The 5 Most Common Money Mistakes That Prevent Your Small Business from Thriving

You did the work, so it’s your money, right? 

But what about taxes, payroll, payroll remittance, and all your other expenses? If you don’t put money aside for these money grabbers, you’ll find yourself putting off these payments. 

A few days, weeks, months…

It may not seem like a big problem—at first. But delayed payments will deteriorate relationships with suppliers, employees, and contractors. 

You can’t have a healthy business without trusted relationships.

Missing tax payments are also a sure way to trigger an audit—not to mention the penalties and interest charges that come with failing to pay your taxes. 

So unless you’re looking to replace your business relationships with a new intimate relationship with the CRA, make sure you have funds set aside to cover all the costs associated with running a healthy business. 

You did the work, so it’s your money, right? 

But what about taxes, payroll, payroll remittance, and all your other expenses? If you don’t put money aside for these money grabbers, you’ll find yourself putting off these payments. 

A few days, weeks, months…

It may not seem like a big problem—at first. But delayed payments will deteriorate relationships with suppliers, employees, and contractors. 

You can’t have a healthy business without trusted relationships.

Missing tax payments are also a sure way to trigger an audit—not to mention the penalties and interest charges that come with failing to pay your taxes. 

So unless you’re looking to replace your business relationships with a new intimate relationship with the CRA, make sure you have funds set aside to cover all the costs associated with running a healthy business. 

If you’re finding it tricky to remain on top knowing what funds need to be set aside and making these payments happen on time (you have a business to run, after all!), make sure you find a qualified and, preferably, certified bookkeeper to help you keep all your business relationships pristine. 

Speaking of setting aside money for expenses, the second mistake we see business owners make is failing to run their businesses on a budget.

Why is a budget so important?

Simply put, it’s difficult to make wise business decisions when you don’t know what’s going on with your finances. 

Just as with your personal finances, you need to have a budget for your business, especially if you’d like to see regular profit.

(We’re guessing you do.)

This not only means allocating money for expenses but also checking in at least each month to ensure you’re remaining on budget and making adjustments to spending, staffing, invoicing, etc. as needed.

You can probably guess from our name, GuYDanS Consulting & Bookkeeping, that we love budgets. 

And no, it is not because we’re gluttons for punishment. Precisely the opposite. We want to see you thrive (almost) as much as you do, and cashflow planning problems is one of the main reasons small businesses fail in the first five years. 

Maybe you didn’t notice you reached this business milestone. Maybe you forgot—or didn’t realize—registering for GST was necessary. Or maybe, just maybe, you think you don’t really have to register for GST.

You might think you’re getting away with it, but eventually, the CRA will find out. 

And what comes next is not pretty.

Remember the audit triggering we talked about in Mistake #1? Well, failing to register for GST invites the CRA to audit not only your business but also you personally—even if you’re incorporated. If you have a spouse, he or she is also fair auditing game.

If you haven’t hit $30,000 annually just yet, pay attention to when you do (or hire a certified bookkeeper who will pay attention for you).

If you’ve already surpassed these earnings and have not registered for GST, please, stop reading this and go do it now or ask us to help.

Yes, you attended a conference last weekend and claimed the hotel, meals, and transportation as business expenses. Yes, the spa was in the general vicinity of the conference room. And yes, you went there to unwind after a full day of meetings.

But no, your facial on Saturday does not count as a business expense.

There is a lot you can write off as a sole proprietor or incorporated entity, and we want to make sure you get all those advantages, but we also want to make sure you remain above reproach—at least in the eyes of the CRA.

So you know there are a lot of expenses that you can write off, but also that there are many non-business expenses that are accounting faux pas if written off.

Some expenses are obvious:

• staples for the office stapler? Definitely.
• Accessories for your cat? Probably not (unless your business involves cat accessorizing).  

But what about that lunch that wasn’t really a business meeting that kind of turned into something resembling one?

Or that laptop you bought for your daughter but ended up using for work every now and then when you forget yours at the office? 

And is that even an expense? Or is it an asset?

You could google all the “do’s and don’ts” of what to write off as well as all the other financial decisions associated with running your business. But this means spending time away from all the reasons you got into your business in the first place. 

Just as importantly, how do you know that what you’re finding on Google is correct? Or that you’re googling the right questions?

We hope that you haven’t been led astray thus far, but unless you have an accounting background, chances are, you won’t be able to reliably separate the “wheat from the chaff.”

Some expenses are obvious:

• staples for the office stapler? Definitely.
• Accessories for your cat? Probably not (unless your business involves cat accessorizing).  

But what about that lunch that wasn’t really a business meeting that kind of turned into something resembling one?

Or that laptop you bought for your daughter but ended up using for work every now and then when you forget yours at the office? 

And is that even an expense? Or is it an asset?

You could google all the “do’s and don’ts” of what to write off as well as all the other financial decisions associated with running your business. But this means spending time away from all the reasons you got into your business in the first place. 

Just as importantly, how do you know that what you’re finding on Google is correct? Or that you’re googling the right questions?

We hope that you haven’t been led astray thus far, but unless you have an accounting background, chances are, you won’t be able to reliably separate the “wheat from the chaff.”

That’s why we’re good at what we do, so you can focus on being good at what you do.