Regrets, entrepreneurs have a few
While the tenacity to pick themselves up and learn from their mistakes sets successful entrepreneurs apart from failed ones, why make costly and disastrous blunders when you can learn from other people?
In the middle of a pandemic that has seen many businesses fold, business owners couldn’t afford to make thoughtless decisions then flippantly charge these to experience.
In Taxumo, we regularly get to talk to our community of entrepreneurs who candidly reveal their regrets from when they started out. We’ve compiled here their top five mistakes, which we hope you could learn from:
“I didn’t know being a One-Person Corporation could protect me from liabilities!”
Some entrepreneurs think starting a business means creating a corporation or an OPC (One-Person Corporation.) That’s not necessarily the case. Lone service providers (like wedding hosts, speakers, etc.) can register as a professional.
And instead of opening a corporation, you can also open a sole proprietorship. Opening a business as a professional or as a sole prop means you are operating as an individual and not as a corporation.
Of course, these have pros and cons.
As an individual, there are provisions in the law that make compliance a lot easier. For example, the frequency of filing your percentage tax forms (which is the sales tax you pay if you’re non-VAT) has decreased from monthly to just quarterly, thanks to the Tax Reform for Acceleration and Inclusion Law.
The main advantage of a corporation is that it is seen as a separate person in the eyes of the law. This means that the corporation’s shareholders aren’t accountable for the corporation’s liabilities.
If that sounds confusing, let me explain: say your corporation took out a business loan from a bank. If your corporation cannot pay the loan at any point, the bank usually cannot go after the shareholders. That isn’t the case for individuals.
On the other hand, having a corporation does mean more work. Bank enrollments (and many bank activities) often require a secretary’s certificate or a board resolution.
And since corporations are registered with the Securities and Exchange Commission, they need an audited financial statement every year—regardless of how much they’ve earned.
“I didn’t include taxes in my revenue model and now I’m trapped.”
Guess why an unregistered business usually has lower margins?
Because they have fewer costs. That means they often exclude the taxes they were supposed to pay had they been operating legally.
Once they include taxes in their computations, however, they realize that the business is not sustainable.
Anyone serious about their business and planning out their revenue model should always include taxes. If you find out that your business is making money, even with all the costs adequately credited, then you have a sustainable business that you can go all-in with.
“I lost a big deal because I couldn’t issue an official receipt or sales invoice.”
Larger customers, meaning the ones who make bigger orders from their suppliers, usually require documentation. These customers need certificates showing registered and official receipts.
That’s why they want a business owner who takes their business seriously because they need to make sure that business owner delivers their end of the deal.
Larger customers will want to make sure that their expenses are properly recorded. That means that they need their suppliers to provide official receipts or sales invoices.
“I thought I could trust my service provider.”
Saying business owners are busy is an understatement. Most business owners just want services that free up as much of their time and energy as possible.
When outsourcing a task to a service provider, make sure you understand what you are outsourcing. Remember that in business, you can outsource the work, but you cannot outsource the risk.
This is especially true when it comes to taxes. At the end of the day, if your service provider forgets to pay and file your taxes, the Bureau of Internal Revenue doesn’t go after your service provider: they go after you. (We at Taxumo are actually helping many business owners who are now paying penalties because their service providers defrauded them.)
So what do you do? Try to get as much visibility as possible on your service providers’ work.
“I thought money was more important that time.”
Most business owners eventually realize that their most scarce resource is not money but time. For example, online sellers who miss those big e-commerce sale dates will have to wait another month before they can jump again into their customers’ buying frenzy.
This also applies to your own time. You should be spending your time on the things that will really make your business grow.
While a few succeed by pure dumb luck, most of us fail because of dumb, avoidable decisions. Business owners: Take time to learn the lessons from your fellow entrepreneurs and strategically set yourself up for success. You can do it! —CONTRIBUTED
The author is CEO of Taxumo (www.taxumo.com), a multiawarded online tax filing and payment platform in the Philippines.
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