Spooky Small Business Mistakes That Haunt at Tax Time

Chris Coggins • October 14, 2025

Avoiding Frightful Financial Slip-Ups Before They Come Back to Haunt You

October is the month of pumpkins on porches, spooky movie marathons, and kids dressed like superheroes running door-to-door. But for small business owners, October can also be a reminder of something far scarier than ghosts or goblins: tax mistakes.


While most frights in October are temporary (the jump scare when you forget you left that skeleton decoration in the hallway), tax mistakes can stick around and haunt your business long after the candy is gone. The good news? With a little awareness and preparation, you can avoid the kind of financial horror stories that make your accountant shiver.


Let’s shine a flashlight on some of the most common spooky mistakes business owners make—so you can avoid them and sleep soundly this tax season.


The Phantom of Poor Recordkeeping


Nothing sends chills down the spine of a business owner like the words, “Do you have documentation for that?”


Messy, incomplete, or missing records are the stuff of nightmares. Imagine opening a drawer full of crumpled receipts right before a tax deadline. Or worse—getting audited and realizing you can’t prove half of your deductions.


Poor recordkeeping not only makes tax time stressful, it can also cost you money. Without proper documentation, deductions disappear into thin air.


How to Banish the Phantom:


  • Use cloud-based accounting software to track expenses in real time.
  • Digitize receipts immediately with an app instead of stuffing them into the glove box.
  • Keep personal and business expenses separate (yes, even that “business” Target run).


The Werewolf of Commingled Accounts


During the day, your checking account looks innocent enough. But at night, it transforms—personal expenses mixed with business transactions, creating a beast that’s hard to tame.


Mixing personal and business funds is one of the scariest mistakes a business owner can make. Not only does it make bookkeeping a nightmare, but it can also cause problems if the IRS comes sniffing around. And if your business is an LLC or corporation, it can even put your liability protection at risk.


How to Tame the Werewolf:


  • Open separate bank accounts and credit cards for your business.
  • Pay yourself a salary or owner’s draw instead of dipping directly into business funds.
  • Resist the urge to swipe the business card for personal groceries, no matter how tempting.


The Zombie of Missed Deadlines


Missed deadlines have a way of rising from the grave to haunt you. Payroll filings, estimated tax payments, annual returns—ignore them at your peril.

The IRS doesn’t hand out candy for being late; they hand out penalties and interest. And once they start adding up, it can feel like your cash flow is being slowly eaten alive.


How to Stop the Zombie in Its Tracks:


  • Set up reminders in your calendar for all tax deadlines.
  • Work with a tax professional who can help keep you accountable.
  • If you do miss a deadline, act quickly. The sooner you address it, the less damage it can do.


The Poltergeist of Payroll


Payroll mistakes may be invisible at first, but they can cause chaos behind the scenes. Misclassifying employees as independent contractors, miscalculating withholdings, or failing to file payroll taxes properly can all invite IRS scrutiny.


And here’s the really spooky part: payroll mistakes don’t just vanish. They linger, creating problems for months—or even years—until they’re properly fixed.


How to Clear Out the Poltergeist:


  • Use a reputable payroll service instead of handling it all manually.
  • Double-check worker classifications (employee vs. contractor).
  • Make sure tax withholdings and filings are accurate and timely.


The Vampire of Ignored Tax Planning


You may not see it lurking in the shadows, but ignored tax planning is slowly draining your business of resources. When you wait until the last minute to think about taxes, you miss opportunities to save money through deductions, retirement contributions, or strategic timing of income and expenses.


The result? You hand over more of your hard-earned money than necessary—just like a vampire quietly sipping away at your profits.


How to Ward Off the Vampire:


  • Review your financials mid-year, not just at tax time.
  • Consider strategies like retirement contributions, equipment purchases, or adjusting how you pay yourself.
  • Work with a tax advisor who can help you identify opportunities before it’s too late.


The Skeleton Crew Mindset


Here’s another frightening mistake: trying to do everything yourself. Many business owners wear too many hats—bookkeeper, tax preparer, HR manager—believing they’re saving money. But in reality, this skeleton crew approach often costs more in mistakes, stress, and missed opportunities.


How to Flesh Out Your Team:


  • Outsource tasks that drain your time or expertise, like payroll or bookkeeping.
  • Bring in professionals for tax strategy, compliance, or legal matters.
  • Remember: your time is valuable. Focus on what you do best and delegate the rest.


The Curse of Ignoring Cash Flow


Even a profitable business can crumble if cash flow is ignored. Many entrepreneurs fall into the trap of focusing only on sales and revenue, forgetting that bills, payroll, and taxes all demand actual cash on hand.


Ignoring cash flow is like ignoring a creaky floorboard in a haunted house—it might not collapse today, but eventually, it will give way.


How to Break the Curse:


  • Monitor cash flow regularly, not just at year-end.
  • Build a cushion for unexpected expenses or seasonal slowdowns.
  • Don’t forget to set aside money specifically for taxes—April will come faster than you think.


A Final Word Before the Clock Strikes Midnight


October is the season of thrills, chills, and pumpkin spice everything. But don’t let business and tax mistakes be the monsters that keep you up at night. With good records, proper planning, and the right support, you can banish these financial frights before they ever get a chance to haunt you.


So while the kids are out trick-or-treating, take a moment to review your own financial house. Make sure there are no skeletons in the closet (financially speaking, of course). And if you find one? Don’t panic. Shine a light on it, fix it, and move forward.


Because unlike the haunted houses on your block, running a business doesn’t have to be scary. With the right game plan, it can be more like carving pumpkins—messy at times, but ultimately rewarding, creative, and even a little fun.


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