The Top 5 Bookkeeping Mistakes Small Business Owners Make (And How to Fix Them)

 

Let’s be honest—bookkeeping isn’t exactly the sexiest part of running a business. But unless you enjoy surprise IRS letters, sleepless tax seasons, and playing detective with your own bank statements... it’s kind of important. At BookWyrm Ledger Co., we’ve seen it all—and we’re here to help you avoid the biggest bookkeeping blunders that trip up even the savviest entrepreneurs.

1. Mixing Business and Personal Expenses

Why it’s bad: It muddies your financial waters faster than a toddler in a puddle. Plus, it’s a red flag during audits.

Real talk: Buying lattes or new shoes on your business card "just this once" turns into chaos come tax time. If it ain’t a business expense, don’t swipe it.

Fix it:

• Open a dedicated business bank account.

• Use a business credit/debit card only for business expenses.

• Track any owner’s draws or contributions clearly.

2. Falling Behind on Data Entry

Why it’s bad: Nothing says “panic” like scrambling to input six months of transactions the week taxes are due.

Fix it:

• Set a weekly calendar reminder to update your books.

• Use software like QuickBooks Online or Zoho Books to streamline entry.

• Consider outsourcing (hey, we know a great team… wink wink).

3. DIY-ing Without Understanding

Why it’s bad: Google is great for recipes. Not so much for nuanced tax categories or state-specific sales tax laws.

Fix it:

• Invest in a consult or training session to get the basics down.

• Know when to DIY and when to call a pro.

• Bookmark reputable sources—not random Reddit threads.

4. Not Reconciling Bank Accounts Monthly

Why it’s bad: Your software might say you have $5,000. Your bank might say you have $27. One of those is going to bounce.

Fix it:

• Reconcile monthly. Seriously.

• Catch duplicates, missing transactions, and bank errors.

• Many platforms have bank feeds, but still double-check.

5. Ignoring Your Financial Reports

Why it’s bad: Your P&L isn’t just for your CPA. It’s your business’s story—told in dollars.

Fix it:

• Review your Profit & Loss and Balance Sheet monthly.

• Look for trends: Are profits shrinking? Is overhead ballooning?

• Use this info to make better business decisions.
  
  
  

  
  
  

Wrap Up:

Bookkeeping doesn’t have to be a mystery novel full of plot twists and hidden expenses. Avoid these common mistakes and you’ll be ahead of the game—and your competitors. Need help cleaning up a mess or just want to get started the right way? Book a consult with BookWyrm Ledger Co. and we’ll help you tame the financial dragons.

Book a free consult or reply with your bookkeeping horror story—we've heard them all!

Accounting Across Industries: Cannabis, Construction, and Alcohol Introduction

 

Accounting isn’t a one-size-fits-all game. While the fundamentals remain the same—tracking income, managing expenses, and keeping Uncle Sam happy—each industry comes with its own quirks, rules, and headaches. When it comes to bookkeeping for cannabis businesses, construction companies, and alcohol producers (breweries, distilleries, and wineries), the differences are stark, but so are the similarities.

All three industries face complex inventory management, cash handling challenges, regulatory hurdles, and industry-specific tax rules. Whether you’re tracking cannabis plants from seed to sale, managing job costs on a construction project, or accounting for barrels of aging whiskey, having an industry-savvy accountant can make or break your bottom line. Let’s dive into the unique accounting needs of these three industries and how BookWyrm Ledger Co. can help businesses stay compliant, efficient, and profitable.

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1. Inventory Processes: From Plants to Projects to Pints

Inventory is a challenge across all three industries, but how it’s tracked and valued differs significantly.

• Cannabis: Due to strict state and federal regulations, cannabis businesses must follow meticulous inventory tracking. Systems like METRC or BioTrack require businesses to monitor plants and products at every stage, from seed to sale. Cost accounting for cannabis inventory is particularly tricky due to IRS Code 280E, which limits deductible expenses. Getting inventory classification right is crucial to avoid overpaying taxes (or worse, triggering an audit).

