5 Common Tax Mistakes Business Owners Make (And Why We Keep Finding Them in New Client Files)
Published on July 11, 2025
When a business owner comes to us for the first time, we don’t just take their latest numbers and run. We go back.
We review previous tax returns, financial statements, and bookkeeping records—line by line, entity by entity.
Why?
Because that’s where the gold is.
And more often than not, it’s also where we find mistakes made by previous accounting firms.
Not little ones. Costly ones.
Missed deductions. Misclassified income. Tax strategies that don’t match the structure. Decisions that looked fine on paper but didn’t hold up in real life.
Why does this happen?
Sometimes it’s a lack of planning. But more often? It’s a lack of knowledge.
Most accounting firms are doing their best—but they’re stretched thin. They file what’s in front of them, answer the questions you ask, and keep things moving. What they don’t do is stop and dig. They don’t ask if you should be on a different accounting method, if your compensation strategy still makes sense, or if your real estate is pulling its tax weight.
We take a different approach.
We reverse-engineer what’s been done, clean up what was missed, and build a forward-looking strategy that fits your business now—and scales with you in the future.
Here are five of the most common mistakes we catch:
- You’re Paying Yourself Too Much in Wages
If you’re running an S-Corp and your W-2 salary is too high, you're paying more in income taxes and more in payroll taxes (Social Security and Medicare) than necessary.
The smarter play? Set a reasonable wage that reflects your role (the IRS requires this), and take the rest as a distribution. Same idea in partnerships and C-Corps—once you’ve hit Social Security or retirement limits, the extra wage just becomes extra tax.
We help our clients get that balance right—so you’re paying yourself well and paying less to Uncle Sam.
- You’re Missing Deductions You’re Entitled To
No one wants to mess around with questionable deductions. But what we see too often is the opposite—business owners leaving money on the table because they didn’t know what was allowed.
We’re talking about real, legal, totally IRS-backed deductions like:
- Home office expenses
- Cell phone and internet costs
- Annual meeting expenses
- Owner fringe benefits
- Health insurance premiums
- Business mileage and travel
- Professional development
- Retirement contributions
These aren’t “creative” tax strategies—they’re smart, standard practices for owner-operated businesses. But if your accountant isn’t bringing them up, they’re probably not getting taken.
That’s why we do a full deduction and fringe benefit review with every new client.
You can start here, if you’re curious.
- You’re Paying Tax on Money You Haven’t Collected
If you’re using accrual-basis accounting but could be on cash basis, you’re likely paying tax on income you haven’t even received yet. And that hurts.
Under accrual, you owe tax when you invoice—not when you get paid.
So if a client drags their feet for 90 days (or just disappears), you’re still taxed on the revenue.
If your business earns less than $25 million per year, you likely qualify for cash-basis accounting. That one change can put your tax bill in sync with your actual cash flow—and keep more money in your hands when it matters most.
We help business owners evaluate and implement that shift all the time. It’s not just cleaner—it’s usually cheaper.
- You’re Depreciating Real Estate at a Snail’s Pace
Most commercial properties (including residential rentals) qualify for accelerated depreciation. That means you don’t have to spread the write-off over 27.5 or 39 years—you can take 25–35% of the purchase price as a deduction within the first few years.
It’s called cost segregation, and it’s one of the fastest ways to improve cash flow if you own real estate.
The problem? Most accountants don’t bring it up unless you do.
At BGW, we analyze your property holdings during onboarding and let you know whether cost seg makes sense—based on your structure, goals, and upcoming tax position.
Why wait 30 years to write off a building you may only hold for 7?
- You’re Missing Tax Credits You Already Qualify For
Tax credits are more powerful than deductions—they reduce your tax bill dollar-for-dollar. And yet? They’re the most commonly missed opportunity we see.
The most frequent misses:
- R&D Credit – You don’t need a lab coat. If you’re improving systems, building new products, or even developing custom software, this might apply.
- Work Opportunity Tax Credit (WOTC) – If you hire employees from certain targeted groups (veterans, long-term unemployed, etc.), you could qualify for thousands in credits per hire.
And that’s not all. Depending on your business, you might also qualify for:
- Energy-efficient building credits
- Healthcare tax credits
- Training and apprenticeship incentives
- State and industry-specific programs
- Even retroactive credits from the past few years
We identify these during our intake process—and many of them can still be claimed even after a return has been filed.
So… What Might Be Hiding in Your Files?
Most of our new clients come in thinking they’ve got things mostly covered. And many of them do. But “mostly covered” usually still means missed money.
And here, we don’t do “mostly.”
We dig. We fix. We plan forward.
Let’s take a look together.
We’ll help you find what’s missing—and make sure it doesn’t get missed again.
