10 Costly Mistakes Businesses Make and How to Avoid Them

1. Mixing Business and Personal Expenses

Using one bank account for everything to do with the business helps keep your records simple.

2. Missing Allowable Expenses

Instead of only claiming obvious costs, consider what other costs for your business could be tax deductible.

3. Poor Record Keeping

Rather than relying on a box of receipts, leaving it until the last minute and forgetting what things are for, consider using accounting software to keep up to date as you go along.

4. Not Saving for Tax

Don’t treat all income as available to spend as you then wont have enough to pay tax. Have a second bank account and put a percentage of your income away for the tax bill.

5. Not Understanding Profit Margins

Instead of focussing too much on turnover, be aware of the gross profit if you have direct costs, and the overheads for running a business.

6. Pricing Too Low

Rather than setting prices without understanding the costs, understand the market you are in and price accordingly

7. Registering for VAT too Late

Be aware of the threshold, which is currently £90k. Track turnover on a rolling twelve-month basis if you think you are getting close.

8. Delaying Invoicing

Don’ wait too long to raise invoices. Instead invoice immediately and chase overdue payments. Consider software with automated payment links.

9. Ignoring Cashflow Forecasts

Watching profit not cash? Often people don’t understand why they have tax to pay and no money in the bank. Prepare and monitor a simple cashflow.

10. Never Looking at Your Numbers

Speak to your accountant more than once a year, being prepared for increases in tax and knowing you are going over the VAT threshold is all part of understanding how your business is performing.

Get In Touch

A good accountant can save more than they cost, they can help you pay the correct amount of tax, improve your profits and plan for growth and the future of the business enabling you to make better decisions.

Want some help in understanding your business and the figures further? Get in touch with your local Whitings office today.