4 Common Financial Issues Small Businesses Face

4 Common Financial Issues Small Businesses Face
There are common financial challenges small business owners run into that can be avoided. Here are a few money mistakes to keep your eyes on.
by Deborah Findling Jan 27, 2021 — 3 min read
4 Common Financial Issues Small Businesses Face

This article is for educational purposes and does not constitute legal, employment, or tax advice. For specific advice applicable to your business, please contact a professional.

There are a few common financial mistakes small business owners might make that could be avoided with the right planning and tools. Here are a few money mistakes to keep your eyes on as we start off the new year.

Mixing business and personal accounts

Many small business owners are first-time entrepreneurs which means that personal and business accounts can be confusing. However, mixing business and personal accounts for business transactions or funds can lead to cash flow management and tax issues. It is also important not to use your business credit card or debit card for personal expenses.

Not managing cash flow

Operating a business comes with risk, but by managing cash flow closely you can plan better for the future. Cash flow management is the process of tracking how much money is going in and out of your business. By keeping an eye on cash flow, you can better manage your debts, like paying employees, suppliers and more. Many small business owners worry about amassing too much debt too quickly — here are a few common pitfalls that may contribute to this:

Be aware of changing tax guidelines

Before you know it, the end of the year is already here and it is time to file taxes. When it comes to the end of the fiscal year, planning ahead can help you avoid a tax bill surprise. According to the IRS, a few common tax errors small businesses make include underpaying estimated taxes, depositing employment taxes, paying late, and not separating business and personal expenses.


Failure to pay taxes properly results in penalties, so keeping track of taxes both quarterly and for the end of the fiscal year can help you avoid any tax surprises and having to consult a tax professional.

Lacking business insurance

Business insurance can help mitigate financial risk in unforeseen events. There are many different options when it comes to small business insurance. A few different types of business insurance to consider after speaking to an insurance provider, depending on the type of business you operate, are:


Many small business owners have limited cash liquidity and irregular cash flow. The combination of a small cash buffer and irregular cash flow can contribute to financial issues. Employing some of these tools to avoid financial mistakes can help you better plan ahead and give you some room to make mistakes and cover unexpected expenses.

Deborah Findling
Deborah Findling is an Executive Managing Editor at Square. She also writes about investment, finance, accounting and other existing and emerging payment methods and technologies.


Keep Reading

Tell us a little more about yourself to gain access to the resource.

i Enter your first name.
i Enter your last name.
i Enter a valid email.
i Enter a valid phone number.
i Enter your company name.
i Select estimated annual revenue.
i This field is required.

Thank you!
Check your email for your resource.

Results for

Based on your region, we recommend viewing our website in:

Continue to ->