Running a small business is no easy feat, and managing your finances can often feel like a balancing act. If you’re not careful, you can easily fall into financial pitfalls that create unnecessary stress and roadblocks. In this post, we’re going to explore six of the most common financial mistakes small business owners make—and more importantly, how to avoid them.

1. Mixing Personal and Business Finances
   Keeping personal and business expenses separate isn’t just about staying organized—it’s about protecting yourself legally. Without clear boundaries, your personal assets could be at risk in the event of a lawsuit.
2. Failing to Create a Money Plan
   A business budget (or money allocation plan) is crucial for managing cash flow and avoiding unexpected financial hiccups. It’s not about restriction; it’s about being proactive.
3. Not Tracking Expenses
   Without regular tracking of your expenses, it’s impossible to know your business’s true financial health. Plus, you might miss out on valuable tax deductions.
4. Not Saving for Estimated Taxes
   Saving for taxes is non-negotiable. Failing to do so can result in scrambling to pay hefty tax bills, which can destabilize your cash flow for months.
5. Mismanaging Debt
   While debt can help grow your business, too much of it can hurt your profitability. Set parameters and make sure debt repayments don’t eat into your revenue.
6. Ignoring Bookkeeping
   Staying on top of your bookkeeping is essential. Without it, you can’t make informed financial decisions for your business.

Avoiding these six pitfalls is key to running a successful and financially healthy business. For an even deeper dive, give episode 23 of the Financially Adjusted podcast a listen.