Common Accounting Mistakes and How to Avoid Them
Accounting might not be everyone’s favourite part of business ownership, but overlooking the basics can cost you time, money, and peace of mind. Here are some common mistakes small business owners make, and how to avoid them.
- Mixing Business and Personal Finances
Using one bank account for both personal and business expenses can cause serious headaches. It makes it harder to track spending, claim deductions, and prepare accurate tax returns.
Solution: Set up a separate business bank account and use it strictly for business-related transactions.
- Falling Behind on Record-Keeping
It’s easy to let bookkeeping slide during busy periods, but playing catch-up later can lead to errors and missed deductions.
Solution: Schedule a regular time each week to update your records. Cloud accounting software can automate much of the process.
- Misclassifying Expenses
Putting costs in the wrong category can skew your financial reports and even lead to compliance issues.
Solution: Use consistent categories and talk to your accountant if you’re unsure where something belongs.
- Not Backing Up Data
Relying on paper receipts or storing all your financial data in one place can put your business at risk.
Solution: Use cloud-based accounting tools that automatically back up your data.
- Waiting Until Tax Time
Leaving everything to the last minute makes tax season more stressful than it needs to be.
Solution: Work with an accountant year-round to stay on top of deadlines, track expenses, and plan ahead.
Avoiding these simple mistakes can help your business run smoother, and make tax time a lot less scary.
