Common Accounting Mistakes Made by Small Businesses

Leaving everything to year-end. Twelve months reconstructed in three weeks will contain errors, and there is no time left to act on what the numbers reveal.

Never reconciling the bank. Books that have not been matched to a bank statement are an opinion, not a record.

Recording only what passed through the bank. Cash expenses, amounts paid personally on the business's behalf and non-cash adjustments are all real and all get missed.

Treating an asset purchase as an expense. It distorts profit in the year of purchase and misstates what the business owns thereafter.

Ignoring advances and deposits, which are not income until the work is done.

Letting a suspense or unexplained-difference balance persist. It is a note saying something is wrong, and it does not resolve itself.

Not backing up. Records that exist in one place, on one machine, are one accident away from a very expensive year.

Each of these is prevented by the same habit: close every month properly, and do not carry an unanswered question into the next one.