• Construction: Unlike cannabis and alcohol, construction companies don’t deal with traditional inventory. Instead, they manage job-specific materials, equipment, and labor costs. Proper job costing ensures each project remains profitable. Over- or under-allocating materials can throw off financials, making accurate tracking essential for forecasting and budgeting.

• Alcohol: Breweries, distilleries, and wineries operate under batch and process inventory accounting. Ingredients like grains, hops, or grapes may be purchased in bulk, but production cycles (especially in aging processes) mean costs must be carefully allocated over time. Compliance with the Alcohol and Tobacco Tax and Trade Bureau (TTB) requires detailed production and sales reporting to avoid fines.

Each industry must track inventory closely, but the methods vary dramatically. Whether you need help setting up a compliant tracking system or just want to make sure your cost allocations are accurate, BookWyrm Ledger Co. has you covered.

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2. Cash Transactions & Banking Issues: The Struggles Are Real

Handling cash is tricky, but in some industries, it’s an unavoidable reality.

• Cannabis: Since cannabis remains federally illegal, many banks refuse to work with dispensaries and growers. This forces businesses to operate heavily in cash, increasing risks for theft, fraud, and poor record-keeping. Businesses must be extra diligent about documenting every transaction, and working with an accountant who understands cash-heavy businesses is critical.

• Construction: While banking isn’t usually an issue, construction companies often deal with inconsistent cash flow. Retainage (a portion of payment held until project completion) can create cash crunches, making proper planning crucial. Additionally, contractors who rely on cash payments for subcontractors must be meticulous with documentation to avoid IRS scrutiny.

• Alcohol: Alcohol businesses typically have no trouble accessing banking services, but tasting rooms, bars, and direct-to-consumer sales mean they handle a lot of cash. Proper POS integration and cash-handling procedures are essential to prevent revenue leakage and tax issues.

Regardless of the industry, businesses that deal in cash must have strict financial controls in place. That’s where we come in—helping you implement best practices to protect your business and keep your books in order.

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3. POS Systems & Integrations: Connecting the Dots

A good point-of-sale (POS) system is essential for tracking sales, inventory, and customer data. However, not all systems are created equal.

• Cannabis: Due to compliance regulations, cannabis businesses need industry-specific POS systems like Flowhub, BioTrack, or Greenbits that integrate with state-mandated tracking systems. These systems ensure that every gram of product is accounted for and reported correctly.

• Construction: POS systems aren’t as relevant here, but construction companies rely heavily on invoicing and job costing tools. Integrating QuickBooks or Zoho Books with project management software like Procore can streamline financial tracking.

• Alcohol: Breweries and distilleries often juggle multiple sales channels—taproom sales, wholesale distribution, and online orders. POS systems like Arryved or Ekos help manage inventory and sales across these channels, ensuring compliance and smooth operations.

The right technology stack can save businesses hours of manual work and reduce costly errors. If you’re struggling with integrations, let’s talk about how to streamline your financial processes.

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4. Tax Compliance & Reporting: Navigating the Minefield

Each of these industries faces unique tax burdens that require careful planning.

• Cannabis: The infamous IRS Code 280E disallows standard business deductions for cannabis companies, making tax planning critical. Businesses can only deduct Cost of Goods Sold (COGS), which means proper expense allocation is key to minimizing tax liability.

• Construction: Sales tax is a major concern, as taxability varies by state and even project type. Some states require sales tax on materials, others on labor, and some on both. Misclassifying transactions can lead to costly penalties.

• Alcohol: Alcohol businesses must navigate federal excise taxes, state sales taxes, and distributor tax reporting. The TTB requires strict compliance, and mistakes can lead to hefty fines or even license revocation.

If tax compliance is giving you headaches, BookWyrm Ledger Co. can help you navigate these complexities and avoid costly mistakes.

