As some of you may already know, life as a start-up is anything but easy. Suddenly, you are in control of each and every department — and this can come as something as a shock to the system.
Something which often gets forgotten about is the dreaded tax-factor. With business owners desperately trying to not become part of that club of companies who fail in their first year, this is somewhat understandable.
As understandable as it might be, it’s also something you can’t avoid. Through today’s post we will now take a look at some of the most common mistakes that new business owners make when it comes to taxes.
Mistake #1 – You don’t file your receipts
Like it or not, tax isn’t going to be the most profitable activity that you undertake in those initial start-up days.
However, there are ways to at least bring your tax bill down, and having a proper filing system for receipts is one of these.
Far too many business owners forget about the little expenses. For example, it might be the cost of catching a bus to meet a client for a meeting. This might seem small at the time, but grouped with other expenses and you suddenly have plenty to add to your SA100 tax return.
Bearing this in mind, make sure all receipts are kept so you can file them as expenses when the time comes.
Mistake #2 – It’s all in the same bank account
Another classic error is keeping all of your finances in the same account. In other words, you mix business and pleasure.
There’s nothing illegal about the above practice, but it really can make life a lot more difficult for you. Suddenly, you become lost in a maze over what’s a personal expense and what isn’t — and this prompts no-end of issues.
Mistake #3 – You don’t number your invoices
Considering how many different templates are now out there, we are quite frankly amazed at just how many invoices are not numbered properly. Some companies will even not number them sequentially, which then prompts a whole host of other issues.
When you opt for such an unstructured approach, you’ll find that it becomes nigh-on impossible to find out what has been paid and what hasn’t. Not only that, but when it comes to tax return time, you’ll find that it’s very difficult to do it efficiently with all of your records all over the place.
Mistake #4 – You don’t leave any money for tax
When you are in the wonderful world of employment, your employer looks after all of your tax obligations.
Then, when the above changes, the onus is on you.
This is something that you need to consider as this tax won’t be leaving your bank account on a regular basis. Instead, you are left with one bill at the end of the year, and you’ll need to make sure that you have the funds to cover it.
