Money mistakes can sink an otherwise great business idea. Here are the most common pitfalls and how to avoid them.

Mixing personal and business finances. Open a separate bank account from day one, even if you’re a sole proprietor. This makes tracking income, expenses, and taxes much easier.

Underpricing products or services. Many new owners price too low out of fear of losing customers, then struggle to cover costs. Research competitor pricing and factor in all your costs, including your own time.

Ignoring cash flow. Profit on paper doesn’t mean cash in the bank. Track when money actually comes in and goes out, especially if clients pay on delayed terms.

Not setting aside money for taxes. Set aside a percentage of every payment received specifically for taxes, so you’re not caught off guard at tax time.

Overspending on tools and software early on. Many free or low-cost alternatives exist for accounting, marketing, and project management — upgrade only when you’ve outgrown them.

Not having an emergency fund for the business. Aim to build up 1-3 months of operating expenses as a buffer for slow periods or unexpected costs.