5 common mistakes new business owners make (and how to avoid them)

Many young business owners get right into their business without knowing what could go wrong. It’s usual to make mistakes when you start your first business, but it’s always a good idea to know what common mistakes to avoid.

Doing this will save you a lot of money, time, and concern. Quality Company Formations, the best company formation service in the UK, talks about the five most common mistakes new business owners make and how to avoid them.

The First mistake is not paying taxes

Paying taxes may not be the most exciting part of running a business, but ignoring them can hurt your finances and the law.

Be careful to register for taxes (VAT, corporation tax, and PAYE) on time.

If a limited company’s business turnover is more than £90,000 over a rolling 12-month period, it must register for VAT. Many businesses choose to register for VAT even if their sales are below this level since it lets them get back VAT on purchases. 

If you need help registering for VAT, go to Quality Company Formations’ VAT Registration Service. For just £39.99, we will fill out and send your UK VAT registration application to HMRC. You can also get help from a VAT registration expert if you have any questions.

Companies must also register for corporation tax three months after they start doing business, which includes buying, selling, providing services, hiring people, or making money. Companies that have employees, including directors, and pay them £123 or more a week must also sign up for PAYE.

Meet essential tax deadlines

Your tax obligations will depend on the kind of business structure you have. If you miss deadlines, you could get fined or perhaps have to close your firm.

Set reminders on your calendar at least a month before your business and revenue due dates:

Self-Evaluation: January 31st

• Corporation Tax: nine months and one day after the end of the year
• Value Added Tax Returns: Usually, one month and seven days after the end of the quarter,
• PAYE and National Insurance are due on the 22nd of every month. 
• Companies House sends a confirmation statement every 12 months after a company is formed.
• Sign up for an HMRC online account to see tax deadlines and returns that haven’t been filed.

Mistake 2: Making bad choices about branding and marketing

Sadly, many business owners don’t realize how important branding is. They often make quick decisions about their branding without realizing that low brand recognition leads to slow sales, since they are too focused on getting their goods or services to market.

Pick a name that makes your business stick out

This is important for building a strong brand identity and standing out in a crowded market. A unique name will help customers remember your business and set it apart from competitors. 

If the name you want to use is already taken, you may have to deal with trademark difficulties or rebrand, which may be costly and time-consuming. Before you pick a name, do a company name checker to make sure it’s free. 

Use the same branding on your website, social media profiles, and packaging.

This is needed to build trust and recognition. When customers see the same logo, colors, typefaces, and messages on all of your platforms, they are more likely to remember your business. On the other hand, inconsistent branding might mislead customers and make them think the business is chaotic or unreliable.

This is especially important in digital marketing, as people interact with firms through a number of different platforms. Customers will have a good experience with the brand no matter what they do: look at social media, visit a website, or get a product.

Mistake 3: Not following the law

A lot of business owners put off dealing with legal issues because they think they don’t need to, which can lead to fines and fights. 

Choose the right structure for your business

Choosing the right business structure is particularly important for a new company because it affects everything from tax requirements and liabilities to administrative chores and growth potential. Partnerships, limited companies, and sole proprietorships are the most popular types in the UK. 

A sole proprietorship is simple and provides you full control, but you are also responsible for any debts you take on. A limited corporation protects the owner’s personal assets by making the business and the owner legally separate. However, it also requires more financial reporting and compliance. Partnerships let two or more people share responsibility, although liability is different for limited liability partnerships (LLPs) and regular partnerships.

Make deals with customers and suppliers

This will help you make your expectations clear and keep you safe legally. A well-written contract makes it less likely that there will be misunderstandings or fights because it clearly spells out things like payment terms, deliverables, deadlines, and how to settle disagreements. Contracts also show clients and partners that your business is fair and open, which builds professionalism and confidence.

Error 4: Poor handling of money

Cash flow problems are one of the key reasons why businesses fail in their early stages. To avoid the most common mistakes, here are some important things to do:

Set a budget that makes sense

A well-defined budget can help you keep track of your income and expenses so you don’t spend too much. Rent, utilities, supplies, and marketing are all examples of operating costs that should be included. Also, fledgling businesses should set aside money for unexpected costs like fixing broken equipment or months when sales are slow. 

Set the right prices for goods and services

In order to attract customers, many new businesses set their prices too low, which can quickly lead to money problems. Pricing should include administrative costs and a solid profit margin, in addition to labor and material costs. 

Doing market research and knowing what your competitors charge could help you set a fair and long-lasting price. Charging less could assist sales at first, but it won’t help a business grow in the long run.

Don’t mix your business and personal money

It can be hard to file taxes and keep track of profits when personal and business earnings are combined. A separate business bank account can help you keep accurate records. Also, keeping track of your money and getting ready to pay your taxes becomes easier.

Error 5: Trying to do everything on your own

A lot of business owners think they have to do everything themselves, which is a mistake. It’s great to get involved, but if you take on too much, you can burn out and slow down the growth of your business.

Focus on tasks that are worth a lot of money

Not all tasks are equally important, so focus on those that actually help the business expand, including sales and strategy planning. Administrative labor, operational chores, and customer support can quickly take up a lot of time, making it hard for the organization to grow. By separating tasks that need your personal attention from those that can be delegated, you can make sure that your efforts are focused on the things that will really help you succeed.

Outsource when you can

Outsourcing is a cheaper way to handle critical tasks without having to hire full-time personnel. You can save time by employing people or firms to do things like keep your books, administer your social media, and build your website. 

Giving professionals specific duties also improves quality. For example, a business owner who is having problems with social media marketing can spend hours making content that has little to no effect, while a freelancing specialist could get more people to participate in a much shorter amount of time.

To sum up

There are many things that may go wrong when beginning a business, but avoiding these common mistakes will save you time, money, and stress. All business owners make mistakes because they are just human. But you can set your business up for long-term success by learning from their mistakes and taking steps to prevent them.

Quality Company Formations can help you start and run your new firm. You can hire a trained company secretary to run your firm with our Full Company Secretary Service. This includes up to fifteen modifications to your business each year, like changes to directors or share transfers. In addition to keeping and completing all five business registers, we will also make and file your yearly Confirmation Statement. Call us right now to find out more about how we can help.

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