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.
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 starts by analysing your market and industry. What are common rates for your service or product? In addition, calculate your own costs, including your time, taxes, insurance and overhead. Based on this, determine a rate that is profitable and defensible. Take into account what clients are willing to pay, but don't be afraid to put realistic value on your work.
No money set aside for tax
One of the most common mistakes among start-ups is forgetting about tax reservation. It seems attractive to have all your income readily available, but the Inland Revenue counts on some of it. And that assessment always comes, even if you haven't set aside money for it.
The solution is simple: set aside a percentage immediately with each payment. You can set aside VAT in full (e.g. 21 per cent of your invoice amount) and for income tax purposes, 20 to 30 per cent of your turnover is usually a safe margin. Exactly how much depends on your profits and deductions. By doing this structurally from the start, you avoid surprises when filing tax returns.
No putting agreements on paper
Cooperation based on trust sounds nice, but it is risky. Without written agreements, it is unclear what exactly has been agreed, how payment is arranged or what the delivery deadline is. In case of disagreement, you have nothing to fall back on.
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 which period
- How to deal with changes or cancellations
With clear agreements, you avoid misunderstandings and 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
Professional help seems like a cost, but often actually delivers more. You keep time to develop your business and avoid mistakes that cost money later.
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.
