Top 7 Bookkeeping Mistakes Small Businesses Make (and How to Avoid Them)

Running a small business comes with no shortage of responsibilities—and bookkeeping often ends up at the bottom of the to-do list. But poor bookkeeping practices can lead to missed opportunities, financial strain, or even trouble with the IRS. Let’s look at the seven most common bookkeeping mistakes small business owners make and how to sidestep them in 2025.

1. Mixing Business and Personal Finances

Combining personal and business expenses makes it incredibly difficult to track profitability, manage taxes, and maintain accurate records.

Fix: Open separate bank accounts and credit cards for your business. Keep transactions clean and consistent.

2. Not Keeping Receipts or Documentation

Missing receipts means missing backup if you’re ever audited or questioned about deductions.

Fix: Use a receipt management tool like Dext or Expensify to digitize and store receipts as you go.

3. Falling Behind on Bookkeeping Tasks

Waiting until year-end to reconcile your books often leads to errors and overlooked expenses.

Fix: Set a recurring weekly or monthly time to update your books. Treat it like an essential meeting.

4. Misclassifying Expenses

Improper categorization can result in inaccurate reports and missed deductions.

Fix: Learn standard expense categories or consult a professional to set up your chart of accounts correctly.

5. Ignoring Bank Reconciliations

Unreconciled accounts can hide fraud, errors, or bounced transactions.

Fix: Reconcile your bank and credit card accounts monthly to ensure your books match your statements.

6. Using the Wrong Software (or None at All)

Manual bookkeeping or outdated systems increase the risk of human error and inefficiency.

Fix: Choose bookkeeping software that suits your business size and industry—QuickBooks Online, Xero, or Wave are excellent starting points.

7. Not Seeking Help When Needed

Too many business owners wait until tax time to clean up their books—a costly and stressful move.

Fix: Don’t hesitate to bring in a professional bookkeeper to review your records quarterly or assist regularly.

Avoiding These Mistakes = Better Business Health

Good bookkeeping isn’t just about staying out of trouble. It empowers you to make smart decisions, track growth, and plan for the future. By avoiding these common mistakes, you’ll build a stronger financial foundation for your business in 2025 and beyond.

Want to clean up your books the right way? Copperhead Financial helps small businesses avoid these pitfalls and more. Let's talk about how we can support your financial goals.