After years of cleaning up books for small business owners, I’ve noticed the same handful of mistakes show up over and over. And they almost always cost real money, either in missed deductions, IRS penalties, or just the time it takes to fix them later. Here are the five I see most often.

1. Mixing personal and business expenses

This is the number one issue I see, and it’s almost always the most expensive to clean up. Running personal purchases through the business account (or vice versa) muddies your records, makes tax prep painful, and can put your liability protection at risk if your LLC ever gets challenged.

What to do instead: Open a dedicated business checking account and a business credit card. Run every business transaction through them, and pay yourself with regular owner draws or a salary (which is based on your entity type). Your future self at tax time will thank you.

2. Waiting until tax season to reconcile

I’ve seen business owners hand over a shoebox of receipts in March and ask their accountant to “figure it out.” That works, sort of, but it costs more, takes longer, and you’ve spent the entire year flying blind without any real idea of how the business is doing.

Bookkeeping isn’t just about tax compliance. It’s the dashboard that tells you whether you’re actually profitable.

3. Misclassifying contractors as employees (or vice versa)

The IRS has specific rules about who counts as an employee versus an independent contractor, and the penalties for getting it wrong are steep. If you control how, when, and where someone does the work, the IRS generally considers them an employee, even if you pay them on a 1099. When in doubt, classify cautiously and ask a CPA. It’s much cheaper than a back-tax assessment plus penalties.

4. Skipping sales tax

If you sell taxable goods or services and you’re not collecting and remitting sales tax in the right states, you’re building up a liability that grows every month. Check with your state’s Department of Revenue to learn the sales tax rules.

5. Not tracking mileage and home office use

These are two of the most commonly missed deductions for small business owners. The standard mileage rate alone is over 65 cents per mile in 2026. That adds up fast if you’re driving to client sites, the bank, the post office, or supply runs. Use an app like MileIQ to track miles automatically, and document your home office square footage so you can claim either the simplified or actual-expense home office deduction.

The common thread

Every one of these is a habit problem, not a knowledge problem. The fix isn’t usually learning more accounting. It’s setting up a system that handles things consistently so you don’t have to remember. If you’re seeing any of these in your own books and want a second set of eyes, that’s exactly what I do. Reach out and let’s talk through your specific situation.