As a small business owner, you have a lot on your plate. Without reliable financial processes in place, it’s easy to make mistakes—mistakes that could cost you valuable time and profit.
That’s why it’s crucial to manage your business funds with the right tools.
Learn more about the costliest mistakes that small business owners can make, and how to mitigate these risks for your own business.
Using a Personal Account Rather Than a Business Account
Many new business owners make the mistake of using their personal bank account to also run their business. While this might seem convenient, it can create significant challenges down the road, such as:
- Complicated Accounting – Separating personal and business transactions manually can be time-consuming and lead to errors.
- Tax Issues – Many business expenses are tax-deductible, but without clear records it may be difficult to track deductions accurately.
- Limited Banking Features – Business bank accounts often offer features like bookkeeping integration, payroll support, and higher cash deposit limits.
Opening a business checking account that better suits your operational purposes may simplify your financial management, provide valuable banking tools, and link to banking services for your business.
Choosing the Wrong Bank for Your Business
When it’s time to open a business account, there are seemingly endless options available. That’s why doing thorough research about your banking partner could be one of the best financial moves to make before opening your own small business. There’s no single best business bank account for everyone, so it’s critical that you take the time to understand your banking needs.
It’s also a good idea to think ahead and determine which bank accounts will accommodate your growth. Ask yourself if the bank in question offers treasury management services, business loans, or equipment financing should you need to leverage these resources. Make sure the bank you choose offers scalable solutions that will continue to support your needs as your business expands.
And though it can be difficult to determine from a quick browse, determining the level of customer support you can expect from a bank is important. Explore online reviews and social media mentions to see how consistent and personalized their customer service may be, and don’t hesitate to visit a local branch to get a preview.
Failing to Track Your Budget and Spending
Creating a budget is imperative for a small business, but tracking your spending is equally as important. Without oversight, you may:
- Overspend in certain areas, reducing profitability
- Struggle to identify financial inefficiencies
- Lose track of funds needed for growth and reinvestment
To simplify business budgeting even further, many financial institutions like SouthEast Bank offer digital budgeting tools you can use to track your spending and savings goals automatically. Simply set your specifications, then let your mobile and online banking platforms do the heavy lifting.
Manually Tracking Customer Payments
Don’t waste valuable time monitoring invoices and payments manually. Not only is it tedious, but you’re more prone to errors if you try to manage it all yourself manually, while automating the process might save time and improve cash flow management.
For instance, tools like Autobooks allow businesses to set up invoices and see which invoices have been viewed, paid, or are outstanding. From there, payments can be funded directly to your checking account, and you can generate detailed financial reports to help guide your business decisions moving forward.
Consider how automating your invoicing and payment tracking systems may free you up from administrative tasks so you can focus on growth for your business.
Not Categorizing Accounts for Different Uses
As your business develops and your goals evolve, you may find that utilizing more than one business checking account is a beneficial strategy for your financial management. For instance, you may use one account for storefront utilities or upkeep, one for payroll, another for taxes. You may further divide your funds into savings account for future business goals, both short-term and long-term.
Keep in mind that there are advantages and disadvantages to categorizing your business accounts. Each account may come with its own fees and minimum balance requirements, and dividing up funds may minimize eligibility for greater interest rates were you to keep them combined. However, you can also leverage different accounts for types of income and expenses, helping you keep a closer eye on your operational budget and margin for profit.
Talk to your banking partner about whether combining or categorizing accounts may offer better benefits for you based on your circumstances and goals.
Explore Business Banking Solutions with SouthEast Bank
Running a business requires a lot of focus and organization, and though there are many people offering advice about how to get started they may not tell you how to leverage a banking partner to help you save time and effort along the way.
The good news is that, no matter where you are in your business journey, you can learn from your mistakes and set yourself up for better banking going forward. Get started by identifying your goals for your bank account, what tools and services you may want to use in the future, and making the most of the benefits and resources that come with them!
With SouthEast Bank, access a personal business banker who can guide you through our variety of business banking solutions. Explore checking accounts, merchant services, and treasury management tools to support your everyday and long-term financial success. When you’re ready to get started, we’re here to help guide you to where you want to be!
Note: Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as legal or tax advice. An attorney or tax advisor should be consulted for advice on specific issues.