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5. Payroll & Contractor Payments: Keeping It Legal

Hiring employees and contractors comes with different challenges for each industry.

• Cannabis: Payroll compliance is tough when dealing with cash payments. Many cannabis businesses struggle with worker classification, tip reporting, and payroll tax compliance, making professional guidance essential.

• Construction: Construction businesses frequently hire independent contractors, making 1099 reporting a major consideration. Additionally, prevailing wage laws in government contracts add complexity to payroll processing.

• Alcohol: Seasonal employees and tipped workers require careful payroll tracking. Tip reporting, overtime calculations, and compliance with liquor licensing labor laws all add layers of complexity.

Whether you need help with payroll setup, compliance, or contractor payments, we’ve got your back.

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6. Financial Reporting & KPIs: Know Your Numbers

Tracking key performance indicators (KPIs) is essential for long-term success.

• Cannabis: Gross profit margins, inventory turnover, and cash-to-sales ratios are critical metrics.

• Construction: Job profitability, labor utilization, and accounts receivable aging determine financial health.

• Alcohol: Cost per batch, sales mix analysis, and distribution margins help breweries, distilleries, and wineries stay profitable.

Understanding these metrics can give business owners a competitive edge. If you’re not sure what to track, let’s talk.

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Conclusion

While cannabis, construction, and alcohol businesses all have unique accounting needs, they share common challenges—complex inventory tracking, cash management issues, strict compliance requirements, and industry-specific taxes. Having an experienced accountant who understands your industry is the key to staying profitable and stress-free.

If your books are feeling more chaotic than your busiest sales day, let’s fix that. Book a free consult today at www.bookwyrmledger.co and let’s get your finances in order.

📢 280E ALERT: The IRS Is Coming for Cannabis Tax Deductions—And It Might Get Worse!

If you’re in the cannabis industry, you already know the nightmare that is IRC Section 280E. Since cannabis is still federally illegal, businesses can’t deduct normal expenses like rent, payroll, and marketing—only the cost of goods sold (COGS). That means dispensaries, growers, and other plant-touching businesses end up paying effective tax rates of 60-80% or more.

Now, things could get even worse. A newly proposed bill in Congress aims to further limit tax benefits for cannabis companies, making an already unfair tax burden even heavier. While some lawmakers are pushing for rescheduling or full legalization, this bill could move things in the opposite direction by eliminating certain tax deductions cannabis businesses have managed to claim under existing tax law.

🔥 What This Means for Cannabis Businesses:

❌ Higher tax bills – Even fewer deductions means more taxable income and even less cash flow.
❌ More financial strain on small cannabis businesses – Larger companies with strong cash reserves may survive, but smaller businesses could be hit the hardest.
❌ Increased compliance risk – With the IRS already targeting cannabis businesses for audits, even minor tax mistakes could become costly.
❌ Uncertain future for tax policy – While some states push for more cannabis-friendly policies, this federal move could create additional hurdles.

✅ What You Can Do to Protect Your Business:

✔️ Stay informed – Keep an eye on legislative updates and tax law changes that could impact your business.
✔️ Maximize allowable deductions – While 280E is restrictive, careful tax planning can help optimize deductions, particularly by structuring expenses under COGS.
✔️ Work with an expert – A knowledgeable accountant (like BookWyrm Ledger Co.!) can help navigate these tricky tax waters and develop a strategy that minimizes your tax burden.
✔️ Advocate for fair cannabis tax policies – Support industry groups and lobby for 280E reform to level the playing field for legal cannabis businesses.

The bottom line? 280E already makes running a cannabis business expensive, and this new bill could make it even tougher. If you’re not actively managing your tax strategy, you could be leaving thousands (or more) on the table.

Want to make sure your business is prepared? Let’s talk tax strategy. Book a free consult today!

