5 Common Tax Mistakes Small Business Owners make (and How to Avoid Them)

Running a small business is hard work—and tax season can feel overwhelming. Even experienced business owners sometimes make mistakes that cost them money or cause unnecessary stress. Here are five of the most common tax mistakes small business owners make, and tips for avoiding them.

1. Missing Deadlines for Payroll or Sales Tax

Late payroll or sales tax filings can result in penalties and interest, even if the mistake was unintentional. Keep a calendar of due dates and consider setting up automatic reminders or using accounting software to track deadlines.

2. Forgetting Deductions for Business Expenses

Many small business owners miss out on deductions simply because they aren’t keeping organized records. Common deductions include office supplies, mileage, business meals, and software subscriptions. Track your expenses carefully throughout the year to maximize your savings.

3. Improper Record Keeping

Good bookkeeping isn’t just for tax season—it helps you make smart business decisions year-round. Failing to categorize transactions correctly or mixing personal and business finances can create headaches when it’s time to file. Consider working with a bookkeeper to stay organized.

4. Not Separating Personal & Business Finances

Using your personal account for business expenses can make it difficult to prove deductions and track income accurately. Open a dedicated business account and use it exclusively for your business transactions.

5. Miscalculating Quarterly Tax Estimates

Many small business owners underestimate quarterly taxes, leading to large bills at tax time. Review your estimated taxes regularly and adjust as your income changes. Professional guidance can help ensure you’re paying enough to avoid penalties—but not too much, leaving money unnecessarily tied up.

Avoiding these common mistakes can save you time, money, and stress.

At Melinda Monfort – Tax & Bookkeeping LLC, we specialize in helping small businesses and individuals stay organized and compliant. With over 14 years of experience, we provide bookkeeping, payroll, sales tax support, tax returns, and tax planning. If you want to simplify your finances and stay ahead of tax season, schedule a free consultation today.