Most founders don’t realize their bookkeeping is broken until it’s tax season—or worse, they’re cash poor and confused about why.
Here are the most common mistakes we see from business owners trying to DIY their books, plus how to fix them before they turn into expensive problems.
1. Skipping Monthly Reconciliation
If your books don’t match your bank accounts, you’re flying blind.
Unreconciled accounts = inaccurate cash flow, missed transactions, and messy books come tax time.
✅ Fix: Set a recurring time each month to reconcile every account—bank, credit card, and payment processors.
2. Mixing Personal and Business Expenses
Using one card for both business and personal transactions?
That’s a fast track to disorganized books, IRS red flags, and missed deductions.
✅ Fix: Open a dedicated business checking account and credit card.
3. Not Categorizing Transactions Correctly
Improper categories can mean:
Overpaying taxes
Underreporting revenue
Misleading P&L reports
✅ Fix: Use consistent rules and double-check automation in tools like QuickBooks, Xero, or Wave.
4. Waiting Until Tax Season
DIYers often “catch up” in March or April—but by then, it's too late to course-correct or make smart tax-saving decisions.
✅ Fix: Keep books current so your CPA can plan proactively.
5. Over-Relying on Automation
AI-powered bookkeeping tools sound great—until they miscategorize your contractor payments or miss Stripe fees.
✅ Fix: Automation is helpful, but still requires oversight.
6. Doing It All Yourself for Too Long
“People wait too long to hand this off. You end up wasting time and losing money in tax errors or bad decision-making.”
— Kimi, Co-founder ofSam’s List
✅ Fix:Hire a bookkeeperonce you hit $250K+ in revenue, manage contractors, or feel behind.
7. Not Reviewing Financial Reports
You’re not just keeping records for the IRS—you need to know how your business is doing.
If you’re not reviewing P&Ls or balance sheets monthly, you’re not managing the business.
✅ Fix: Set a recurring meeting with your bookkeeper (or yourself) to review the numbers every month.
FAQ
What are the most common bookkeeping mistakes?
The top mistakes include skipping reconciliations, miscategorizing expenses, mixing personal and business spending, and falling behind on reports.
How do bookkeeping mistakes affect taxes?
Incorrect books lead to missed deductions, inaccurate filings, and higher CPA bills during tax season.
Can I fix bad bookkeeping mid-year?
Yes—but the longer you wait, the more it costs to clean up. Get help early if you’re behind.
You Might Also Like:
1.Bookkeeping for Solopreneurs
2.When Should You Hire a Bookkeeper?
3.Types of Bookkeeping
Author: Kimi, Co-founder of Sam's List
Kimi writes about what she's learning while building Sam's List and shares honest takeaways from her conversations with accountants and financial advisors across the country. None of this is financial advice—just the stuff most people wish someone told them sooner.
