As an accountancy firm working with businesses, we often see the same common accounting mistakes crop up time and time again. And the truth is, most of them are completely avoidable, with the right systems, support, and a bit of forward planning.
Whether you’re a startup, a sole trader, or running a growing SME, keeping on top of your accounts is crucial, not just for staying compliant with HMRC, but for making good business decisions day to day.
Here are seven common accounting mistakes we regularly help clients fix, along with some straightforward advice on how to avoid them in the first place.
1. Mixing business and personal finances
This is one of the most common accounting mistakes we see, and one of the most avoidable. Using the same bank account for both personal and business expenses can make bookkeeping a nightmare. It also makes things much more complicated if HMRC ever comes calling.
What to do instead:
Open a separate business bank account and use it exclusively for business income and expenses. This simple step makes managing your accounts (and filing your tax return) far easier and more accurate.
2. Not keeping proper records
Poor record-keeping is one of the fastest ways to lose track of your finances. Missing receipts, unclear expenses, or unlogged income can lead to inaccurate tax returns, missed deductions, and potential penalties.
Quick tip:
Get into the habit of logging everything as you go. Cloud-based tools like Xero or QuickBooks can really help here, and they make it easy to store receipts digitally and stay organised.
3. Getting VAT wrong
We know how tricky VAT can be, especially with the different rates, schemes, and deadlines. We’ve seen plenty of businesses miscalculate or miss a return altogether, and unfortunately, HMRC doesn’t tend to be very forgiving.
What helps:
Make sure you’re on the right VAT scheme for your business, use Making Tax Digital-compliant software, and don’t be afraid to get professional help if you’re unsure. It’s worth it.
4. Not reconciling bank accounts regularly
Reconciling your accounts might not be the most exciting job, but it’s essential. Without regular checks, small errors or even fraud can go unnoticed for months.
Our advice:
Reconcile your bank transactions monthly, or better yet, use software that pulls in your bank feeds and makes reconciliation easy and fast.
5. Forgetting to budget for tax
Too many businesses fall into the trap of spending everything that comes in, only to be hit with a big tax bill they haven’t budgeted for.
How to fix it:
Set aside a percentage of your profits, ideally in a separate tax pot, so when VAT, Corporation Tax, or PAYE is due, you’re ready.
6. Trying to do everything yourself
We get it, outsourcing can feel like a big step, especially when you’re trying to keep costs down. But DIY accounting can quickly lead to mistakes, especially as your business grows or your finances get more complex.
What we suggest:
Even if you’re using software, it pays to have an accountant check things over or handle more technical areas like VAT or payroll. It often saves more than it costs.
7. Ignoring your financial reports
If you’re not reviewing your profit and loss statement, cash flow, and balance sheet, you could be missing warning signs, or opportunities to grow.
Simple fix:
Take time each month to review your key numbers. If they don’t make much sense to you, that’s where we come in, helping clients make sense of their figures is what we do best.
Final thoughts
The truth is, we all make mistakes, but with a bit of awareness and the right support, these common accounting issues are completely avoidable. Staying on top of your finances helps you sleep better at night, keeps you HMRC-compliant, and gives you the insights you need to run a successful business.
If you’re not sure whether your current setup is working, or just want a second pair of eyes, we’d be happy to help. Feel free to reach out for a chat.
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