5 Common Bookkeeping Mistakes That Cost Small Businesses Money
Bookkeeping may not be the most exciting part of running a small business, but it’s one of the most important. Keeping accurate financial records helps you manage cash flow, prepare for tax time, and make informed decisions. However, many owners—especially those doing their own books—make common mistakes that lead to headaches and lost profits.
Here are five of the most common bookkeeping mistakes and how to avoid them, in the order they typically occur in the workflow:
-
Not Recording Transactions When They Occur
Waiting until transactions clear the bank results in an inaccurate view of available cash and missing details. This applies to both expenses and deposits—delayed entry distorts revenue tracking and planning.
How to avoid it: Record income and expenses at the time they occur so your books reflect reality in real time.
-
Not Keeping Documentation for Expenses
You need supporting documents to validate expenses—meticulous filing isn’t required, but reliable access is. A simple digital system (or even a year-labeled envelope) is enough.
How to avoid it: Store receipts in an accessible digital tool (e.g., QuickBooks Receipt Capture) or a simple, consistent physical method.
-
Misclassifying Expenses
Wrong categories skew reports, deductions, and profit analysis.
How to avoid it: Use rules in your bookkeeping software and review regularly—or work with a professional to ensure accuracy.
-
Mixing Personal & Business Finances
Combining accounts complicates taxes, hides deductions, and muddies performance tracking.
How to avoid it: Maintain separate business bank and credit card accounts to keep records clean and defensible.
-
Forgetting to Reconcile Accounts
If you don’t reconcile, discrepancies and missing transactions persist—and fraud can go unnoticed.
How to avoid it: Reconcile bank and credit card accounts monthly to catch errors early and trust your numbers.
Final Thoughts
Avoiding these mistakes saves time, money, and stress. Clean, accurate books give you clear cash-flow visibility and better decisions.
Want help getting your books in order?
Schedule a complimentary 30-minute consultation with G² Advisory Services to get practical next steps.
Book Your 30-Minute Consultation