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Incorporation can help your business succeed

When it comes to starting a small business, there’s a lot of ground to cover, and you will inevitably find yourself doing a lot of work just to get started. While your to-do list may already be overflowing, it’s important to be aware of the important things you may not be doing that could spell trouble for your business.

According to a recent SmallBizTrends.com article, 8 out of 10 businesses fail. Fortunately there are steps you can take to make sure your business doesn’t become part of this statistic.

Here are a few steps you can take to avoid financial hazards as you get your business going:

Watch your spending. Too much overhead and not enough funds to cover it can lead you to overextend your expenses, which could put you out of business. It’s a good idea to keep a budget.  According to SmallBizTrends.com, mismanagement of funds is the leading cause of business failure.

Keep business and personal funds in separate accounts. When you mix your business and personal funds, it can be difficult to manage your company’s funds appropriately. There can even be legal complications, which you may want to consult an attorney or accountant to learn more about.

Sign your checks. Even if you’ve hired an accountant to manage your business funds, it’s important that you sign off on every check so you know where that money is going.

Pay your taxes. When tax time comes, it’s your responsibility to pay up. Failure to do so could result in a visit from the IRS.

Incorporate your business! There are many advantages to incorporating your business, including limited tax obligations and personal exposure to liability, and greater flexibility.

Additionally, the U.S. Small Business Administration outlines that poor inventory management, personal use of business funds and lack of experience are included as a few main reasons for small business failure. Paying close attention to your finances and incorporating your business will help you avoid some of these pitfalls.