5 Common Accounting Mistakes Small Business Owners Make — And How to Avoid Them
Running a small business is hard work — and managing your finances can feel overwhelming. As accountants, we’ve seen many great business owners trip up on the same financial pitfalls. The good news? Most of these mistakes are easy to avoid once you know what to look for.
Here are the 5 most common accounting mistakes small business owners make — and how you can stay clear of them.
1. Mixing Personal and Business Expenses
It might seem harmless to use one card for everything, but blending personal and business expenses creates headaches at tax time — and makes it harder to understand your true business performance.
Avoid it:
Open a dedicated business bank account and credit card.
Track expenses using bookkeeping software (like QuickBooks or Xero).
2. Not Keeping Receipts or Proper Records
The IRS doesn’t accept bank statements as proof for all deductions. Missing receipts could mean lost write-offs — or worse, red flags during an audit.
Avoid it:
Use apps like Expensify or Dext to snap and store receipts on the go.
Keep digital records backed up securely.
3. DIY Bookkeeping Without Oversight
We love a hands-on entrepreneur, but doing your own books can be risky if you don’t fully understand what you’re doing — especially when growth starts to scale.
Avoid it:
Invest in a professional bookkeeper or accounting review at least quarterly.
Even small mistakes (like miscategorizing expenses) can cost you more in taxes or lost deductions.
4. Falling Behind on Taxes
Whether it’s missing quarterly payments or not collecting sales tax correctly, tax missteps can lead to big penalties.
Avoid it:
Mark important tax deadlines in your calendar (e.g., estimated payments, 1099s).
Work with an accountant who can handle this for you — and help you plan ahead.
5. Not Reviewing Financial Reports Regularly
If you’re not checking your Profit & Loss and Balance Sheet monthly, you’re flying blind. You may miss warning signs like cash flow issues or rising expenses.
Avoid it:
Set a monthly “money meeting” to review your reports.
Your accountant can explain trends and help you make smart decisions.
Final Thoughts
Good accounting isn’t just about taxes — it’s about understanding your business, spotting opportunities, and staying compliant. Whether you’re just starting out or hitting your next growth phase, having the right financial support can make all the difference.