This One Tax Mistake Could Wreck Your Small Business (Don’t Let It!)
You started your business to follow your passion, make your own rules, and maybe sneak in a few “business lunches” (we see you). But there’s one thing that can tank your dreams faster than you can say tax deduction:
Common tax mistakes for small business owners.
And the biggest culprit of all? Poor recordkeeping.
Let’s break it down - what this tax mistake really costs you, the other tax pitfalls new business owners face, and how to steer clear of a financial disaster.
🚨 The #1 Tax Mistake: Poor Recordkeeping
It’s not flashy. It’s not fun. But bad recordkeeping is the silent assassin of small business success.
Here’s why:
You miss out on tax deductions
You risk misreporting income
You’re clueless when tax season hits (cue panic)
And you’re practically inviting an IRS audit with a bow on top
Poor recordkeeping is the #1 tax mistake small business owners make. Don’t let it be you.
📦 Other Common Tax Mistakes Small Business Owners Make
Let’s walk through the classic tax traps, so you can avoid them like a pro.
1️⃣ Mixing Personal and Business Finances
Buying groceries, office supplies, and your dog’s birthday cake on the same credit card? Yeah, no.
How to Fix It: Get a dedicated business bank account. Use it for everything related to your business.
2️⃣ Not Paying Estimated Taxes
Small business owners need to pay quarterly taxes. If you don’t, the IRS will hit you with penalties that hurt.
How to Fix It: Set aside 25–30% of income for taxes. Pay by April 15, June 15, September 15, and January 15.
3️⃣ Ignoring Sales Tax Requirements
Selling goods or services? You may need to collect and remit sales tax.
How to Fix It: Check your state’s rules. Some are chill; others are, well, less chill.
4️⃣ Missing 1099 Deadlines
If you pay a contractor more than $600, you must file a 1099-NEC by January 31.
How to Fix It: Track contractor payments all year. Don’t wait until January.
5️⃣ Not Hiring a Tax Pro
Think TurboTax will magically understand your business deductions? Spoiler: It won’t.
How to Fix It: Get a tax professional who knows small businesses and can help you save money legally.
😱 The Real Cost of Tax Mistakes
Let’s be blunt: tax mistakes can wreck your business.
Mess up your taxes, and you might:
❌ Owe back taxes and interest
❌ Get slapped with penalties
❌ Lose sleep (and sanity)
❌ Get audited (and no one wants that)
Ignoring taxes isn’t a savings strategy, it’s a fast track to financial stress.
✅ How to Stay Out of Tax Trouble
Here’s your small business tax survival checklist:
✅ Keep your records clean and organized
✅ Use bookkeeping software (QuickBooks, Wave, or a trusty spreadsheet)
✅ Pay your estimated taxes
✅ Separate business and personal accounts
✅ Work with a tax pro who gets small business life
The key is to be proactive, not reactive.
📢 Final Thoughts
Here’s the tea: Common tax mistakes for small business owners aren’t just minor slip-ups - they can derail your entire business if you’re not careful.
But the good news? They’re preventable.
✅ Keep your records tidy
✅ Know your tax deadlines
✅ Pay what you owe
✅ Ask for help when you need it
👉 Want more practical tips to help you keep your books and business on track? Subscribe to Tea on the Ledger for strategies, insights, and the occasional laugh - all straight to your inbox.
Let’s make sure tax season never ruins your week. 🌿
