Owning a business will be fun, they said. Yes, it can be, and it can be incredibly rewarding as well if you don’t fall victim to the many myths and misconceptions of being a business owner.
Being a business owner can also be stressful, scary, exhilarating, and just about any emotional adjective you can think of. It’s all of it, and more. I have worked with many business owners in various stages of their business’s life and the ones that tend to do best are the ones that have the most realistic expectations. Unfortunately, we sometimes go blindly into a new venture without realizing it and it makes our journey more difficult than it needs to be.
From an accounting perspective, I can share some of the most common myths I see with business owners and how you can avoid them.
Myth #1 – They can do it all alone
Let’s face it, most business owners are trailblazers in one way or another and it takes a certain personality type to take on this type of bold move. We need people like this to get things moving, to create ideas, companies, change. The potential flaw in these types of people is that they can be so driven that they think they can do it all alone. While it may be a valiant endeavor, this is where burnout happens, and the results are rarely positive.
Fact – It takes a village
This is a common saying when it comes to raising children and in a lot of ways, building a business mirrors raising a child – both need constant attention and the right support to grow and flourish. Even if you are a company of one, it’s still important that you build a business support network – whether it’s fellow business owners, business support groups, or contractors that help you when needed. Having the support you need can make the difference between a business (and business owner) that is struggling or flourishing.
Myth #2 – They don’t need accounting software
This is one of my favorites and unfortunately, I see this often. Whether business owners are trying to minimize costs, don’t have time to learn new software, or whatever, some business owners think they can get by with using a spreadsheet to track expenses and manage their financials.
Fact – Spreadsheets are not the answer.
If you expect your business to grow, having solid financial information is vital. Spreadsheets are great for basic levels of tracking and analysis but are not designed to be the support system you need to grow a business. You will need software that can quickly and accurately produce the financial statements you will need at all levels of your business’ growth.
There are plenty of options available and some cater to specific industries. It can be a lot to consider, so consult with a skilled accountant or bookkeeper to see which will best suit your current and future needs.
Myth #3 – They don’t need separate business banking or credit accounts
As an accountant, I feel a certain deep pain when I hear that a business owner thinks it’s alright to combine personal and business expenses in one bank account or credit card. And of course, they are tracking everything on a spreadsheet…
Fact – Combining business income and expenses with personal financials is a recipe for a hot mess
Not only is a business owner wasting time with all the extra tracking required, but they are also likely not going to have accurate financial reports. In general, running financial reports can be a nightmare when personal and business expenses are not kept separate, and the business will ultimately suffer from a lack of accurate information.
Also note, if you are audited, the IRS and your CPA will likely not accept your business financial information if it is combined with your personal information due to a lack of accuracy.
If you are currently running a business or thinking about starting one, please consider how believing in the above myths will affect your success. Having a strong support network and the proper financial tools in place can make a huge difference to your success rate. If you need help separating your personal and business expenses, setting up your accounting software, or establishing your accounting practices, give us a call at 505-850-3908. We’d love to help you build your business.