5 Bookkeeping Mistakes That Hurt Small Businesses at Tax Time

Bookkeeping isn’t just about compliance. It directly affects your tax position, decision-making, and financial stability. Here are the most costly mistakes we see among Texas small businesses:

Mistake 1: Mixing Personal and Business Accounts
This makes it nearly impossible to prove deductible expenses during an audit. Open separate accounts and issue reimbursements using a formal process.

Mistake 2: Ignoring Monthly Reconciliations
If your bank and QuickBooks aren’t aligned, your financials can be off by thousands. Monthly reconciliation is your first line of defense against fraud and cash flow errors.

Mistake 3: Misclassifying Expenses
For example, meals are only 50% deductible, while office supplies are fully deductible. Large capital purchases must be depreciated, not expensed. Mistakes here can trigger IRS scrutiny.

Mistake 4: No Periodic CPA Review
QuickBooks users often rely solely on bank feed automation. Without periodic reviews, errors compound unnoticed. We recommend quarterly CPA check-ins, even if you do your own bookkeeping.

Mistake 5: Year-End Catch-Up
Trying to clean up 12 months of financials in January leads to missed write-offs and filing delays. It also reduces your ability to make tax-saving moves like retirement contributions or bonuses before year-end.

Avoid these pitfalls with a midyear bookkeeping audit or a customized QuickBooks training session. Stay accurate, compliant, and ready for growth.