The greatest mistake business owners make is believing they can do it all by themselves.
Twas the night before Christmas, and all through the gym,
Memberships weren’t selling, and margins were thin.
Year-end deadlines were looming in the cold winter air,
In hopes that miracle revenue soon would appear.
You know the old poem. And hopefully, the above scenario doesn’t apply to you. Perhaps you are swimming in the black and 2017 has been a banner year. Or maybe you’re hoping 2018 will be your year. Whatever your scenario, we’d be remiss if we didn’t provide you with an annual list for contemplation. After all, we’re fast approaching the month of months for lists, goals, and positive change. While we can still hear sleigh bells, let’s close out 2017 with one final, holiday-themed, post. Here are is our list of five things that will land you on Santa’s naughty list.
Not Paying Your Taxes or Paying Them Late
This one seems like a no-brainer, but you’d be surprised how often we’ve had to intervene to assist an owner in resolving taxes that haven’t been filed or paid. Most of the time the misstep isn’t willful, but the state and federal governments aren’t very forgiving of even the most innocent of mistakes. Late payment penalties and interest really rack up! For example, say you file your federal business taxes three months after the April 15th deadline. Your penalty would be five percent of the unpaid taxes for each month or part of a month your tax return is late. If your gym owed taxes of $30,000, your fine would be $4,500! Remember, each state also has their naughty list fines.
The worst idea for solving for a cash shortage is to delay paying the IRS the employees’ withholding amounts from payroll. Unfortunately, we’ve seen this before after taking over the back-office for a business. They were never able to get ahead of the sins of their past and ended up closing their business. What’s worse than shutting your doors? Dealing with the IRS for the foreseeable future. This is a big no-no that can cost an owner their personal assets and often carries criminal sanctions.
Employee Misclassification, Independent Contractors
We get it; the urge to pay out wages via the much loved and regularly abused 1099 is real. After all, you save on employer taxes, and there are no pesky state and federal quarterly reports to file. Heck, you don’t even need to use payroll software! But 99% of the time this is a great way to find yourself on the wrong side of the IRS and state. Very, very rarely are you ever legally justified in paying your team anything other than W2 wages. See our previous article on this. The fines are stiff and criminal charges can apply.
Employee Misclassification, Exempt vs. Non-Exempt
The guidelines on who may be compensated via salary and not track time are fairly ironclad. Be careful here, or you’ll find yourself faced with the gift of a wage claim lawsuit. It’s the gift that keeps on giving (hire a lawyer) and giving (rack up a healthy legal bill) and giving (pay out a huge settlement or judgment). Read more on employee classification here.
Incurring a Ton of Debt with the Hope of Future Revenue
The tried and true advice to never to count your eggs before they hatch is timeless financial wisdom.
So is the exercise of prudence when it comes to credit cards and lines of credit. While using credit cards responsibly is a normal business practice, it also exposes you to the risk of deep debt if mismanaged.
Because credit cards are so convenient to use, many new business owners fail to see that they're compounding their expenses and incurring interest charges every time they leverage their credit line and don't pay off the full balance each month. See more big money mistakes like this here.
Trying to Do It All
The greatest mistake business owners make is believing they can do it all by themselves. While you can do almost everything, you end up doing almost everything poorly. Just like any other person, you likely have one or two natural talents. As an entrepreneur, it is your job to identify those talents and focus on them to your fullest. Surround yourself with people who are strong where your talents are weakest. Great companies are built on the foundation of exploiting a few strengths, not on trying to be masters of everything.
Need some help? What’s on your help wish list this holiday season? Now is the time to make a change for 2018. GYM HQ can take many necessary, but very time-consuming tasks off your hands next year. Imagine having payroll, accounting (from all your financial reports to payables), business registrations, HR documentation and compliance, member issue resolution and late membership dues management all taken care of by your new back-office, GYM HQ! We can be here for all of that and much more—like making sure you don’t make any of the mistakes on this list! Visit our site today to learn more!