When we hear something often enough, we tend to deem it true. We don’t even always think about researching whether it’s accurate or not. While not always harmful in our everyday lives, the same can’t always be said for financial misinformation. Incorrect advice could have a detrimental impact on your business.
Knowledge is power. Protect your professional interests by understanding the most common financial myths. We’ve included some of the most crucial below:
Myth: You Can Do Your Own Taxes to Save Money
In many situations, taking a DIY approach to something can indeed save you money. However, that’s not always true when it comes to taxes. If you work with a local tax agent rather than doing your taxes yourself, you can take advantage of their years of experience to potentially bring down your tax bill.
Working with a local tax agent also makes sense from a time savings perspective. While they focus on filling out all your tax paperwork and filing it on your behalf, you can be more involved and productive in your everyday business operations.
Myth: All Debt Is Bad Debt
Most people would prefer not to have any debt. However, that’s not always the best case scenario because not all debt is bad. You could classify bad debt as things like overextended credit lines and unplanned, high-interest loans, such as emergency overdrafts. However, there are also examples of ‘good’ debt, such as student loans, mortgages, and business loans. While you owe people money, you are investing in your future and the potential to make more money.
Myth: You’re Successful If You’re Making Sales
With customers lining up out the door and a team of busy frontline workers, it’s easy to see yourself as successful. In basic terms, you can see business revenue as success. However, making sales doesn’t equal profitability. You also have to factor in your expenses, overheads, and cash flow.
While monitoring your revenue is essential, you also need to monitor your profit margins and cash flow. A business accountant can certainly help you with this.
Myth: Small Businesses Don’t Need Accountants
Small business owners are jacks of all trades. Before their business gets off the ground, and they have the budget to hire help, they are the owner, the manager, the cleaner, the shop assistant, and everything in between.
Yet, despite playing many roles in a business, there’s one role they don’t have to play just because they’re small. Whether you’re a new or seasoned business owner, you can hire an accountant. In fact, hiring an accountant is recommended early on in business for a variety of reasons. Reputable accountants can help you stay compliant, build a robust financial foundation, and avoid costly tax mistakes.
Myth: Cutting Costs Is the Best Way to Increase Profits
It’s true that the less you spend, the more profit you have. However, cutting costs isn’t necessarily the best way to build a foundation for long-term gains. You often need to invest money to make a profit.
Don’t underestimate the importance of investing in marketing, product quality, and talent to help your business grow.
Not everything you read and hear in business magazines and from business ‘experts’ will be accurate. Some business advice can even be harmful. Don’t be afraid to perform thorough research when making business decisions. It can help you see something from all angles, allowing you to make your decisions with confidence.