Real Bookkeeping Mistakes We’ve Fixed—And What You Can Learn From Them

Real Bookkeeping Mistakes We’ve Fixed—And What You Can Learn From Them

Bookkeeping mistakes happen—especially when you're juggling 1,000 things as a business owner. But small errors can snowball into big problems: missed deductions, IRS penalties, or reports that don’t reflect reality.

Here are some real mistakes we’ve seen (and fixed!)—and how you can avoid them in your own business.

1. Mixing Personal and Business Expenses

The mistake: Using one bank account or credit card for everything.

The fix: We helped the client open a separate business account, set up auto-categorization rules in QuickBooks, and categorized and corrected a year’s worth of mixed transactions.

📌 What you can learn: Always keep business and personal finances separate. It’s cleaner, more professional, and required if you want to protect your business entity and support your deductions during an audit.

2. Misclassifying Expenses

The mistake: Putting everything under “Miscellaneous” or choosing the wrong categories (like classifying a contractor as an employee or software as office supplies).

The fix: We reorganized the client’s chart of accounts and reclassified expenses for accurate reports and easier tax filing.

📌 What you can learn: Your chart of accounts should reflect how your business operates. Clear categories = better insights and fewer headaches at tax time.

3. Not Reconciling Bank Accounts

The mistake: Assuming the bank feed in QuickBooks is always accurate.

The fix: We reviewed each month’s bank statements, caught duplicate transactions, and reconciled everything back to the penny.

📌 What you can learn: If you’re not reconciling monthly, your books could be missing transactions—or overstating income. It’s a non-negotiable step.

4. Forgetting to Track 1099 Contractors

The mistake: Paying contractors via Venmo, Zelle, or checks with no W-9 on file. Then scrambling at year-end to issue 1099s.

The fix: We set up a contractor onboarding process, collected W-9s before payment, and tracked payments by vendor to simplify 1099 filings.

📌 What you can learn: If you pay contractors more than $600/year, you need to track it properly from day one. And with recent IRS changes to 1099-K reporting, it's more important than ever to separate contractor payments from platforms like PayPal or Venmo.

5. Falling Behind on Bookkeeping

The mistake: Letting months (or years) go by without updating books.

The fix: We did a full catch-up, built a monthly workflow, and trained the client on how to stay current moving forward.

📌 What you can learn: You don’t have to do it all alone—but you do need a system (or a partner!) to stay consistent.

6. Ignoring Sales Tax Obligations

The mistake: Not collecting or remitting sales tax correctly across different states or platforms.

The fix: We assessed the client’s sales tax nexus, registered in the right states, and implemented automated tracking with their POS and accounting software.

📌 What you can learn: If you sell across state lines (or even within your state), sales tax compliance can get complicated fast. Know where you have nexus and automate where possible.

Final Thoughts

Bookkeeping doesn’t have to be perfect—but it does need to be accurate and timely. The good news? Every mistake is fixable with the right systems, automation tools, and support.

Need help cleaning up messy books or setting up a system that works for you? KB2 Bookkeeping & Tax is here to help you turn chaos into clarity. Let’s get it done—without the judgment. 💼✨