Common Bookkeeping Mistakes to Avoid in 2025

For small businesses, keeping the books clean is essential to running your operation smoothly. Improper bookkeeping practices can lead to hours of unneeded extra work. Below are some common mistakes to avoid making and how to avoid making them.

Keep Personal and Business Expenses Separate

Small business owners may find it easy to group expenses together - but this later becomes an accounting nightmare if you’re ever audited. It also removes a layer of legal protection should the need ever arise. It is important to keep separate accounts for your business and personal expenses. Having a separate credit card for business expenses that is visually different (i.e. a different color, a sticker indicating it’s your business card, etc.) can also help you from mixing the two up if you’re paying in a rush. 

If you accidentally pay out of the wrong account, it’s not the end of the world. As long as you reimburse yourself and document it correctly, things will balance out. Recording a purchase as “Owner’s Draw” is one effective way to remedy this mistake.

Account for Cash Payments Properly

If your business regularly deals with cash, it is important to make sure these transactions are recorded properly. It may be tempting to record all cash payments under one lump sum, but this can lead to serious issues later on if you’re ever audited. Keeping a dedicated cash and receipts journal, a daily cash sheet, and a petty cash fund are all effective ways to organize your cash transactions. 

Regularly Review your Financial Statements

Financial statements provide valuable insights on how your business is performing. Reviewing them is a great way to stay on top of your budget, maximize your tax deductibles, and spot trends within your business. If you are not regularly reviewing these or do not know how, you are missing out on pertinent information as to how your business is performing. 

Keep Your Receipts

It is recommended you keep receipts for business expenses for seven years in the event of an audit. You may be asked to present receipts. Digital records of receipts are acceptable - and would likely be the easiest way to keep track of them. Consider investing in a scanner so you can digitally file away your receipts without having to keep track of physical copies.

Categorizing and recording the details of the receipt will also help you justify the expense and easily identify it if ever questioned.

Reconcile Once a Month

Reconciling your monthly statements will help you verify the amount in your checking account, as well as catch any bookkeeping errors early on. Your monthly statements are showing each transaction that goes through your account each month, so it is important to verify them each month to spot any abnormalities.

Ready to take control of your finances? At Brecken Business Solutions, we’re committed to simplifying the tax process for businesses in the Mountain States. To see what services we offer, click here, or contact us today!