Top Bookkeeping Mistakes Small Businesses Make !
1. Mixing Personal & Business Finances
Using a single bank account for business and personal expenses is a recipe for disaster. It complicates tax filings, invites audit risks, and makes it impossible to track true profitability. Always open a dedicated business account and credit card.
2. Ignoring Receipts & Documentation
Throwing away receipts or failing to digitize them means losing out on tax deductions. The IRS requires documentation for expenses over $75. Use apps like Expensify or Shoeboxed to capture and categorize receipts instantly.
3. Inconsistent Record-Keeping
Postponing reconciliations leads to backlogged books and inaccurate financial statements. Set a weekly or monthly schedule to update records, or automate transactions with bank feeds in accounting software.
4. Misclassifying Expenses
Calling a “business dinner” a “marketing expense” might not seem like a big deal—until it triggers an audit. Learn standard categories (e.g., COGS vs. overhead) or hire a bookkeeper to classify transactions correctly.
5. Not Using Cloud-Based Tools
Spreadsheets crash, get deleted, or become outdated. Cloud tools like QuickBooks Online offer real-time collaboration, automatic backups, and integrations with payment processors or payroll services.