Today, operating a business can be very costly and time-consuming. If you’re a new inexperienced small business owner, the new duties can even be overwhelming. In fact, with so much to handle efficiently, it’s easy to have expenses that you fail to prepare for. Here are 5 Expenses Most Entrepreneurs Fail to Prepare For
1. End of Year Tax Expenses
Even if you’re a sole proprietorship and not a corporation, the taxes for your business may quickly become complicated. In fact, the more you earn, the higher your tax burden will be.
To keep from being charged too much in taxes, you need to prepare as you go. If not, your failure in preparation can easily become an expensive lesson that is learned with much dismay.
To avoid these problems, you should keep good records throughout the year. This way, the only preparation that you should have to do by the end of the first month of next year is to contact a tax preparer or accountant to file your business taxes as soon as possible.
2. Emergency repairs
Just like any household that’s run by a homeowner, business owners can run into all kinds of emergency situations. Since an infinite number of problems can go wrong in both small and large companies, it’s best to be prepared for virtually anything.
Unfortunately, as a new entrepreneur, there are times when these emergencies can completely disrupt your operations.
For instance, if a piece of the main equipment that’s used to perform key functions goes down, the operation for the business may be down too.
Typically, based on the severity of the problem, the operations may be down for a day or more. When the owner is not prepared for these types of emergency repairs, they may lose sales and revenue due to the disruption that was caused. Unfortunately, since these types of repairs may be difficult to predict, these things can wreak havoc on your company’s budget.
3. High Cost of Utility
Another big problem that can be very expensive for you as a new business owner is failing to prepare for utility costs. While some small business owners may not consider these as an expense that can be controlled, you can benefit greatly from using a strategy that helps to manage utility costs.
Based on the size of the building, the location of the business, and the utilities involved, there’s usually a lot that you can do to reduce the cost. For instance, if there are parts of your business facility that’s never in use, you need to make sure the empty part is well insulated. You should also make sure the electricity in that part of the building is kept off until it is actually occupied by your employees.
4. Proper Insurance
Since some essential things like the company’s insurance needs may fall on the bottom of the list, there are times when things can be completely missed. For instance, if you’re not diligent about making sure the company’s assets are insured, you may be exposed to lawsuits if you don’t purchase product liability insurance.
To avoid these issues, you need t make sure you know all of the different types that apply to your operations. Here are some of the most important.
- General liability
- Product liability
- Commercial property insurance
- Workers compensation insurance
5. Demand for additional human resources
When operations begin to pick up, it’s important to pay attention to all changing needs to prevent unnecessary failures in staffing up. Based on how quickly the demand for your products and services increase or season, it’s easy to underestimate how many human resources are really needed for a specific period of time.
When you open your doors for business, you need to know what to look for, particularly when it comes to taking care of your business expenses. Even though you may feel that you are doing everything that you can, you may miss important factors. Some of the most common failures for a business owner includes not being ready for tax filings, not properly staffing up or making preparations for emergency repairs.