Houston – Tax season can be stressful for small business owners, especially when important deadlines are approaching. But waiting until tax time to get organized could lead to costly mistakes and a bigger tax bill.
Accountant and business strategist Dr. Rosie Thomas says one of the biggest mistakes she sees is failing to track business expenses and deductions throughout the year.
Thomas explained keeping accurate records of money coming in and going out can help business owners identify deductions and potentially lower their tax liability.
Thomas recommends using accounting software such as QuickBooks to categorize transactions and stay organized. For business owners who can afford it, working with a bookkeeper can also help keep financial records in order while providing a clearer picture of the company’s finances.
Another common mistake is mixing personal and business expenses. Thomas recommends maintaining separate bank accounts and credit cards for business and personal spending. This makes it easier to track business income and expenses and can simplify the tax-filing process.
Business structure is another area entrepreneurs should pay attention to. Many people start as sole proprietors, but as a business grows, it may make sense to explore other structures, such as an LLC or S corporation. The right structure depends on a business owner’s individual circumstances, income and goals, so consulting with a tax professional is important before making a change.
Thomas also recommends thinking about taxes throughout the year instead of waiting until filing season. Depending on a taxpayer’s situation, different deadlines may apply, including estimated tax payment deadlines and the Oct. 15 extended filing deadline.
For tax preparation or business mentorship, visit Drrosiethomas.com
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