-
Being so arrogant as to think you are an expert in
all fields. If you are a roofer, you laugh at the "do it yourself
jobs;" if you are a mechanic, you see the messes people make of their
own cars. Don't fall into the same category that you laugh at. Get
professional help when needed.
-
Expensing owner's draw. Owners' draw is NOT
an expense. It is not deductible.
-
Deducting vehicle payments. The total
payment on a vehicle you are buying is not deductible, only the interest.
-
Not depreciating vehicles. The total
cost of a vehicle or equipment is deductible as depreciation.
-
Expensing vehicles. A
vehicle or equipment is not an expense, it is an asset.
-
Not recording mileage. You must keep
track of mileage on your vehicle regardless of the method you use on your
tax return.
-
Not paying sales tax or payroll
taxes on time. This can get you into real trouble and the taxes
and penalties accumulate quickly.
-
Not keeping a list of all the assets you
own. This is the collateral for your loan or evidence for an insurance
claim.
-
Not sending your statements to
customers on a timely basis. The longer you wait, the less likely you
are to collect your money.
-
Not adding finance charges for late
payments. Make it worthwhile to be paid first.
-
Losing track of important
documents. Always keep a copy of important documents in your
own files. This includes employee W-4's, tax returns, employment reports, subcontract
labor records, leases, purchase agreements, etc.
-
Doing your accounting work on a
spreadsheet. There is too much of a chance for error. Accounting
programs are cheap and more dependable.
-
Payroll computational errors.
Consider using an outside payroll service. Penalties and errors can be
very costly.
-
Ignoring bank statements. Review
bank statements and reconcile as soon as they are received. Got a
question? Call the bank and ask for an explanation.
-
Under-utilizing your computer. Take
advantage of your computer's ability. Never do a task manually or
duplicate what your computer is automatically doing for you.
-
Not getting to know your accounting
system. Whether it is a manual system or a sophisticated computer
system, you need to know what the data mean to you and your business.
-
Blindly accepting what any accountant or
bookkeeper hands you. It is your MONEY and your business.
Understand what it means.
-
Not paying self-employment tax. Even
if your "Taxable Income" is zero, you could
still owe self employment tax,
-
Not starting out with enough cash to
keep the business going until it can support you and your family. Borrow
more when you first start, rather than wait until you are broke and no one
will lend to you. This is the purpose of a cash flow analysis.
-
Not sending a Form 1099 to subcontractor
workers. It is required for a worker that you pay over $600 in a year.
-
Shoe-box accounting. Keeping all
your receipts is not good enough, organize them into categories. If you go
to the IRS with a box of loose receipts, they will NOT add them up
and try to decipher them. Staple together all receipts that make up a
number on the tax return, and circle the total.
Not showing a profit to keep from paying income tax, then expecting
to sell your business for a big profit or borrow based on your business.
