I want to share 3 common mistakes entrepreneurs make. These mistakes can be avoided by simply consulting with a professional before you start your business. I’ve notice we feel like we can slack the first two years of our business. The down fall to that is, you create some bad habits that are hard to break. So here are so common mistakes I don’t want you to make. If you are doing these things in your business, don’t trip or panic. Just learn from your mistakes and do better.
1. LLC paying themselves as an expense
So LLC cannot take a salary unless they are set up as a SCorp ( if you want to switch to an SCorp this year you still have time) . If you do take money from your business it is consider an owners draw and it is not tax deductible. That’s why it is very important to consult with an accountant or tax accountant to ensure you are setting things up properly in your business. Many of us get started and decide we will consult the professionals later or when we start making money. Write your concerns down and sit down with someone, even if it is for only one session to get all the information you need before getting started. It cost us more to fix mistakes then it does to prevent them.
2.Not paying annual fees
When you start a business in your state, remember there are recurring fees that you have to pay. There are very few states that do not have a fee. If you have a non profit you may not be required to pay or they may charge you a lesser fee. The fee can be between $0 to $300. If you are unaware of the fee in your state send me a message and I will let you know what it is for you. It can be every year on the same date for every one or it could be on your business start date. Some states make you pay twice a year or every other year.
It is important that you mark these dates in your business calendar. If you do not pay these fees your business will go inactive. There are penalty ‘s for not paying on time. These fees vary state to state. The last thing you want is for someone to look up your business name and it says inactive.
3.Keeping business expenses separate
One of the worse things you can do is mix your personal expenses with your business expenses. Now, I know many business owners do this. Especially those who do not make enough money to pay themselves. The best practice is to withdraw your money and pay your personal bills. Or transfer out your money to a personal account. Your rent, utilities, or groceries should not come out of your business account. If you have created this habit don’t feel bad. It takes time to get use to it. The reason you are an LLC or Corporation is to protect your personal assets. Corporations do not use the business bank account for owners personal affairs. Your LLC is just as important and is held to the same standard as a Corporation.
If I have triggered some questions for you. Please feel free to schedule a free 15 minute consult with me. Click here and select a time and day that works best for you.