6 Financial Mistakes New Entrepreneurs Should Avoid

Launching your own business is exciting—but if you’re not careful, money missteps can derail your progress before you get off the ground. Whether you’re just starting out or still in planning mode, here are six of the most common financial mistakes new entrepreneurs make—and how to steer clear of them.

1. Not Separating Business and Personal Finances

It might seem easier to use your personal bank account at the beginning, but this creates confusion, complicates taxes, and can hurt your credibility.

✅ Fix it:
Open a business checking account and get a business credit card—even if you’re a sole proprietor. This helps you build credit and keep clean records from the start.

2. Underestimating Startup Costs

A lot of new entrepreneurs underestimate how much it really costs to get up and running. From marketing and licenses to tech tools and insurance, those small expenses add up quickly.

✅ Fix it:
Create a realistic budget that includes both one-time startup costs and ongoing monthly expenses. Always plan for a cushion—things often cost more than expected.

3. Ignoring Taxes Until It’s Too Late

Many new business owners are caught off guard by taxes. Whether it’s quarterly estimated payments, sales tax, or self-employment tax, ignoring your tax responsibilities can lead to penalties.

✅ Fix it:
Set aside 20–30% of your income for taxes and consult a small business tax professional early on. It’s worth the investment.

4. Not Paying Yourself

It’s easy to put every dollar back into your business, but you still need to pay yourself—even if it’s a small amount. Otherwise, burnout (and resentment) will follow.

✅ Fix it:
Include your salary in your monthly budget. As your business grows, adjust your compensation accordingly.

5. Overspending on Tools and Subscriptions

Yes, that flashy marketing tool or productivity app sounds amazing—but you don’t need every software under the sun right away.

✅ Fix it:
Start with the essentials. Track your ROI on every tool you use, and revisit your subscriptions quarterly to eliminate waste.

6. Avoiding Help From Financial Professionals

Trying to DIY every aspect of your finances can lead to expensive mistakes. From legal structures to bookkeeping, getting expert advice can save you time and money.

✅ Fix it:
Work with a bookkeeper, accountant, or business advisor—especially in your first year. You don’t need to do it alone.

Final Thoughts: Smart Money Moves Build Strong Businesses

Every successful business starts with solid financial habits. Avoiding these common mistakes early on can help you build a more stable, profitable future for your business.

And if you’ve already made a few of these errors? Don’t stress. The best time to fix a money mistake is now—and you’re already ahead by learning how.

👉 Need more resources to manage your business finances? Explore our Finance Learning Center and join Galaxy of Stars for tools, funding opportunities, and expert tips tailored to women and minority entrepreneurs.