5 Common Bookkeeping Mistakes Small Business Owners Make — And How to Avoid Them
When you’re wearing all the hats in your business, bookkeeping can often fall to the bottom of the priority list. Unfortunately, that can lead to costly mistakes come tax time, missed deductions, or issues if the CRA ever comes knocking. At Ask-Her® Tax, we’ve worked with countless small and Indigenous-owned businesses across Alberta, and we’ve seen firsthand the most common pitfalls — and how to fix them.
Here are five bookkeeping mistakes we see far too often, and simple tips to help you stay on track.
1. Not Keeping Receipts Organized
Many business owners think digital bank statements are enough. But come audit time, the CRA may want to see the original receipt. Tossing everything into a shoebox or mixing personal and business expenses can cost you valuable deductions.
What to do instead:
Use a digital receipt-tracking app or cloud folder. Snap photos of receipts on the go and label them clearly by date and category. Or work with a bookkeeper who will organize it all for you monthly.
2. Missing Out on Eligible Deductions
If you don’t know what you can write off, you’re likely leaving money on the table. Things like home office space, mileage, and software subscriptions are often missed.
What to do instead:
Keep a running list of recurring monthly expenses related to your business. Talk to a tax professional (like us!) to learn what qualifies based on your structure.
3. Doing It All Manually
Many small businesses start out using spreadsheets to track income and expenses. That’s okay for a while, but as your business grows, so does the risk of error.
What to do instead:
Switch to a cloud-based bookkeeping system like QuickBooks or Wave. These platforms sync with your bank account and save you time. Better yet — let us manage it for you while you focus on growing your business.
4. Mixing Personal and Business Finances
We can’t stress this enough: keep your business finances separate. Mixing the two makes it nearly impossible to reconcile your books or file taxes properly — and it could raise red flags with the CRA.
What to do instead:
Open a dedicated business bank account and credit card. This not only keeps your finances cleaner, but it also helps build your business credit profile.
5. Waiting Until Tax Season to Catch Up
Scrambling in April to organize a year’s worth of receipts and invoices is overwhelming — and prone to mistakes. It also increases the risk of late filings and penalties.
What to do instead:
Bookkeeping is best done monthly. If you can’t stay on top of it, outsource to a professional. We offer flexible monthly packages that keep you organized year-round.
Avoiding these mistakes can save you time, stress, and money.
At Ask-Her® Tax, we’re here to make bookkeeping easy, accurate, and empowering — so you can stay focused on what you do best.
If you have any questions at all regarding the information in this post please reach out to us at Ask-Her!
Written and composed by:
Shelilia Vivier - President/CEO
Ask-Her™ Tax + Bookkeeping Inc.
Copyright 2024