Failure to keep clear records
Messy administration quickly causes a loss of overview. You don't know exactly what is coming in or going out, and the risk of errors, arrears or missed tax obligations increases. Ultimately, this can lead to fines, payment problems or unnecessary stress.
Avoid this by working with a structured system from the start. Use a professional accounting package in which you keep track of all your income and expenditure. Choose a solution that suits your type of business, preferably with bank linking and automatic VAT calculation.
Schedule a regular admin time every week: gather receipts and invoices, check unpaid items, note down any questions and do your time registration . If a VAT return is due, submit it even if you had no turnover. See the explanation from the Tax and Customs Administration.
Business account
In addition, provide a separate business bank account. By keeping private and business finances separate, you can see at a glance how your business is doing and be better prepared for quarterly or annual returns.
Rates not reflecting reality
Many start-ups find pricing difficult. Rates that are too low often result from uncertainty or a desire to attract customers. Rates that are too high sometimes arise from overestimating or misjudging the market. In both cases, your business model is under pressure: you make too little profit, or orders fail to materialise.
A good pricing strategy Start by analysing your market and industry. What are standard rates for your service or product? In addition, calculate your own costs, including your time, taxes, insurance and overhead. Base your calculations on billable hours: acquisition, administration, holiday and sickness are not automatically paid client hours. Divide your required annual turnover by the hours you can realistically invoice. Compare that outcome with your market and adjust your offer or costs if necessary. Take into account what clients are willing to pay, but do not be afraid to assign realistic value to your work.
No money set aside for tax
Keep received VAT separate from your turnover and additionally set aside a reserve for income tax and any statutory health insurance contribution (Zvw). Fictional example: an invoice of €1,210 including 21% VAT contains €210 VAT (€1,210 × 21/121), not 21% of €1,210. What you ultimately pay in VAT also depends on deductible input tax and any corrections. View the VAT calculation example from the Dutch tax authorities.
For income tax, a fixed percentage of turnover is not a safe general rule. Budget based on your expected profit, other income, deductions and tax credits. Also check the provisional healthcare insurance act assessment. Have your reservation and provisional assessment adjusted if your expectations change.
No putting agreements on paper
Collaborating on the basis of trust sounds pleasant, but is risky. Without written agreements, it is unclear what was precisely agreed, how payment is arranged or what the delivery deadline is. In the event of a disagreement, it can therefore be more difficult to prove what you agreed upon.
Therefore, always lay down the most important agreements. This does not have to be an extensive contract. An approved offer or an e-mail confirmation is often enough. In any case, make sure the following is clear:
- What you deliver
- At what price
- Within what timeframe you deliver, invoice and get paid
- How to deal with changes or cancellations
Have changes and additional work reconfirmed before you start with them. With clear agreements, you limit misunderstandings and you can act professionally if something goes wrong.
Wanting to do everything yourself
Many start-ups want to do everything themselves. You build your website, do your own administration, write your own texts and also try to build your online visibility. This is understandable, but it often takes more time than you think and rarely leads to the best results.
Take a critical look at your own time and skills. What really benefits you? What mostly costs you energy or frustration? Outsource things that are not within your core. Think about:
- An accountant for your records
- A marketing specialist for your visibility
- A lawyer for your general terms and conditions
Compare the cost of help with the time, quality and risks involved. Outsourcing still requires you to provide information and check agreements. Read what tasks an accountant can take over and look the package and the conditions.
Confusing turnover with available cash
An issued invoice is not yet a received payment. And a positive bank balance may be needed for VAT, suppliers or an upcoming investment. Therefore, create a simple overview for the next three months with opening balance, expected receipts, payments and tax provisions. Update this as soon as a customer pays later. Read more about turnover, profit and cash flow.
If virtually all your revenue comes from a single customer, then consider what drop-out or a delayed payment means. Keep appropriate customer acquisition also moving during busy periods.
Conclusion
Entrepreneurship is a learning process, but you can avoid many problems by making conscious choices from the start. Keep clear records, choose realistic rates, set aside money for taxes, record agreements and outsource what you don't need to do yourself. This way, you work on a stable, professional basis for your business. And that gives you room to grow.
