Running a business is challenging, and managing taxes can be one of the most confusing areas for entrepreneurs. Even a small tax misstep can result in financial penalties, missed opportunities, or legal issues. Here’s a practical guide to the five most common tax mistakes—and how you can avoid them.

1. Mixing Personal and Business Expenses

The mistake: Many new entrepreneurs use the same bank account or credit card for both business and personal expenses, leading to messy bookkeeping and audit risks.

How to avoid it:

  • Open a separate business account and use it strictly for business-related transactions.
  • Use accounting tools (like Merit Aktiva) to keep clean records.
  • Work with an accountant to categorize transactions properly.

2. Not Planning for Tax Payments

The mistake: Some businesses forget that tax isn’t withheld automatically and end up with a large unexpected bill at the end of the year.

How to avoid it:

  • Set aside money monthly for taxes (e.g., 20–25% of income).
  • Use forecast tools to estimate taxes in advance.
  • Consider quarterly prepayments to avoid surprises. (EMTA Estonian Tax Calendar)

3. Missing VAT Obligations

The mistake: Registering for VAT too late—or failing to register at all—can lead to penalties. Similarly, not submitting VAT returns on time is a common issue.

How to avoid it:

  • Monitor your revenue regularly to know when VAT registration is required.
  • Automate VAT reporting with tools like CostPocket.
  • Consult with a tax advisor to ensure compliance with Estonian VAT law. (Estonian VAT Guide)

4. Poor Documentation of Business Costs

The mistake: Failing to collect and organize receipts means legitimate business expenses can’t be deducted during tax reporting.

How to avoid it:

  • Digitize and store all receipts using a tool like CostPocket.
  • Organize expenses by category: travel, materials, consulting, etc.
  • Schedule monthly reviews to ensure documents are complete.

5. Trying to Do It All Alone

The mistake: DIY tax management may work at first but can become risky and time-consuming as your business grows.

How to avoid it:

  • Partner with professionals like stmills.com to get expert advice tailored to your business model.
  • Save time, reduce stress, and ensure you’re making the most of available deductions, incentives, and compliant structures.

How stmills.com Can Help

At Stmills.com, we support businesses with:

  • Monthly accounting and VAT support
  • Tax consultation and strategic planning
  • Tools like Merit Aktiva and CostPocket setup
  • Regular compliance checks to keep your business on track

Useful Links and Resources:

Avoiding these tax mistakes helps your business stay financially healthy, legally compliant, and ready for sustainable growth—with the right partner by your side.

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