🔗 www.bookwyrmledgers.com

Welcome February & Business Goals Check-In

 Kickstart February: Reviewing January’s Numbers for a Stronger Month Ahead

Welcome to February! The new year is in full swing, and for small business owners, that means one important thing—it’s time to review January’s numbers and set realistic goals for February.

Whether January was a record-breaking month or came with a few bumps in the road, analyzing your financials now can help you make smarter business decisions moving forward. So, grab your planner, a cup of coffee, and let’s break down how to use last month’s data to set yourself up for success.

Step 1: Review Your Revenue & Expenses

Start with the basics—how much money came in, and how much went out? Look at:
✅ Total Revenue: Did you hit your sales goals? Were there any unexpected spikes or slow periods?
✅ Top Expenses: Where did most of your money go? Any surprise costs you didn’t plan for?
✅ Net Profit: After expenses, how much did you actually take home?

If you use accounting software like QuickBooks, Xero, or Zoho Books, pull a profit and loss statement to get a clear picture of your numbers.

Step 2: Analyze Cash Flow

Your profit might look great on paper, but what about actual cash in the bank?
📌 Did you have any late payments from clients?
📌 Were there big expenses that drained your cash reserves?
📌 Do you have upcoming expenses you need to prepare for?

Understanding cash flow helps prevent financial stress and ensures you have enough to cover upcoming payroll, taxes, or inventory restocks.

Step 3: Check Progress on Your Goals

In January, you probably set some business goals—financial or otherwise. Now’s the time to check in:
✔️ Did you hit your revenue target?
✔️ Were you able to stick to your budget?
✔️ Did you implement any new marketing strategies, and did they work?

If you fell short, don’t panic! This is your chance to adjust and set more realistic targets for February.

Step 4: Set SMART Goals for February

Based on what you learned from January, set clear goals for February. Keep them SMART:
🔹 Specific – Instead of “make more money,” try “increase revenue by 10%.”
🔹 Measurable – Track progress weekly to stay on target.
🔹 Achievable – If you hit $5,000 in sales last month, jumping to $15,000 might be unrealistic.
🔹 Relevant – Focus on goals that truly impact your business growth.
🔹 Time-bound – Set a deadline to hold yourself accountable.

Final Thoughts: Make Reviewing Your Numbers a Habit

The more often you check in with your financials, the easier it becomes to stay on top of things. Schedule a monthly finance review—just like a client meeting—to go over your numbers, adjust your strategy, and keep your business moving forward.

Need help making sense of your books? Let’s chat! Book a free consult to make sure your finances are on track for a successful year.

BookWyrm Bite: Accountant vs. Tax Accountant—Why You Need Both

 

We’ve made it to the end of January, and for business owners, that means one thing: tax season panic—unless you’ve been keeping your books in order all year. Before you rush to a tax accountant with a shoebox of receipts, let’s talk about the key differences between an accountant and a tax accountant—and why having both can save you time, stress, and money.

🔹 Accountant (That’s Me! 🐉📚)

An accountant helps you track, organize, and understand your financials all year long. That means:
✅ Keeping your books clean and accurate
✅ Categorizing income and expenses properly
✅ Managing cash flow so you don’t run into surprises
✅ Helping you plan ahead instead of reacting at the last minute

Think of me as your financial storyteller, making sure your numbers make sense so you can make smarter business decisions.

💰 Savings: A good accountant keeps you from losing money due to missed deductions, incorrect reporting, or financial blind spots. ⏳ Time saved: No more hours wasted fixing mistakes or digging through old receipts!

🔹 Tax Accountant (aka The Tax Wizard 🧙‍♂️✨)

A tax accountant (or CPA specializing in taxes) steps in to:
✅ File your returns correctly and on time
✅ Minimize tax liability (a.k.a. find legal ways to save you money)
✅ Ensure IRS compliance and avoid penalties
✅ Handle tax strategy for bigger financial moves (like expansions, hiring, or investments)

They take the financial story we’ve built throughout the year and translate it into accurate, optimized tax filings that (hopefully) save you money and prevent IRS headaches.

