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  • Writer's pictureAmie McGlinch

Common Bookkeeping Mistakes to Avoid as a Small Business Owner

Alright, fellow small business owners, let's talk about something that's not as glamorous as launching a new product or sealing a big deal: bookkeeping. I know, it doesn't sound too exciting, but trust me, it's crucial. Making bookkeeping mistakes can cost you big time. So, in this post, we're going to keep it simple as we explore the common bookkeeping blunders to avoid.

1. Mixing Business with Personal Expenses

Picture this: you're out to dinner with friends, and you decide to pick up the tab with your business credit card. It's tempting, right? Well, don't do it. Mixing business and personal expenses is a recipe for confusion and headaches when tax time rolls around. Create a clear boundary between your personal and business finances.

2. Neglecting to Keep Receipts

It's easy to toss those crumpled receipts into the abyss of your glove compartment, but this habit can come back to haunt you. Every receipt is a piece of evidence for your expenses. Without them, you might miss out on valuable deductions and end up overpaying your taxes. Keep those receipts organized!

3. Forgetting to Record Cash Transactions

Cash might feel like a relic in the digital age, but it's still relevant, especially for small businesses. Failing to record cash transactions can lead to discrepancies in your records. Get in the habit of documenting every penny that comes in or goes out, no matter the form.

4. Not Reconciling Bank Statements

Your bank statement is like a report card for your financial health. Failing to reconcile it with your records can lead to financial chaos. Take the time each month to ensure your records match your bank statement. It's a simple but vital step.

5. Ignoring Deadlines

Missing deadlines can have dire consequences, especially when it comes to taxes. Filing late can result in penalties and interest charges. Mark important dates on your calendar, set reminders, or consider hiring a professional to help you stay on track.

6. DIY Complex Tax Issues

Sure, you can handle basic tax matters, but when it gets complex, it's time to call in the experts. Trying to tackle intricate tax issues without professional guidance can lead to costly mistakes. Don't be a hero; seek help when needed.

7. Not Backing Up Data

Imagine losing all your financial data in a computer crash – it's a nightmare. Regularly back up your financial records to a secure location. This way, you won't have to start from scratch if disaster strikes.

8. Overlooking Petty Cash

Petty cash might seem insignificant, but it adds up. If you don't track it properly, you might end up with unaccounted-for expenses. Keep a tight rein on your petty cash and record every transaction.

9. Skipping Regular Revisions

Your business evolves, and so should your bookkeeping system. Don't get stuck in old habits. Regularly review your bookkeeping processes to ensure they still fit your business's needs.

10. Being Too Hasty

Rushing through bookkeeping is a recipe for errors. Take your time, be thorough, and double-check your work. It's better to be slow and accurate than fast and messy.

In Conclusion

Bookkeeping might not be the star of the show, but it's the backstage crew that keeps your business running smoothly. Avoiding these common mistakes can save you time, money, and countless headaches down the road. So, keep your business and personal finances separate, organize those receipts, and stay on top of your bookkeeping tasks. Your business will thank you, and you'll sleep better knowing your financial house is in order.

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