By Henry Brown

To run a business successfully, there’s a lot you need to get right. You have to be able to make the right decisions at the right time, understand your customers, manage your staff effectively, plan for the future – and much more besides.

However, if there is one aspect of business that you have to get right above all others, it’s your business taxes. If you get your taxes right, all is well; if there’s a mistake, it could lead to your business’ demise – and when the stakes are this high, you have to avoid the most common mistakes entrepreneurs make concerning their business taxes…

Mistake #1: DIY

Given the plethora of business tax guides online and dedicated software that promises to simplify the whole experience, it’s easy to see why business owners are tempted to DIY their taxes – it seems to be an easy and affordable choice. However, the simple reality is that businesses taxes are hugely complex, and only experienced providers of tax services have the necessary expertise and experience to manage your business’ tax requirements successfully. So while DIY tax management might be tempting, the best thing you can do for your business’ future is to outsource your tax affairs to an experienced professional service.

Mistake #2: Mixing personal and business receipts

Most of us are accustomed to storing receipts when we make a purchase, but for business owners, the need to keep business and personal receipts separate from one another is crucial. It’s always best to use separate filing systems or – for electronic receipts – email accounts, so you can always be 100% certain which aspect of your finances each individual receipt pertains to. It’s also helpful to keep a central log book of each receipt, which should include details of the purchase, where the receipt for the purchase is stored, and whether the purchase was for business or personal reasons; if you then find a loose receipt in future, with no memory of the purchase, you can cross-reference with this logbook and ensure the receipt is subsequently filed correctly.

Mistake #3: Not separating finances

It’s not just receipts that need to be kept separate; wherever possible, your personal and business finances should be entirely distinct from one another. While this is relatively easily achieved for medium or large businesses, smaller companies – and especially those that are owner-operated, with no additional staff – tend to blur the lines between personal and business finances a little more. To avoid this, it’s usually best to pay yourself a salary, which you receive in a separate, personal-only account. In a similar vein, if you use credit cards, these should be separated too: one credit card for personal use, and one “for business” card that is never used for personal purchases.

In conclusion

By avoiding these common mistakes, you will go a long way toward ensuring that your business’ tax affairs are always in the best possible order – so you can enjoy a successful and worry-free entrepreneurial career for many years to come.

_______

Henry Brown is an online marketing executive. When he isn’t talking shop, he’s roaming the streets of London, uncovering the extra-ordinary in the ordinary.