💰 Savings: Proper tax planning can prevent overpaying taxes or missing deductions. ⏳ Time saved: No last-minute scramble to fix your books before filing!

🚨 The Real Cost of NOT Having an Accountant Year-Round?

If you only see a tax accountant at the last minute without working with an accountant all year, here’s what happens:
❌ You overpay on taxes because deductions weren’t properly tracked
❌ Your books are a mess, leading to higher tax prep fees (because your CPA has to clean up first!)
❌ You waste hours trying to DIY your finances when you should be running your business
❌ You risk late fees, penalties, or IRS audits if numbers are incorrect

📢 The Smart Move? Work with an Accountant Year-Round!

When tax season rolls around, you want to be prepared, stress-free, and in the best possible position to save money. That’s where I come in!

👉 Let’s get your books in order and set you up for success. Book a free consult here: www.bookwyrmledgers.com

The Best Apps for Cannabis Companies That Integrate with QuickBooks

 

Running a cannabis business comes with unique challenges—compliance, cash-heavy operations, inventory tracking, and payroll hurdles, just to name a few. Luckily, if you’re using QuickBooks for accounting, there are several apps designed to meet the specific needs of cannabis businesses. Here’s a quick look at some of the best tools that integrate seamlessly with QuickBooks to keep your cannabis business thriving.

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1. Compliance and Tracking

Metrc Integrators (e.g., GrowFlow, Canix)
Compliance is king in the cannabis industry, and staying on top of seed-to-sale tracking is essential. Metrc integrators like GrowFlow, and Canix connect your QuickBooks account with state-mandated compliance data. From real-time inventory tracking to automated reporting, these tools help you maintain compliance without breaking a sweat.

BioTrack THC
Another powerful seed-to-sale solution, BioTrack THC, integrates with QuickBooks to streamline compliance, inventory, and sales tracking. Whether you’re growing, manufacturing, or retailing, BioTrack’s robust reporting tools can keep your business on the right side of the law.

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2. Inventory Management

Fishbowl Manufacturing/Inventory
Managing inventory for cultivation and manufacturing can be a logistical headache. Fishbowl Inventory integrates with QuickBooks to offer features like batch tracking, inventory forecasting, and reporting. Perfect for large-scale operations that need to stay organized.

Flourish Software
This all-in-one platform is designed for cannabis cultivators and manufacturers. It integrates with QuickBooks to help with inventory tracking, harvest management, and compliance. Plus, it supports RFID and barcode scanning for ultimate efficiency.

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3. Payment Solutions

PayQwick
Handling payments in a cash-heavy industry isn’t easy, but PayQwick simplifies the process. This cannabis-specific financial platform integrates with QuickBooks to automate accounting, manage cash flow, and offer digital payment options.

KindPay
Another cannabis-friendly payment processor, KindPay, ensures secure transactions and simplifies reconciliation within QuickBooks. It’s a great option for reducing reliance on cash and improving transparency.

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4. Payroll and HR

Journey Payroll and HR
Journey Payroll and HR provides cannabis businesses with payroll and HR solutions tailored to their needs. Its integration with QuickBooks ensures seamless payroll processing, tax compliance, and employee management, reducing administrative burden and saving time.

Gusto
While not cannabis-specific, Gusto’s payroll and HR features integrate smoothly with QuickBooks and can be tailored for cannabis businesses. From automated payroll to benefits management, Gusto takes the headache out of employee management.

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5. Cash Management

NatureTrak
For businesses dealing with large volumes of cash, NatureTrak is a game-changer. Its QuickBooks integration helps you track and manage cash flow, vault storage, and secure transport solutions, ensuring accuracy and security.

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6. Point of Sale (POS) Systems

Treez
This cannabis retail POS system integrates with QuickBooks to manage sales data, inventory, and compliance reporting. Treez also provides valuable customer insights to help grow your business.

