Starting your own business is exciting and often the result of many years in the wedding industry, where you’ve proven your expertise. You know everything there is to know about your given profession, and you’re ready to share it with the world! Starting your own business, however, doesn’t always mean that you know everything there is to know about owning a business.
Knowing the basics of owning a small business is important. 46% of small businesses fail because of incompetence due to nonpayment of taxes, lack of planning, no knowledge of financing or no experience in record-keeping. 30% of businesses fail because of unbalanced experience or due to lack of managerial experience. It’s best to do your homework before getting started to know exactly what owning your own business means.
Read up on these common small business mistakes to keep your wedding and events business thriving!
Mixing personal and professional accounts
For many one-man (or woman) businesses, it’s easy to co-mingle business accounts with your professional accounts, since both accounts go directly to you. It may be a common practice, but it will cause problems for your business in the long run. You should maintain separate checking accounts and track expenses separately so when tax time rolls around, you’ll be able to see your records easily and file taxes appropriately. It’s also just good business sense – couples feel better about writing checks to businesses, not individuals. The more you separate yourself from your business, the more you will be perceived as a professional wedding business rather than a part-time weekend warrior.
Operating without proper licenses or permits
Along with separate bank accounts, your business should also be registered in a variety of ways. You’ll need to register your business name, register with the IRS in order to get a federal tax ID, register with your state tax office and register for the appropriate business licenses and permits. The U.S. Small Business Administration has a great step-by-step guide which explains the various ways you’ll need to register your small business. The main point here is that your business should be legitimate in the eyes of the government before you start accepting customers. If anything were to happen with a client, you’ll need to have your business covered and legally registered!
Failing to follow government regulations
As a small business owner, you are subject to certain laws and regulations that control the way you do business. Similar to getting the proper licenses, following government regulations are imperative to being fully operational. It can be a bit complicated to know exactly which regulations apply to your business, but the U.S. Small Business Administration does a good job of providing resources to help you figure out what to look out for! Your business is subject to laws that regulate the way you hire and employ others, how you conduct your finances, how you trademark or copyright your business and many other aspects of your business. Be sure to do the research to make sure your business is compliant.
Not hiring tangential professionals
This mistake is less related to the legalities of owning and operating a small business and more related to conventional wisdom: you might not think a lawyer or accountant is important until you really need one! Don’t skimp on securing an accountant to help you with your bookkeeping and tax filing – you’ll be thankful if you’re ever audited. If you don’t have the money to keep a lawyer on retainer (most don’t), at least have the name of a good lawyer in mind should you ever need one. Although a lot of advice can be found on the internet, there’s no replacement for the real thing.
For more small business basics, check out our post with HR basics every small business owner should know!