to devise a plan for your business’s future. A seasoned accountant can help you put your business plan together and be your key success as you move forward.
Related: Learn more about why it’s essential to hire an accountant when starting a business here.
Let MARIELA RUIZ, CPA, PLLC Help You Reach Business Milestones
Small businesses face unique financial challenges that require careful attention and planning. MARIELA RUIZ, CPA, PLLC is here to ensure that you are well-supported and guided at each stage of the creation and development of your small business. Check our website to learn more about our services or simply give us a call at (956) 997-0067 for further assistance.