Flowhub
Flowhub is another excellent POS option for dispensaries. With real-time reporting and automated tax calculations, it makes QuickBooks reconciliation a breeze.

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Whether you’re a cultivator, manufacturer, or dispensary owner, these tools can help streamline your operations and keep your finances in check. By integrating with QuickBooks, you’ll save time, reduce errors, and stay focused on what you do best: growing your cannabis business.

Need help setting up your accounting systems or choosing the right tools for your business? Let’s chat! Book a free consultation at BookWyrm Ledger Co. today.

BookWyrm Bites: Accounts Receivable & Payable Aging—Who Owes You (and Who Do You Owe)?

Welcome back to BookWyrm Bites! Today, we’re tackling two critical financial reports: the Accounts Receivable Aging Report (AR Aging) and the Accounts Payable Aging Report (AP Aging). These two work hand in hand to help you manage your cash flow—because it’s just as important to know who owes you as it is to know who you owe. Let’s break them down together.

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What Is an Accounts Receivable Aging Report?

This report breaks down your unpaid invoices by customer and groups them into buckets based on how overdue they are, like:

• Current: Invoices that aren’t due yet.

• 1-30 Days Past Due: A friendly nudge might be all it takes here.

• 31-60 Days Past Due: Time to follow up more assertively.

• 61+ Days Past Due: Uh-oh. You’ve got a slow payer on your hands.

It’s like a leaderboard for your customers, except no one wants to be at the top for being the slowest to pay.

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What Is an Accounts Payable Aging Report?

The flip side of AR Aging, this report shows you who you owe money to and when payments are due. It groups your outstanding bills into similar categories:

• Current: Payments that aren’t due yet.

• 1-30 Days Past Due: Time to send that payment before it’s late.

• 31-60 Days Past Due: You’re officially late; this could hurt your vendor relationships.

• 61+ Days Past Due: Might be time to make an apology call (and payment).

Think of it as your financial to-do list—ignoring it has consequences.

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Why Do These Reports Matter?

Together, these reports help you manage the delicate balance of cash flow. Here’s why they’re essential:

• Cash Flow Management: Know when money is coming in and going out.

• Vendor & Customer Relationships: Stay on top of obligations to keep relationships strong.

• Prioritization: Focus your collection efforts and payments where they’re needed most.

Analogy: If AR Aging is the "Lost and Found" for your money, AP Aging is the "To-Do List" for your debts. Both are key to keeping your finances on track.

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How to Read These Reports Without Stress

1. Start with AR Aging:

   • Look for overdue invoices. Anything past 30 days should grab your attention.

   • Identify repeat offenders and consider stricter payment terms.

2. Move to AP Aging:

   • Focus on bills nearing or past their due dates. Avoid late fees!

   • Spot vendors you rely on heavily and prioritize those relationships.

3. Compare the Two:

   • Are you collecting payments fast enough to cover your own bills? If not, you might need to tighten up collections or rethink payment terms.

Dad Joke Break: Why don’t invoices and bills ever get along? They’re always at odds over who’s due first! 😂

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Red Flags to Watch For

• For AR Aging:

  • Consistently late-paying customers.

  • Large overdue balances that could hurt your cash flow.

• For AP Aging:

  • Frequently late payments to vendors.

  • Too many overdue bills, which can damage your reputation and credit.

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How to Use Them Effectively

• Automate Reminders: Set up alerts for both receivables and payables to avoid missing deadlines.

• Incentivize Early Payments: Offer discounts for early payment from customers and take advantage of discounts offered by vendors.

• Align Terms: Match the payment terms you offer customers with the terms your vendors offer you to avoid cash flow gaps.

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Final Thoughts

AR and AP Aging Reports are two sides of the same coin. By understanding and acting on both, you can maintain strong relationships, improve cash flow, and keep your business running smoothly.

Stay tuned for more insights in our financial series!

Closing Dad Joke: Why did the invoice go on vacation? It needed a break from being outstanding! 😂