Top 5 Bookkeeping Mistakes Small Businesses Make

Bookkeeping might seem straightforward, but even the most organised business owners can slip up. And when it comes to HMRC compliance, cash flow, and tax prep, small mistakes can lead to big headaches.

Here are five common bookkeeping mistakes and how to avoid them:

1. Mixing Personal and Business Expenses

Using the same bank account or credit card for both personal and business purchases makes it harder to track costs, claim expenses, and stay compliant.  

Tip: Open a dedicated business account and keep things separate from day one.

2. Forgetting to Record Transactions

It’s easy to miss small purchases or forget to log income especially when you’re busy. But those gaps can throw off your reports and lead to inaccurate tax filings.  

Tip: Use bookkeeping software or a simple spreadsheet to record everything regularly.

3. Losing Receipts and Invoices

Receipts are essential for VAT claims and expense tracking. Without them, you risk missing deductions or facing HMRC scrutiny.  

Tip: Snap photos of receipts and store them digitally. Cloud-based tools make this easy.

4. Misclassifying Expenses

Putting costs in the wrong category (e.g. travel vs. marketing) can distort your financial reports and affect tax calculations.  

Tip: Learn the basics of expense categories or work with a bookkeeper who knows them inside out.

5. Leaving It All Until Year-End

Trying to catch up on a year’s worth of bookkeeping in one go is stressful and error-prone.  

Tip: Stay on top of your books monthly. It’s quicker, cleaner, and gives you better insight into your business.