5 bookkeeping mistakes to avoid
If you run a small business, your to-do list probably feels endless. Bookkeeping often gets pushed to the bottom until tax time arrives and the stress kicks in.
The truth is, bookkeeping isn’t just about keeping the ATO happy. It’s about:
Knowing where your money is going.
Keeping cash flow healthy.
Avoiding unexpected financial surprises.
By avoiding these 5 common bookkeeping mistakes, you can save time, money, and a lot of stress.
1. Mixing business & personal expenses
What we see: You buy materials for a job or take a client out for lunch and use your personal card. Soon enough, your business and personal expenses are tangled together.
Why it’s a problem: When business and personal expenses are mixed, it’s harder to:
Track real business spending.
Claim the right deductions.
See whether your business is profitable.
It also complicates BAS preparation and can lead to missed deductions or compliance issues.
Our advice: Open a separate bank account for your business, even if you’re a sole trader. Use it exclusively for business income and expenses. Keeping this separate makes tax time easier and less stressful.
2. Losing receipts
What we see: Receipts end up in your car, wallet or vanish completely.
Why it’s a problem: Receipts are proof of purchase. Without them, you may miss eligible tax deductions, and it’s harder to justify expenses if the ATO asks.
Our advice: Capture receipts as soon as you get them. Use apps like Dext and Hubdoc, or simply snap a photo and email it to yourself. Spending five minutes a week organising receipts saves hours later.
3. Coding GST incorrectly
What we see: A bill comes in and you pick a GST code in your accounting software without really checking if it’s right.
Why it’s a problem: Incorrect GST coding can:
Make you miss out on GST refunds you’re entitled to.
Lead to claiming GST on items that aren’t eligible (risking penalties).
BAS lodgements may be inaccurate, affecting cash flow.
Our advice: Check every invoice. If GST applies, it will be clearly shown. If you’re unsure, ask your bookkeeper or accountant. Correct GST coding keeps your BAS accurate and helps you avoid penalties.
4. Relying too much on bank feeds
What we see: Your bank account is linked to your accounting software, and you assume everything is correct without reviewing it.
Why it’s a problem: Bank feeds save time but aren’t always perfect. Without reviewing it:
Transactions can be missed or duplicated.
Financial reports may be inaccurate.
Our advice: Reconcile regularly. Compare your software records to your bank statements so any errors are caught early. A quick review now prevents bigger headaches later.
5. Leaving it until the last minute
What we see: It’s BAS or tax time and you try to enter months of transactions in a single weekend.
Why it’s a problem: Rushed bookkeeping often leads to:
Missed deductions.
Overpaid tax.
Extra time and money fixing mistakes.
Our advice: Update your books weekly or fortnightly. Even an hour a week makes a big difference. If you’d rather focus on running your business, a professional bookkeeper can handle it for you.
Our final thoughts
If any of these mistakes sound familiar, you’re not alone! Most small business owners haven’t been formally taught bookkeeping - they learn as they go. With the right habits and support, you can avoid costly errors and stay in control of your finances.
Need help getting your books in order? Book your free consultation today and let us take bookkeeping off your plate.
