7 Common Accounting Mistakes Small Businesses Make (and How to Avoid Them)

Running a business is exciting — but keeping the books in order? Not always. Many entrepreneurs juggle sales, operations, and customer service, leaving accounting as an afterthought. Unfortunately, that often leads to costly mistakes that affect cash flow, taxes, and long-term growth.

At Alphex Accounting, we’ve seen the same errors repeated by small businesses time and again. Here are seven of the most common — and how you can avoid them.

1. Mixing Personal and Business Finances

It may seem easier to use one account for everything, but mixing personal and business funds makes bookkeeping a nightmare. It also complicates tax reporting and can raise red flags with auditors.

Fix: Open a dedicated business bank account and credit card. Keep all business transactions separate.

2. Neglecting Regular Bookkeeping

Waiting until year-end to update your books often results in errors, missing receipts, and unexpected tax bills.

Fix: Update your records weekly or outsource bookkeeping to professionals who will keep everything current.

3. Poor Recordkeeping for Receipts

Shoebox accounting is a thing of the past. Lost receipts mean lost deductions, which increases your tax bill.

Fix: Use cloud accounting software with mobile apps to snap and store receipts instantly.

4. Not Reconciling Bank Accounts

If your books don’t match your bank statement, you could be overlooking errors or even fraud.

Fix: Reconcile accounts every month to catch mistakes early.

5. Forgetting About Sales Tax

Whether it’s state sales tax in the U.S. or GST/HST in Canada, missing tax deadlines can result in penalties and interest.

Fix: Track sales tax automatically in your accounting software and schedule reminders for filing.

6. Poor Cash Flow Management

Many businesses show a profit on paper but still struggle to pay bills because cash flow isn’t monitored.

Fix: Use real-time dashboards to track receivables, payables, and cash balances regularly.

7. Trying to Do It All Alone

Accounting is complex, and mistakes can be expensive. Business owners often wait too long before seeking professional help.

Fix: Partner with an accounting firm that understands your needs and can guide you with accurate reporting and strategic advice.

Small accounting mistakes can snowball into big financial headaches. By staying organized, using cloud tools, and working with trusted professionals, you’ll keep your business financially healthy and focused on growth.

At Alphex Accounting, we help entrepreneurs avoid these pitfalls with accurate bookkeeping, tax compliance, and personalized financial support.