1. Mixing personal and business transactions
What it is: Using one bank account or credit card for both personal and business spending.
Why it matters: Blending transactions muddies records, increases audit risk, and makes cash flow unclear.
Quick fix: Open dedicated business accounts and update payment methods in apps and subscriptions.
2. Skipping regular reconciliations
What it is: Waiting months to match bank and credit card statements to the ledger.
Why it matters: Missing reconciliations hide duplicate charges, bank errors, or fraud until it is costly to unwind.
Quick fix: Reconcile weekly or monthly and set recurring reminders in your calendar or bookkeeping software.
3. Inconsistent categorization
What it is: Similar expenses are labeled differently from month to month.
Why it matters: Reports become unreliable, and tax deductions can be missed or questioned.
Quick fix: Create a short chart of accounts and stick to it; document rules for common vendors.
4. Poor documentation of receipts
What it is: Receipts, invoices, and mileage logs are missing or scattered.
Why it matters: Without support, expenses may be disallowed and it is harder to answer vendor or tax questions.
Quick fix: Snap photos and attach them to transactions in your app; store digital copies in a shared folder.
5. Overlooking sales tax and payroll liabilities
What it is: Sales tax, payroll tax, or franchise fees are not tracked as separate liabilities.
Why it matters: Funds can be spent accidentally, leading to penalties or cash crunches when payments are due.
Quick fix: Use liability accounts, run aging reports, and move tax funds to a separate savings account.
6. Misclassifying owner draws and contributions
What it is: Owner withdrawals or personal payments into the business are treated like income or expenses.
Why it matters: Financial statements become misleading, affecting profit decisions and lender conversations.
Quick fix: Post owner-related transactions to equity accounts labeled Draws and Contributions.
7. Ignoring accounts receivable follow-up
What it is: Invoices are sent but not monitored for timely payment.
Why it matters: Cash flow stalls and collections take longer the more time passes.
Quick fix: Send friendly reminders before due dates, automate late notices, and review open invoices weekly.
8. Not backing up or restricting access
What it is: Accounting files are stored on one device or shared broadly without roles or permissions.
Why it matters: Data loss or accidental edits can disrupt operations and delay reporting.
Quick fix: Enable cloud backups, use user roles in your software, and keep an admin log of changes.