3 Most Common Mistakes People Make When Doing Their Books

by | Jun 24, 2015

If you are a small business owner and you’ve been doing your own books, you are not alone. It’s estimated by some that nearly half of all small business owners do their own books.

According to an online article in Entrepreneur magazine, bookkeeping is also probably your least favorite activity as a small business owner. This is likely because bookkeeping doesn’t come naturally or automatically to anyone. Bookkeeping is an activity that requires specialised training and knowledge in order to be done in an accurate and competent manner.

Keeping up with your accounts is also a time-consuming, and relatively dry and boring pursuit. If you make costly mistakes, there’s also the potential that you will destroy your ability to remain in business. The following are the top 3 most common errors that small business owners make when they do their own books, as well as some tips for how to avoid them.

  1. Failing to Reconcile the Books with the Bank Account or Doing the Books Infrequently

Do you have any idea how much cash you have on hand in your bank account, or, have you been paying overdraft fees? If your answer is yes, you’ve likely not been reconciling your books with your bank account, or, you’ve been doing your books too infrequently.

Bouncing checks not only costs you money, it can also cost you your reputation with vendors and your community. You can avoid overdraft charges, spot signs of suspicious activity in your accounts, and get a better handle on your finances by reconciling your books with your bank account statements and doing all of your bookkeeping chores more frequently.

Ideally, you will reconcile statements at least monthly, and record transactions daily.

Doing your books more frequently will also help you to make better strategic business decisions and plans, control your cash flows more easily, as well as cost you less time and money when it comes time to do your taxes.

As you do your books, make certain to take the time to jot down a few details for every transaction, while it’s still fresh in your mind. Doing so will save you an enormous amount of time later, when you do your taxes, as you will need more information about your transactions than what is printed on the receipt.

  1. Failing to Record All of Your Cash Payments and Failing to Keep Receipts

Failing to record all of your cash payments is an easy mistake for small business owners to make.  For example, you might be out on the town enjoying a break from work when you happen to see a product that would make running your business easier. So, you just pull the cash out of your pocket and pay for it and either forget to save the receipt, or lose it.

While it might be a small purchase, these cash payments can add up to large sums over the course of the year and result in lost deductions and greater tax liabilities.

So, always get a receipt for all of your cash purchases, keep an envelope handy to store the receipt until you return to work, and then be certain to record the transaction properly, with details, when you do your books.

  1. Using an Accounting Program That’s too Difficult or Complex for Your Skill Level

Keeping up with the books is difficult enough, but it becomes an almost impossible task if your accounting software is too difficult to use.

Ideally, you will want to use a bookkeeping program that keeps your personal and business accounts separate and that makes it easy for you to record and save all of your transactions.

Your accounting system should make it simple to track receivables, payables, invoices, inventory, sales, payroll, superannuation and tax liabilities as well as enable you to make forecasts and projections based on your historical records.

If your system doesn’t allow you to do all of these things, or if it requires too many man hours to be able to do these tasks, it’s probably time to consider changing your accounting software.

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Sophie is an incredibly savvy business owner, for whom I have great respect. She has always been very clear and detailed in her instructions, is always very focused on her business objectives, and displays a business model that you can aspire to as a small business owner. I have no hesitation is recommending her work at The Accounts Studio.

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Director, Virtual Elves Outsourcing Solutions

2017-10-13T09:30:59+00:00

Kristy Smith
Director, Virtual Elves Outsourcing Solutions

Sophie is an incredibly savvy business owner, for whom I have great respect. She has always been very clear and detailed in her instructions, is always very focused on her business objectives, and displays a business model that you can aspire to as a small business owner. I have no hesitation is recommending her work at The Accounts Studio.
I have had many a chat with Sophie on the networking circuit. Sophie has a strong profile and reputation within business circles and I wouldn’t hesitate to recommend her to any soho needing direction, support and encouragement. I have a passion for educating small business myself and wholeheartedly support Sophie in her endeavour to actively reduce costs for those who may be unintentionally making uninformed decisions relating to business management. Many business owners are unnecessarily outsourcing tasks which are misdirected or can be achieved inhouse.

Gai Hook
Virtual Sales Strategy

2017-10-13T09:32:05+00:00

Gai Hook
Virtual Sales Strategy

I have had many a chat with Sophie on the networking circuit. Sophie has a strong profile and reputation within business circles and I wouldn’t hesitate to recommend her to any soho needing direction, support and encouragement. I have a passion for educating small business myself and wholeheartedly support Sophie in her endeavour to actively reduce costs for those who may be unintentionally making uninformed decisions relating to business management. Many business owners are unnecessarily outsourcing tasks which are misdirected or can be achieved inhouse.
I’ve worked with Sophie as a contributor to Confessions of a Mumpreneur – a fantastic book that she dreamt up, edited and produced. Apart from producing fabulous books that help so many others realise their entrepreneurial dreams, Sophie is an astute business person who is making her mark on her own terms. Watch this space – I’m sure we’ll see and hear a lot more from Sophie Andrews in the years to come.

