While coaching a young entrepreneur recently, I was reminded of several common mistakes made by new business owners. The first mistake I’ve seen many times is the impact of taxes on a small business.
When you collect money from customers, it’s easy to assume it’s all yours. But it’s not all your money! The biggest mistake for many is to not earmark monies for taxes.
For every dollar in profit, you owe the IRS income tax and 15.3% for self-employment tax. The IRS penalties and interest for nonpayment have put many people out of business.
Proverbs 4:7 teaches, “The beginning of wisdom is: Acquire wisdom; and with all your acquiring, get understanding.”
Before spending money that isn’t yours, spare yourself penalties and pain. Seek wisdom from people knowledgeable on taxes.