3 Common Mistakes Small Businesses Make: Mistake #2
The first mistake, not saving receipts for purchases, can really trip up a business when it comes to tax time and deductions. The second mistake can creep up on a business owner without them realizing the problems they are causing.
The second common mistake we find business owners, especially small business owners, making is:
Mixing personal and business expenses
Small business owners often pay for business expenses out of pocket or with their own personal credit card and then forget to track these expenses and submit them to the company for reimbursement. It’s a big no-no with the IRS to blend your funds like this. It is imperative you keep separate business and personal accounts. Have a credit card that is only for business expenses, which is paid via a business checking account. If you have to use your own cash, make sure and document this and take care of the reimbursement right away. On the other hand, if you buy something that truly is a personal expense, don’t even think of expensing it as a business expense. The IRS can sniff out padded deductions and may come calling with an audit, so don’t risk it!