News - Blogs
11 May 2023
Thinking you can do it all yourself
Most business owners tend to be self-reliant individuals and one of the common mistakes we see is when an individual is trying to do everything themself. Business owners should focus on what they are good at and knowing their limits. Finding others who you can delegate tasks to and who can handle specialised tasks will help your business succeed. Whether this be engaging with an accountant to look after your bookkeeping as well as annual accounts and bringing in additional members of the team so you can focus on working on the business rather than doing all the day to day tasks.
Not forming the correct business entity
We come across many business owners that have a business set up in a particular way because that’s what their friend said they should do. Choosing the incorrect business entity can have serious financial consequences.
It is important you get advice and provide an accountant with the whole picture so they can correctly advise you on the correct business entity set up. This will help the entity be structured in a way that will save you money and help you avoid liability.
Not having a written agreement with your business partners
Every business needs a written document, whether that be a partnership agreement or shareholders agreement, that explains each person’s rights and responsibilities and describes what will happen if one of them leaves the business.
It’s not uncommon that business partners fail to put agreements in place. They believe as they get along with each other now they will always be able to resolve things informally. Disputes between partners can be expensive, difficult and emotionally draining and that’s why we advise all our clients to have agreements in place from the beginning.
Missing important dates
Many business owners put their head in the sand when it comes to doing their accounts and keeping the accounting records. To stay on top of your finances and obligations, you need to perform the accounting functions throughout the year. Let’s face it you potentially have multiple deadlines you must meet throughout the year, these could include year end accounts, corporation tax, personal tax, PAYE, VAT and CIS.
If you don’t like or don’t have the time to maintain the accounting records and are worried about missing all important deadlines, engage an accountant to have your back covered.
Thinking profit is the cash in the bank
It is important business owners understand the metrics of profit and cash flow and how they interact with each other. It is possible for a business to be both profitable and have a negative cash flow hindering its ability to pay its expenses, expand, and grow. Similarly, it’s possible for a company with positive cash flow and increasing sales to fail to make a profit. We see this with many start-ups and scaling businesses.
If you would like any assistance in overcoming these common problems please contact us here.