Five Small Business Pitfalls to Avoid
Businesses of any size are all born from one thing: The desire and drive to solve a problem. The entrepreneurs that started the business were full of fire, optimism, and had amazing momentum for achieving their goals at a rapid pace. At this speed, sometimes there are issues that pop-up unexpectedly, or potential disasters along the way that are easily side-stepped.
42% of small businesses fail because there was no real market need, while another 29% simply ran out of cash. Regardless of “why” and “how”, there is no shortage of data on how difficult it is to keep a small business running. And while everyone knows that facing challenges and speed bumps along the way is part of the process, it doesn’t make the learning or recovery process any simpler.
Here is our list of five business pitfalls to avoid in order to help your company grow stronger:
- Tax Blunders
For any business, tax season is all year long. Taxes, and avoiding tax blunders, should always be at the forefront of the employers’ mind. For example, always make sure to separate personal from business expenses accurately and properly. Filing taxes late could mean penalties or fees, which don’t come cheap. Most importantly, however, is making sure you are calculating employee payroll properly. Clearly understanding employee and payroll taxes is important. Not taking the time to do so could a series of consequences in motion.
- An Incomplete or Poorly Written Employee Handbook
A thoughtful and complete employee handbook should cover everything from paid time off and unexpected absences, to workplace conduct, social media, and sexual harassment. Pay special attention to state and local changing regulations to ensure the organization remains in compliance throughout the year when it comes to drug-related laws, background checks, and leave entitlement.
- Understanding Overtime
There are a number of questions around overtime laws, including who is exempt, who is entitled, and if there are any penalties for small businesses. Covered, non-exempt employees are entitled to overtime pay. Exempt employees or those who are not required to be paid overtime include movie theater employees, salary employees, and farm workers, among others. Non-compliance means employers could be subject to penalties including back pay to impacted employees.
- Missing Documentation and Paperwork
As a new business gains momentum in the industry, it can be difficult to keep track of all the incoming documents and necessary records for future reference. The most important items to keep include receipts, bank statements, invoices, payroll records, or employment tax records. Some small businesses have reported losing their employer identification number (EIN) issued by the IRS. Try locating the EIN on the original application documents, the paperwork used to open a business bank account, or the forms used to file for any necessary state or local licenses.
- Getting Distracted
Building a business, client base, and brand takes lots of work and focus—it’s hard! But business owners can easily become distracted and taken away from the main focus of their mission and vision. Some of the main distractions to avoid are success envy and lack of organization, and social chatter. Entrepreneurs naturally will be aware of the success of others who have also just recently launched their business. Financial or business milestones can be inspiring…and create jealousy. A disorganized business owner is obvious from the client’s first interaction with them, in most cases. Customers need to know that the business can handle their needs without confusion or distraction.
As easy as it is to feel like things are running smoothly, it is important to keep a close eye on financial records and company data. Things can go quickly from feeling like they are perfect in considering what assets to offload in order to avoid closing the doors. Contact Vensure to get assistance in staying organized, focused, and ensure the bulk of the administrative work is not on the shoulders of the business owner.