LLC Bookkeeping and Tax Tips for Small Business Owners Using QuickBooks

Koen Van Duyse
Apr 26
4 min read

Updated: Apr 26

If you operate a single-member LLC selling goods in a store, at pop-ups, or online, you're wearing a lot of hats: business owner, bookkeeper, tax filer, and maybe even delivery driver.

While QuickBooks can make life easier, there are still key legal, tax, and accounting steps you should know to protect yourself and grow your business. Let's break it down in plain English.

For more tips, visit Cardiff Tax Pros.

1. Your LLC Protects You—But Only If You Treat It Like a Business

Setting up an LLC was a smart move. It legally separates you (personally) from your business's debts and liabilities. But to keep that protection strong, you need to:

Keep your business and personal bank accounts separate
Use your LLC name on invoices, bank accounts, and contracts
File taxes properly (more on that below)

If you mix personal and business funds, a court could "pierce the corporate veil" and hold you personally liable.

Learn more about how to protect your LLC on our blog.

2. Keeping Personal and Business Expenses Separate

This is critical. As an LLC owner, you must keep your personal spending completely separate from your business finances.

Common mistakes to avoid:

Charging personal food (like groceries, restaurant meals unrelated to business) to your business account
Paying for vacations or personal shopping with business funds
Using one credit card for both personal and business without clear separation

Tip: Only true business expenses — things necessary and ordinary for your trade — should go through your business account.

Every personal expense that runs through your business account increases your audit risk and could cause tax penalties.

Check out how to separate expenses properly for more guidance.

3. Business Vehicle Use: Be Honest and Document Everything

If you use a car for business, that’s great — but claiming 100% business use is a red flag to the IRS.

Unless you have a second personal car you use for errands and family, the IRS expects you use your vehicle personally at least part of the time.

What you must do:

Keep a mileage log: record business vs. personal miles
Document each trip: who you visited, why it was business-related
Use apps like MileIQ or QuickBooks mileage tracker to stay compliant

If you claim 100% business use, be ready to:

Prove you have another car for personal use, OR
Have extremely detailed documentation ready for an audit

Important:

Parking fees, tolls, and actual business mileage can all be deductible — but personal trips (like going to the grocery store) are not.

Learn about deducting vehicle expenses on our blog.

4. Ensuring Clear Receipts and Bank Transactions

You need a clear audit trail for every business expense:

Keep receipts for each expense (physical or digital copy)
Match each receipt to a related bank transaction or credit card charge
Label receipts with what the expense was for and how it relates to your business

Examples of good recordkeeping:

"Staples receipt - Office Supplies for March inventory update"
"Target receipt - Business display supplies for pop-up event"

The IRS looks for consistency between:

Bank transactions
Receipts
Business purpose

Having clear, matching records strengthens your deductions if you’re ever audited.

5. Using QuickBooks Properly

QuickBooks is a powerful tool — if you configure it correctly from the start. For a single-member LLC selling goods, you should:

Create an income category like "Retail Sales" or "Online Sales"
Track sales tax collected in a Sales Tax Payable account
Set up Products and Services properly, tying taxable items to the correct tax rates
Reconcile your books monthly, not just at tax time

Pro Tip: Many sellers forget to separate gross sales from sales tax collected. QuickBooks can automate this if you map the right accounts.

6. Sales Tax: It's Your Responsibility, Even If You Sell Online

Selling goods in a store? You need a California Seller's Permit from CDTFA.

Selling goods online (like through Shopify, Square, Etsy, or your own website)? You probably still need to collect sales tax based on where your customers are.

Key points:

Apply for a California Seller's Permit
Collect the correct sales tax rate (base rate + local district taxes)
File sales tax returns quarterly (or monthly, if your tax collected exceeds $15,000/year)
Even if you make no sales in a quarter, you still must file a $0 return

7. Income Taxes: How Your LLC Is Reported

Even though you formed an LLC, the IRS usually sees you as a disregarded entity (like a sole proprietor) unless you choose otherwise.

You file taxes on your personal tax return (Form 1040)
Attach Schedule C for business income and expenses
Pay Self-Employment (SE) Tax on your net profits (15.3% for Social Security and Medicare)

Reminder: The IRS still expects taxes on all gross receipts—even if you collected and paid sales tax separately.

8. Common Mistakes LLC Sellers Make

Forgetting to register for sales tax until it's too late
Mixing personal and business expenses in QuickBooks
Not setting aside money for taxes throughout the year
Underreporting online sales tracked through 1099-K forms
Missing quarterly estimated tax payments, leading to IRS penalties
Claiming 100% business vehicle use without backup

9. When to Get Help (and Why It's Cheaper Than You Think)

As your sales grow, the complexity grows too. That’s where Cardiff Tax Pros comes in.

We can help you register correctly with CDTFA
Set up your QuickBooks file the right way from the start
Catch up missing sales tax returns to avoid penalties
Help you maximize deductions and lower your year-end tax bill

You didn't start your business to be a full-time accountant. Let us help you keep more of what you earn.

Ready to make tax season stress-free?

Contact Cardiff Tax Pros today to schedule a consultation. We'll help you handle taxes, QuickBooks, sales tax filings—and everything in between—so you can get back to growing your business.