When it comes to accounting, mistakes can be easy to make and costly to recover from.

Having an extra pair of eyes on your finances can help you avoid errors and identify systematic inefficiencies.

The good news is that you can learn from the errors and triumphs of seasoned entrepreneurs who have been through it all.

Here are 10 all-too-common accounting mistakes that all small-business operators should know and avoid:

1 Mixing Personal and Business Spending

Many solo entrepreneurs don’t have a dedicated business account, which can lead to missed savings and loss of liability protection. To maximize your allowable tax deductions, you need a clear and complete record of your business-related expenses. And if you’ve established an LLC or corporation, you should avoid commingling funds to maintain the integrity of your legal business entity.

2 Procrastinating on Your Bookkeeping

It can be a real challenge to focus on day-to-day operations while keeping up with all your monthly, quarterly, and annual accounting tasks. But, getting behind on routine bookkeeping can cause compounding errors, and missing tax deadlines can result in stiff penalties. At the beginning of each calendar year, be sure to schedule all your due dates, including employment taxes and sales tax returns.

3 Misclassifying Employees

Treating nonexempt employees as exempt – or employees as independent contractors – can land you in financial trouble. But who counts as what? The standards are a bit complex, so you’re better off relying on primary sources rather than common hearsay. Consult the IRS, the Fair Labor Standards Act (FLSA), and your state’s labor department. And if you’re in any doubt, ask an attorney.

4 Mislabeling Income and Expenses

Improper categorization of your regular inflow and outflow of money can distort your financial picture and impede strategic decision-making. Precision is necessary when creating categories, but too much detail can complicate bookkeeping and lead to analysis paralysis. Take the time to explore the digital expense management and analytics tools that come built-in with your business cards and accounts.

5 Failing to Reconcile

If you don’t regularly compare your internal records against your account statements, it’s easy for a cash crunch to take you by surprise. The reconciliation process can also reveal recurring miscalculations, bank errors, and signs of fraudulent activity or identity theft. It’s wise to establish a regular monthly schedule and streamline the process with accounting software that imports and categorizes your account data.

6 Mismanaging Billing

If you sell on credit, optimize your invoicing policies and processes to facilitate healthy cash flow and customer relationships. An old business adage goes: collect fast, pay slow, and invest your reserves. That strategy hinges on timely, client-friendly invoicing. Use digital tools to automate invoices and reminders, reward early payment with discounts, and provide a range of payment options.

7 Neglecting Communication

Misunderstandings can be costly, so effective accounting requires clear and open communication channels across your organization. Many things can fall through the cracks, including reimbursable expenses, inventory needs, and revenue recognition for new sales. Prioritize team coordination and hold regular meetings to align day-to-day procedures and long-term goals.

8 Throwing Away Receipts

Even in the digital age, you must keep your paper receipts and invoices organized and archive them for at least seven years. Card and account statements are helpful for budgeting and reconciliation, but they don’t have the same depth of information. If you ever discover a discrepancy – or get audited by a tax or labor authority – you’ll be glad you have backup documentation.

9 Ignoring Red Flags

Whether it originates from a dishonest employee or an international cybercriminal, fraud can pose an existential threat to small businesses. Warning signs include duplicated payroll records, excessive voids or returns, and sudden activity in long-dormant accounts. Periodic audits and basic security measures like multifactor authentication and division of duties can help protect your money and data.

10 Trying To Do It All Yourself

Up-and-coming entrepreneurs tend to have a can-do attitude, but you need to know what you can handle and what you’re better off delegating or outsourcing. Hiring a professional to perform regular bookkeeping duties, annual audits, and tax preparation can help you leverage economies of scale. Plus, having an extra pair of eyes on your finances can help you avoid errors and identify systematic inefficiencies that could impede your success.

A Financial Partner You Can Trust

For individualized guidance on enhancing your bookkeeping practices, consult your financial institution.

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