Burkland Brief:
- Mixing personal and business finances causes tax and compliance headaches down the road. Set clean boundaries early.
- Profitability ≠ cash flow. A positive bottom line doesn’t guarantee you won’t run out of money.
- Misclassifying revenue, expenses, or owner contributions can lead to inaccurate reports and unnecessary taxes.
- Compliance costs climb with growth. Plan ahead or risk surprise bills, fraud and audit risks.
When you’re juggling a dozen priorities, accounting usually falls to the bottom of the list. But ignoring your books can cost you in wasted time, unnecessary taxes, missed deductions, even blown financing or acquisition opportunities.
At Burkland, we’ve worked with hundreds of growing businesses across every stage and industry. We’ve seen what works, and what quietly goes off track until it causes real damage. Here are the most common accounting mistakes we help our clients fix, and how to avoid them before they become costly problems.
1. Mixing Personal and Business Finances
It starts innocently—putting a charge on your personal card or paying a vendor from your own account. But the paper trail gets messy fast. Come tax time or during an audit, untangling personal from business transactions is a time-consuming nightmare. It also raises questions about your business’s legitimacy and can create complications with loans or investors.
The fix: Open a business bank account and credit card right away. Keep personal and business transactions strictly separate. If you need to contribute personal funds, record it clearly as a loan, equity contribution, or reimbursement and maintain documentation.
2. Confusing Profit with Cash Flow
You landed a big contract. On paper, your business is profitable. But your account balance says otherwise, and payroll’s due tomorrow.
Many owners confuse profit (what you earn) with cash flow (what’s actually in the bank). But timing matters. If customers pay late or you front-load expenses, a profitable business can still run out of cash.
The fix: Use a rolling 12-month cash flow forecast. Track runway, burn rate, and timing of major outflows. This helps you plan—and sleep—better. A good accountant can help you get this set up and keep it updated.
3. Misclassifying Revenue and Expenses
Improper revenue recognition can throw off your financials. So can failing to distinguish between operating expenses (OpEx) and capital expenditures (CapEx), or misclassifying prepaid costs like insurance.
These errors don’t just confuse your books. They can cause tax trouble, distort profitability, and even tank financing or sale opportunities.
The fix: Adopt accrual accounting early, even if cash accounting seems easier. Work with an accountant who can ensure revenue is recognized correctly and expenses are properly categorized. Clean books = better decisions and fewer surprises.
4. Ignoring Taxes Until They’re a Problem
It’s a common (and costly) myth: “We don’t need to worry about taxes until we’re profitable.” Not true. Even unprofitable businesses owe payroll, sales, franchise, or excise taxes. And many miss out on valuable tax credits, especially the R&D credit.
Sales tax compliance is another stumbling block. If you sell products or services across state lines, you may be responsible for collecting and remitting tax even without a physical presence.
The fix: Talk to a tax pro before there’s a problem. Automate sales and use tax tracking with tools like Avalara or TaxJar. And ask your accountant whether you qualify for R&D tax credits. You might be leaving tens (or hundreds) of thousands of dollars on the table.
5. Mishandling Owner Contributions
When you put your own money into the business, is it a loan? An investment? A reimbursable expense? If you don’t document it properly, it can cause problems later, especially when you try to pay yourself back or bring on a partner or buyer.
The fix: Decide up front how you want to categorize the funds. If it’s a loan, draft a simple agreement with terms. If it’s equity, update your cap table. And always keep a clean paper trail.
6. Skimping on Preparation for Due Diligence
Thinking of selling the business? Taking out a loan? Adding a partner or outside investor? You’ll go through rigorous due diligence and if your financials are disorganized, it can delay or even kill the deal.
The fix: Act like you’re always preparing for due diligence. Keep your books clean, your records current, and your financial reports accurate. If you have equity holders, keep your ownership ledger up to date and audit-ready.
7. Underestimating Compliance Costs as You Grow
Early on, compliance may feel like a minor line item. But as your business grows, so do your obligations and your risks. Annual reports, business licenses, payroll taxes, audits, HR compliance… it adds up fast.
The fix: Budget for compliance. Include legal, accounting, HR, and licensing costs in your forecasts. Hire pros to handle it so you don’t miss deadlines or risk penalties. It’s much cheaper to stay ahead than to clean up later.
8. Lacking Basic Internal Controls
Even with a small team, weak financial controls can lead to errors—or worse. Duplicate payments, incorrect reimbursements, or even internal fraud are more common than most owners realize.
The fix: Put a few key controls in place:
- Separate duties (no one person should approve, pay, and record the same transaction).
- Require dual approval for large payments.
- Reconcile accounts monthly.
- Limit access to bank accounts and payroll systems.
Use tools like BILL or Ramp to automate workflows, set limits, and build accountability into your financial operations.
9. Waiting Too Long to Get Help
Many business owners try to manage the books themselves far longer than they should. Before you know it, you’re spending hours fixing accounting errors instead of running your business.
The fix: Hire an experienced bookkeeper or accountant early. If your business is growing or you’re planning a big move—expansion, financing, acquisition—bring in a fractional CFO. The time and money you’ll save will be more than worth it.
You Don’t Have to Be an Accounting Expert. You Just Need a System That Works.
Most accounting mistakes aren’t complicated. They’re just easy to overlook when you’re busy running a business. But ignoring them won’t make them go away, it just makes them more expensive.
The good news? You don’t have to go it alone. Burkland offers experienced accountants, tax professionals, and payroll specialists who help business owners like you build smart financial systems that scale with you.
Contact us to get your books in order, get your time back, and get ahead.