DO NOT:

Ignore Finances

Entrepreneurs often start their businesses because they have a passion or talent. Sometimes that doesn’t come with a strong business sense, Remer says. But it’s important to keep a focus on finances, taking note of where the business is strong and leveraging those aspects of the operation, she says. The business will fare much better with an eye on those crucial topics.

Start a Business with Inadequate Capitalization

Business owners who don’t have the necessary capital to start their companies sometimes end up using credit cards and digging themselves into deep debt, Remer says. It’s the No. 1 mistake she sees new business owners make. Make sure adequate funding is available to get the company off the ground before diving in.

Let Tax Savings Override Good Business Decisions

Halley says small business owners often ask what they need to buy or spend before the end of the year to reduce their tax liability. She and Remer agree that spending money on business expenses at the end of the year is not always a great idea. Plan ahead, Remer advises, and make sure the expense is a good business decision and a good use of the money.

“It likely does not make sense for the business to spend money on equipment that is not currently needed in order to save tax dollars,” Halley says.

Commingle Personal and Business Funds

From a legal perspective, this “pierces the corporate veil” and costs the business its corporate liability protection, Remer says. Halley says, “It is important not to intermingle business and personal activities to ensure that business income and deductions can be segregated from personal items.” And keep proper records of business income and expenses, she adds.

Make Decisions Without Consulting an Accountant or Attorney

Want to buy out a partner? Fine. But make sure the proper steps are taken to prepare. “You’re no longer a partnership,” Remer says. “You’re a sole proprietor and that’s a different business entity.”

Adding payroll benefits? Tell the accountant or payroll provider. Keep them in the loop.

Wait Until the Last Minute

“There is very little tax planning that can be done once a year has closed as compared to the array of planning opportunities that can be accomplished in November or December of the taxable year,” Halley says. Year-end tax planning also will assist in cash flow planning to satisfy a projected tax liability.