Avoiding the pitfalls of owning a small businessPosted: Updated:
Did you know most small business fail within the first five years? Many times the biggest mistakes are related to finances.
Sherri Slayton with Alliance Bank of America tells us the five common pitfalls for small business owners.
-Pitfall: Not having a relationship with your business banker.
How to Avoid It: Whether you're starting your business, thinking about expanding or just looking for sound advice, your first step should be to make an appointment with your banker.
-Pitfall: Not having a business plan or anticipating cash needs for seasonality or growth.
How to avoid it: Discuss with your banker the short and long term goals for your business.
-Pitfall: Lack of quality accounting and financial information.
How to avoid it: Invest in an accounting system or bookkeeping system at your business, or hire a bookkeeper or accounting service to produce periodic financial reporting including profit and loss statements and balance sheets.
-Pitfall: Internal or external bank account fraud. As a business owner, you should pay close attention to potential fraud on your bank accounts.
How to avoid It: There are many options available to limit access to your business accounts.
-Pitfall: Managing the profitability of the business for tax purposes.
How to avoid it: Talk to your accountant and banker when you are considering deferring recognition of income, pre-paying expenses, expensing items that could be capitalized or accelerating depreciation for tax purposes.
Information on Alliance Bank of Arizona: www.alliancebankofarizona.com
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