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Meals and entertainment expenses can be confusing for small business owners when it comes to tax deductions. Under current tax law, most business meals are 50% deductible if they are ordinary, necessary, and directly related to business. The business owner or an employee must be present, and the meal must involve a business discussion, such as meeting with a client, vendor, or potential customer.

It is important to keep good records for these expenses, including the date, location, amount spent, who attended, and the business purpose of the meeting. Proper documentation helps support the deduction if questions arise later.

Entertainment expenses, such as sporting events, concerts, or golf outings, are generally not deductible, even if a client attends. However, if food and beverages are purchased separately from the entertainment and listed separately on the receipt, the meal portion may still qualify for the 50% deduction.

We’re Here to Help
Understanding what qualifies as a deductible meal or entertainment expense can sometimes be unclear for small business owners. Proper classification and documentation are important to ensure expenses are reported correctly and remain compliant with IRS guidelines. GEM & Company CPA, LLC works with small businesses to help review expenses, maintain accurate records, and ensure deductions are handled properly throughout the year. 

In 2026, accurate bookkeeping is more than a compliance task—it’s a key part of running a profitable, scalable business. With automation, AI-powered tools, and increased reporting requirements, small bookkeeping mistakes can quickly lead to cash flow issues, tax problems, and poor decision-making. 

Here are the five most important bookkeeping mistakes small businesses should avoid in 2026. 

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1. Relying Too Much on Automation Without Review

AI and automated bookkeeping tools are helpful, but they are not perfect. Transactions can be miscategorized, duplicated, or missed entirely.

Why it matters:
Unreviewed automation leads to inaccurate financial reports and potential tax issues.

Best practice:
Use automation to save time, but review your books monthly to ensure accuracy.

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2. Mixing Personal and Business Finances

Combining personal and business transactions continues to be one of the most damaging bookkeeping mistakes.

Why it matters:
It complicates bookkeeping, increases audit risk, and can weaken liability protection.

Best practice:
Maintain separate bank accounts and credit cards for business use only.

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3. Falling Behind on Monthly Bookkeeping

When bookkeeping is delayed, errors pile up and financial clarity disappears.

Why it matters:
Outdated books lead to cash flow surprises, rushed tax prep, and higher cleanup costs.

Best practice:
Keep bookkeeping current with monthly reconciliations and reviews.

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4. Misclassifying Income and Expenses

Incorrect categorization (especially with payroll, contractors, loans, and taxes) can distort profitability and create tax filing issues.

Why it matters:
Misclassified transactions can lead to overpaying or underpaying taxes.

Best practice:
Ensure transactions are categorized correctly and reviewed by an accounting professional.

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5. Ignoring Cash Flow in Favor of Profit

A business can appear profitable on paper while struggling to pay bills.

Why it matters:
Poor cash flow management is a leading cause of small business failure.

Best practice:
Track cash flow separately and use forecasting tools to plan ahead.

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We’re Here to Help
Avoiding bookkeeping mistakes takes more than software. It takes strategy and review. If you’re unsure whether your automation is set up correctly, your books are up to date, or your cash flow is telling the full story, we’re here to help. GEM & Company CPA, LLC works with small businesses to keep books accurate, compliant, and useful for smarter decisions throughout 2026.

Maximizing the Standard Mileage Deduction in 2025

For 2025, the IRS standard mileage rate increases to 70¢ per mile for business-related driving only. The rate applies to cars, vans, pickups, and electric vehicles. Because it resets annually, business owners should update mileage-tracking tools and reimbursement policies each year. The biggest compliance risk and opportunity for savings is accurately separating business mileage from personal use.

Tracking Business Mileage & Year-End Best Practices

Only miles driven exclusively for business qualify, such as trips to clients, temporary work locations, meetings, and business errands. Personal miles, including commuting, school drop-offs, gym visits, and errands are not deductible. Maintain a mileage log showing the date, destination, business purpose, and miles driven. For mixed-purpose trips, only the business portion counts.

At year-end, reconcile mileage to ensure all qualifying trips are included. If you reimburse employees, confirm your accountable plan uses the 2025 rate of 70¢ per mile and issue any remaining reimbursements before closing the books. Keep mileage records for at least three years, as these deductions are frequently reviewed by the IRS.

How the Deduction Works for S Corps and LLCs

S Corporations

If the shareholder-employee personally owns the vehicle, the S corp must reimburse mileage under an accountable plan.
Reimbursements are deductible to the S corp and non-taxable to the shareholder when properly documented. If the S corp owns the vehicle, mileage reimbursement isn’t used, but business vs. personal mileage must still be tracked for fringe benefit reporting.

LLCs

Single-member LLCs deduct mileage directly on Schedule C. Multi-member LLCs should reimburse partners for personally owned vehicles under an accountable plan. LLCs taxed as S corporations follow S corp rules. With consistent tracking and proper documentation, the standard mileage method remains one of the simplest and most audit-friendly deductions available to business owners.

We’re Here to Help
Have questions about mileage deductions or accountable plans? We’re here to help you stay compliant and maximize your tax savings—just reach out. GEM & Company CPA, LLC can ensure your mileage deductions are accurate, compliant, and optimized for year-end tax savings. 

Getting ahead now can help you avoid penalties, missing forms, and stressful January deadlines.
The IRS requires businesses to issue Form 1099s to report certain payments to vendors and contractors. Staying compliant means verifying who needs a 1099 and gathering accurate information before year-end.

1099 Compliance Checklist:

• Gather W-9s: Have a completed Form W-9 for everyone you’ve paid. You’ll need their name, address, and Tax ID number.

• Review vendor payments: Identify anyone paid $600+ for services during the year — including contractors, attorneys, rent, and professional fees.

• Track payments: Cash, check, or bank transfers count toward 1099s; credit card or PayPal payments are reported separately on a 1099-K.

• Check corporate exceptions: Most corporations don’t need a 1099, except attorneys and medical providers.

• Mark deadlines: 1099-NEC forms are due to recipients and the IRS by January 31, 2026.

Coming Change for 2026
Starting with the 2026 tax year, the 1099 threshold rises from $600 to $2,000, meaning fewer vendors will require one. This doesn’t affect 2025 filings but is a good time to update your tracking systems.

We’re Here to Help
Need help identifying 1099 recipients, gathering W-9s, or reviewing your records? GEM & Company CPA, LLC can ensure you’re accurate, compliant, and ready for year-end.