Jennifer Dalitz
Gender Diversity expert, Career Coach, Award winning blogger on women, work & leadership @ www.TheSheEOBlog.com

2017-10-13T09:50:01+00:00

Jennifer Dalitz
Gender Diversity expert, Career Coach, Award winning blogger on women, work & leadership @ www.TheSheEOBlog.com

I’ve worked with Sophie as a contributor to Confessions of a Mumpreneur – a fantastic book that she dreamt up, edited and produced. Apart from producing fabulous books that help so many others realise their entrepreneurial dreams, Sophie is an astute business person who is making her mark on her own terms. Watch this space – I’m sure we’ll see and hear a lot more from Sophie Andrews in the years to come.
I got to know Sophie through my previous employer where Sophie still handles the bookkeeping side of things. While we worked together I have found Sophie very accurate, punctual and very pleasant to work with. And recommend her highly.

Dianna Holwerda
Client Service Manager, John Sergeant Associates Pty Ltd

2017-10-13T09:55:05+00:00

Dianna Holwerda
Client Service Manager, John Sergeant Associates Pty Ltd

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I was recommended to The Accounts Studio at a networking event and have been working with them for the last 2 years. The team have all been very approachable and available – two things essential when it comes to understanding your accounts! I now no longer have the stress every three months of getting my BAS correct and even better I have a clear understanding of where my company is financially! Thanks Sophie and TAS team!

Eleni Mitakos
Galmatic Pty Ltd

2017-10-13T04:16:02+00:00

Eleni Mitakos
Galmatic Pty Ltd

I was recommended to The Accounts Studio at a networking event and have been working with them for the last 2 years. The team have all been very approachable and available – two things essential when it comes to understanding your accounts! I now no longer have the stress every three months of getting my BAS correct and even better I have a clear understanding of where my company is financially! Thanks Sophie and TAS team!
I have really enjoyed working with you guys and look forward to a successful 2013. From the moment we started with TAS I have seen value. The figures are accurate, you are accessible (and approachable!) and most of all – you are cool people!

Chris Du Plessis
Managing Director, Origin Meat Pty Ltd

2017-10-13T04:20:03+00:00

Chris Du Plessis
Managing Director, Origin Meat Pty Ltd

I have really enjoyed working with you guys and look forward to a successful 2013. From the moment we started with TAS I have seen value. The figures are accurate, you are accessible (and approachable!) and most of all – you are cool people!
"Sophie is so professional – careful, attentive and punctual – she has made managing my accounts not just easier, but a whole lot less stressful"

Fast Ed
TV Chef from Better Homes & Gardens

2017-10-13T04:23:15+00:00

Fast Ed
TV Chef from Better Homes & Gardens

"Sophie is so professional – careful, attentive and punctual – she has made managing my accounts not just easier, but a whole lot less stressful"
Sophie has been a tremendous support and guiding light for my business. I have continually succeeded when acting on her advice and by using her services. Her products are fantastic and her ideas and accuracy is out of this world. I would never hesitate to recommend Sophie’s services and I would invite anyone to contact me for a referral.

Belinda Grundy
GM, Property Styling Online and BG Property Styling

2017-10-13T09:21:50+00:00

Belinda Grundy
GM, Property Styling Online and BG Property Styling

Sophie has been a tremendous support and guiding light for my business. I have continually succeeded when acting on her advice and by using her services. Her products are fantastic and her ideas and accuracy is out of this world. I would never hesitate to recommend Sophie’s services and I would invite anyone to contact me for a referral.
Sophie has the spirit of the Entrepreneurial Business Owner! Whether she is running a successful single family website, creating a product for small business owners or running her own bookkeeping agency she is always right on track as to what small business needs. If you want to speak to someone who not only knows what business owners are going through-she also does something about it- then don’t miss out, connect with Sophie! She is someone who can not only think outside the square- she has true strategic thinking; which is often spoken about but is rarely truly placed into action.

Sue Heins
Councillor at Warringah Council

2017-10-13T09:25:16+00:00

Sue Heins
Councillor at Warringah Council

Sophie has the spirit of the Entrepreneurial Business Owner! Whether she is running a successful single family website, creating a product for small business owners or running her own bookkeeping agency she is always right on track as to what small business needs. If you want to speak to someone who not only knows what business owners are going through-she also does something about it- then don’t miss out, connect with Sophie! She is someone who can not only think outside the square- she has true strategic thinking; which is often spoken about but is rarely truly placed into action.
Sophie is an amazing business woman. She is able to take the complexities of business and break them into manageable pieces for small and home based business owners to work with. She’s clever, creative, supportive and very generous. She’s the reason that so many small businesses are doing so well. If yours is a small or home based business then Sophie is someone you need to know.

Anne Maybus
Writer and Content Creator, Clever Streak

2017-10-13T09:26:35+00:00

Anne Maybus
Writer and Content Creator, Clever Streak

Sophie is an amazing business woman. She is able to take the complexities of business and break them into manageable pieces for small and home based business owners to work with. She’s clever, creative, supportive and very generous. She’s the reason that so many small businesses are doing so well. If yours is a small or home based business then Sophie is someone you need to know.