Why Small Business Owners Make a Mistake by Not Keeping Receipts

looka_production_176641351 • May 12, 2025

As a small business owner, you’ve got a lot going on. You're likely juggling operations, sales, customer service, and finances. It's easy to overlook what you consider to be minor details: saving your receipts. But failing to keep proper documentation for your business expenses is one of the most common, and costly, accounting mistakes entrepreneurs make.


Here’s why not keeping receipts can hurt your business more than you think:

  1. Inaccurate Financial Reporting

    While this can be the case if you are personally doing your own accounting, this is 100% the case if you are paying someone to do your bookkeeping.

    It’s mind-boggling how many times I’ve heard the following conversation:

    Owner: This transaction here is classified wrong. Why?

    Bookkeeper: I asked you for the receipt 3 times and never got it. Finally, in order to close the month, I had to put it somewhere, so I made my best guess.

    If the issue were just 1 transaction, any decent bookkeeper would personally reach out to at least ask what the transaction is for. Unfortunately, the reality is usually the majority of the transactions are being categorized without a receipt. Even the best bookkeeper in the world can make a mistake when having to guess at hundreds or thousands of transactions per year.

  2. Improper Budgeting

    I’ve met some small business owners who don’t care too greatly about how each expense is categorized or if one or a couple are wrong. However, I’ve yet to meet one who didn’t care about being able to make informed decisions about where to cut costs or invest more.

    The simplicity of this seems too obvious to state, but it’s just not possible to make accurate and intelligent decisions about your spending if you don’t know what you’re spending your money on.

  3. Your Team Plays Follow the Leader

    Raise your hand if you’ve heard this from an owner: “If they can’t provide the receipt, charge it back to them personally.” Doing this is great in theory, and it can work great in practice. But the truth is the team is learning to not submit receipts from their leader, whether that’s a manager or an owner.

    The team knows whether an owner or manager submits receipts and they also know what level of punishment is placed on them when this isn’t provided.

    The culture of accountability starts at the top.

  4. Digital Tools Make It Easier Than Ever

    I’ll be the first person to admit I’m not the most App-Friendly phone user in the world. I’ll also be the first person to say there is no good excuse to not provide receipts anymore.

    Apps like Expensify, QuickBooks, and Zoho Expense and many more allow you to scan and store receipts digitally. Many even integrate with your accounting system and automatically categorize expenses and the ones that don’t provide simple and easy ways for the user to add details about transactions that are provided to your bookkeeper.

    Providing receipts is now only slightly more complicated than taking a picture with your phone.

  5. Potential Tax Consequences

    The IRS requires documentation for business expenses if you want to claim deductions. Without receipts, your ability to prove those expenses is significantly weakened, which could lead to missed deductions, and, more likely, audit issues.

    While the goal is to not get audited, small business owners often look for every possible write off they can get. If you’re audited and can’t back up your deductions, the IRS may disallow them—leading to back taxes, penalties, and interest.

    Receipts are your best defense. They support your claims and help reduce your taxable income legitimately..

Final Thoughts:



Keeping and providing receipts might seem like a tedious task, and it’s definitely not as sexy as selling the next big account, but it’s a foundational part of sound business accounting. It

The Hidden Risk: Why Skipping Transaction Reconciliation Hurts Small Businesses

By looka_production_176641351 • June 19, 2025
Managing finances is one of the most critical and overlooked aspects of running a small business. Among the many accounting practices that help keep a company financially healthy, transaction reconciliation is one that’s frequently skipped or mishandled. Unfortunately, this mistake can lead to cash flow issues, tax headaches, and even fraud going unnoticed. What Is Transaction Reconciliation? Transaction reconciliation is the process of comparing two sets of records to ensure they match. The records are typically your internal financial records and your bank or credit card statements and consists of confirming the following: Deposits and withdrawals are correctly recorded Expenses match receipts and invoices No transactions are missing or duplicated No unauthorized charges have occurred Reconciling regularly helps you catch errors early and gives you a clear, accurate picture of your company’s financial health. Why Small Businesses Often Skip Reconciliation Here are some of the key reasons small businesses struggle with transaction reconciliation: 1. Lack of Time and Resources Many small business owners wear multiple hats, including accountant. Reconciliation often falls to the bottom of the to-do list, especially when daily operations demand constant attention. 2. No Dedicated Bookkeeper Without a trained bookkeeper or accountant, business owners may not know how or when to reconcile. They may rely solely on what’s in the bank account to guide financial decisions, without verifying the accuracy of those balances. 3. Overreliance on Software Modern accounting software like QuickBooks or Xero makes bookkeeping easier, but it's not foolproof. If transactions are miscategorized or missed, the reports will be inaccurate, and automated reconciliation won’t catch everything unless it’s reviewed manually. In addition, there can be failures in how the systems sync, causing transactions to be completely missed or duplicated even. 4. Misunderstanding Its Importance Some small business owners assume that reconciliation is only necessary at tax time or when there’s a financial discrepancy. In reality, it should be a monthly (or even weekly) practice to keep financial records clean and trustworthy. 5. Gatekeeper Issues Some small business owners are concerned with sharing their bank account information with their accountants. Despite the accountant having access to their information through the accounting they are doing, there is sometimes a reluctance in providing financial statements. The Risks of Not Reconciling Transactions Failing to reconcile your books regularly can lead to several problems: Cash Flow Issues : If your records are off, you may believe you have more money than you actually do leading to overspending or bounced payments. Missed Errors and Fraud : Without reconciliation, duplicate charges, unauthorized transactions, or data entry errors can slip through unnoticed. Inaccurate Financial Statements : Your profit and loss statements, balance sheets, and tax returns will be unreliable, which can affect decision-making and financing. Compliance Risks : For businesses that undergo audits or need to file taxes accurately, unreconciled accounts can result in penalties or legal trouble. How to Avoid This Mistake Here are a few practical tips to ensure transaction reconciliation becomes a consistent part of your accounting routine: Set a Schedule : Reconcile monthly at minimum and weekly if you have high transaction volume. Use Software Wisely : Accounting software can help but always review automated matches carefully. Hire a Professional : Consider working with a bookkeeper or CPA who can manage or audit your reconciliations. Stay Organized : Keep invoices, receipts, and payment records in order to match against bank transactions easily. Final Thoughts While transaction reconciliation may seem tedious, it's a fundamental habit for maintaining control over your business finances. Small businesses that prioritize this task are significantly less likely to encounter financial difficulties and are better positioned to grow sustainably. Don’t wait for an audit or a cash flow crisis to discover an accounting mistake. Start reconciling today and take charge of your financial health.

Why Not Using Accounting Software Is a Major Mistake for Small Business Owners

By looka_production_176641351 • June 6, 2025
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Generally running your own small business comes with wearing more hats than you ever cared to wear – CEO, marketer, sales rep, and bookkeeper. With so many responsibilities, it’s easy for some to be considered more important than others, or more likely, you focus more on the responsibilities that are more natural for you. As most entrepreneurs are not accountants, bookkeeping is secondary, and a natural byproduct is improper expense classification.