Top Mistakes PA Small Business Owners Should Avoid

Familiarizing themselves with some of the most common business mistakes for small businesses can help these organizations take steps to avoid these pitfalls and keep their businesses moving forward. Here are the most common small business mistakes in Pennsylvania.

Common Mistakes PA Small Business Owners Make

Neglecting Proper Business Registration and Licensing

Businesses in Pennsylvania need to think about a variety of different types of licensing and registration to conduct their business legally. Licensing requirements can vary widely depending on industry and location. Researching the specific state requirements and what is needed for the industry is critical to maintaining all the proper registration and licensing.

Ignoring Employment Laws and Regulations

Employment laws stem from local, state, and federal authorities. These laws govern essential employment aspects, including wage and hour laws, anti-discrimination regulations, and employee benefits. Failure to adhere to these regulations can result in lawsuits and penalties for businesses.

Therefore, organizations must carefully monitor their jurisdiction's local labor laws. Tracking all the changing labor laws can be stressful for businesses, but working with a partner who specializes in business compliance can help organizations stay current and aligned with the latest regulations.

Poor Financial Management

Businesses' finances play a critical role in organizational success. Knowing how much money the company spends in different areas and how that compares to the money coming into the company impacts business strategy and planning.

Businesses' financial management directly affects their tax processing and other related fees. Mishandling finances can lead to significant challenges, including fines and penalties for improper tax payments. Inadequate financial tracking can also result in cash flow issues, leaving the company without sufficient funds to cover expenses and adequately support its operations.

Overlooking Tax Obligations

Tax obligations are critical but also very complex for small businesses. Knowing what you need to pay in taxes and how your tax responsibility shifts as your business grows remains an essential part of business management.

Companies need to look at a variety of different types of taxes. They need to consider payments in areas such as:

• Income tax
• Payroll taxes
• Sales taxes
  
  

It's crucial for businesses to accurately calculate their taxes to avoid penalties and fines, which can hinder their operations. Failing to meet corporate tax obligations can also damage a business's reputation. However, staying updated on various taxes at local, state, and federal levels can feel overwhelming for many businesses. Therefore, working with a dedicated tax professional who stays current with employment and compliance tax laws can be the best option for businesses.

Inadequate Insurance Coverage

Small businesses need insurance to protect them from potential business risks. Companies need to invest in a variety of different types of insurance, including:

• General liability insurance
• Property insurance
• Workers’ compensation insurance
  
  

Failing to carry the proper insurance can lead to many penalties for businesses. If someone files a claim and the business does not have proper coverage, the results could be disastrous. Fines may also be levied against businesses if any required forms of insurance are neglected.

Failing to Create a Business Plan

A well-written business plan can be the deciding factor between success and failure for a small company. It outlines their business objectives, what they offer their target market, what sets them apart from competitors, and their plan for achieving success.

Businesses that neglect to create a proper business plan will struggle with decision-making and may make poor choices that don't align with their overall business goals. They will also face challenges in areas like financial projections, marketing, and sales strategies. Creating a quality business plan provides a step-by-step guide for successful growth, and those who skip this step will be at a significant disadvantage.

Ignoring Legal Contracts and Agreements

Businesses of all sizes find themselves making contracts and agreements. They discuss matters with their investors, clients, and internal personnel on a regular basis, which often leads to quick verbal agreements. However, relying excessively on these casual discussions can quickly spell trouble with misunderstandings and legal disputes.

Employees and companies need a concrete way to review contracts, and getting the contract in writing is the way to achieve this goal. Ensure all potential agreements and contracts are written out so that a legal professional can review all the fine print before anyone signs. This simple step ensures that all the parties fully understand the agreement.

Taking Your Business Further with Exact Payroll: Pennsylvania Business Tips

Businesses face a variety of common PA small business compliance errors that can derail efforts to nurture and grow an organization. Protect your business by avoiding these common mistakes. Contact Exact Payroll for expert guidance and comprehensive payroll and compliance services tailored to small businesses in Pennsylvania.