10 Biggest Financial Mistakes By Small Business Owners And How To Correct Them

Mistake No. 1
25 YEARS MORTGAGE: why? For example, if you pay $270, 000 for Each $100, 000 of mortgage at 10% interest.

CORRECTION: Get a 15 year mortgage and Increase your payments by only 18%.

RESULT: You pay $192, 240 for each $100, 000 of Mortgage.  You save $77, 760.
 
Mistake No. 2

BUYING WHOLE LIFE INSURANCE POLICIES: why?
The most expensive type of life insurance.

CORRECTION: Buy level premium term insurance.


RESULTS: Save up to 70% on premiums.

Mistake No. 3

BUYING ENDOWMENT INSURANCE AS AN INVESTMENT:
Why? Poor investment returns due to high Charges and poor tax efficiency.


CORRECTION: Keep life insurance separate from Savings and investments.

Results: Save on life insurance premiums and Improve returns.

Mistake No. 4

BUYING NEW CARS: why? Cars depreciate 30% to 50% In the first two years.

CORRECTION: Buy a 2 to 3 years old car.
Result: Save thousands of Money, Pounds and Dollars.

Mistake No. 5

NO RETIREMENT PLANNING: why? Over reliance on Government pension.
CORRECTION: Join your company scheme after a thorough check Or set up a private pension Scheme after taking advice.

RESULT: Because pensions have more tax advantages 

Than any other investment, the government is Subsidizing your retirement. 

Contributions are Tax deductible and investment profits are free of Tax.

Mistake No. 6

PAYING ALLOWANCES TO CHILDREN FROM AFTER TAX INCOME: why? Allowances are taxed at the parents Tax rate.

CORRECTION: Pay children wages from your small Business, subject to hours and age limits.

RESULT: Save up to 40% of every $1, 000 of Allowances

Mistake No. 7

NON DEDUCTIBLE COMPUTER AND CAR: Why? Its an Expense. Used in a small business, it can be Deducted.

CORRECTION: Depreciate within the small business.

RESULT: Assets for business are deductible over
Time.

Mistake No. 8

BUYING INDIVIDUAL SHARES, GILTS, PRECIOUS METALS
OR COMMODITIES: why? Risky.



CORRECTION: Invest in equities or gilts through Unit Trusts to ensure spread of risk.

RESULT: Lower risk investments and ability to Switch between cash equities or gilts to match Economic cycle. 

Benefit from professional Management.

Mistake No. 9

NO ACCESSIBLE CASH: why? Urgent cash requirements Can interrupt investment or require expensive Borrowing against investments.

CORRECTION: Build up cash reserve of 3 months Income in a TESSA, Cooperatives or building society.

RESULT: Avoid forced liquidation of investments Or higher interest loans.


Mistake No. 10

SURPLUS SAVINGS IN BUILDING SOCIETY: why? Low Return.

CORRECTION: Beyond 3 month's cash reserve, invest Additional funds according to Flexible Investment Strategy.
RESULT: Gain reliable long term returns on your Funds.

All The Best.

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