Ask any tax professional what keeps them busy in March and April and you will not hear wild fraud schemes first. You will hear about missing forms, fuzzy records, and basic choices that snowball into penalties. The good news is that most of these problems are avoidable. The bad news is that the habits that cause them are very human and very common.
If you have ever stared at a tax notice and thought, "We are not criminals, how did this happen?" you are exactly who this is for.
Let us start with the classic. You grab the business debit card to pay for groceries. You buy a flight for a family vacation on the company Amex because you are short on cash this month. You promise yourself you will sort it out later.
Later never comes. At tax time, your preparer is forced to guess which transactions are truly business related. In a pinch, they might deduct less than they could just to stay on the safe side. In an audit, an agent who sees personal spending flowing through a business account becomes suspicious of everything else.
The fix is boring but powerful. One business checking account. One business credit card. Owners get money out of the business through a documented salary or owner draw, not random swipes. If you accidentally pay a personal bill with business funds, record it as a draw the same week instead of pretending it will disappear.
Another frequent headache involves contractors. When you pay non employees, the IRS often expects a Form 1099 to be filed, summarizing what they received. If you ignore this and the contractor reports a different number, the IRS can send letters to both of you.
The threshold and rules change occasionally, but as a simple habit, capture W-9 forms from vendors before you pay their first invoice. That gives you their legal name, tax ID, and address. Then, once a year, have your accounting system run a 1099 report so you can file on time. It is not glamorous work, but it keeps you off certain enforcement lists.
This one keeps growing as remote and gig work expands. It is tempting to call everyone a contractor. No payroll taxes, no benefits, nice and simple. Until the state labor department or the IRS decides those "contractors" look a lot like employees: fixed schedules, close control, work that is core to your business.
Reclassifications can lead to back payroll taxes, interest, and penalties. In some cases, states can also pursue unpaid unemployment insurance or workers compensation premiums. That turns a short term cash saving into a very expensive bill.
There is no single test that covers every situation, but if you set hours, provide tools, and supervise the details of how work is done, you should at least ask your advisor whether the role really belongs on payroll.
Many small businesses legitimately spend money on travel, meals, home office space, and vehicles. The issue is not whether the expense is allowed in theory. It is whether you can prove it when asked.
Common weak spots:
In normal years, nobody asks. In an audit year, those gaps become a problem. A simple system can help: snap pictures of receipts into a folder or app, keep a basic mileage log on your phone, and jot down short notes like "lunch with supplier about new contract" on calendar events or receipt images.
Owners who are used to a paycheck often forget about quarterly estimated taxes when they start a business. Nobody withholds for you anymore. The first year or two, cash is tight, so the estimates get skipped. Then the tax return shows a balance due plus an underpayment penalty. It feels like a punishment for finally making money.
A better approach is to set aside a fixed percentage of every owner distribution into a separate savings account. Even 20 to 30 percent can soften the blow when estimates come due. Once your profits stabilize, your CPA can help you dial in more precise quarterly amounts so you avoid both big surprises and unnecessary overpayments.
Maybe the most human mistake of all is silence. A business owner feels embarrassed about messy books or late filings, so they avoid their accountant until the last possible minute. By then, options are limited. Extensions get filed, but underlying issues remain.
If you are behind, the best time to admit it is right now, not three days before the deadline. Most tax professionals are far less judgmental than you think. They would rather help you clean up this year and build better systems for next year than keep patching the same holes over and over.
Good tax filing is not about perfection. It is about making fewer unforced errors. If you fix just the habits in this list, you will already be ahead of a large chunk of the small business world.
November 19, 2025
The image of a CFO sitting down the hall in a corner office does not match how many growing companies work today. Fractional CFOs are part of that shift.
November 19, 2025
When you start talking to investors or lenders, the quality of your numbers suddenly matters a lot. A fractional CFO can be the difference between a rough pitch and a calm one.
