Running a small business is a rewarding journey—but it also comes with responsibilities that can make or break your financial future. One of the biggest stressors (and potential money pits) for business owners? Taxes.
Tax mistakes are more than just innocent oversights—they can cost you thousands of dollars, lead to IRS penalties, and jeopardize your long-term business goals. Here are the top tax mistakes I see small business owners make and how to avoid these tax mistakes:
1. Mixing Business and Personal Finances
One of the most common mistakes I see? Business owners using the same bank account and credit card for both personal and business expenses.
Why is this a big deal?
- It makes bookkeeping a nightmare.
- You lose out on valid deductions.
- It raises red flags with the IRS.
Fix it: Set up a separate business bank account and credit card right away. This simple step keeps your records clean and protects your legal and tax standing.
2. Not Paying Estimated Taxes
If you’re self-employed or own a business, the IRS expects you to pay taxes quarterly, not just at year-end. Many small business owners are caught off guard when they owe a massive lump sum in April—often with penalties for underpayment.
Fix it: Work with a bookkeeper or tax advisor to estimate your quarterly tax payments and pay them on time. Planning ahead prevents sticker shock and interest charges.
3. Choosing the Wrong Entity Structure
Your business entity type—Sole Proprietor, LLC, S Corp, etc.—directly affects how you’re taxed.
Choosing the wrong one could mean:
- Overpaying in self-employment taxes
- Missing out on tax-saving opportunities
- Taking on unnecessary risk
Fix it: Have your entity reviewed annually as your business grows. What worked when you started may not be optimal now.
4. Poor Record-Keeping
Good records are the foundation of solid tax planning. If you’re not tracking your income, expenses, mileage, and receipts accurately, you’re setting yourself up for stress, missed deductions, or worse—an audit.
Fix it: Use accounting software and work with a professional bookkeeper to keep your books clean, up-to-date, and audit-ready.
5. DIY Taxes Without Strategy
There’s a big difference between filing your taxes and strategizing your taxes. Many small business owners either DIY with software or hand everything off to a tax preparer—but no one is actively looking for ways to save them money.
Fix it: Hire a tax strategist who looks forward—not just backward—to implement tax-saving strategies all year long.
6. Not Having a CFO or Bookkeeper
Trying to manage your finances alone is like trying to drive blindfolded. Without a CFO or bookkeeper, you don’t have clear data to make smart decisions. You also risk missing out on tax strategies that could save you thousands.
Fix it: A part-time CFO or experienced bookkeeper gives you visibility, insight, and confidence. You’ll make better decisions, save on taxes, and sleep better at night.
Why This All Matters
When you treat your taxes as an afterthought, you’re leaving money on the table and increasing your risk. But when you put systems, professionals, and strategy in place, you gain control over your business—and your financial future.
Ready to stop guessing and start saving?
Let’s talk. Book a free “Right Fit” meeting to see if Gundersons CFO & Bookkeeping is the partner you’ve been missing.
👉 Book a Discovery Call
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