Doing your own bookkeeping has its advantages, but be sure to avoid these common mistakes. 

Utilising an inept bookkeeping system

Whatever system you are using, be it an excel spread-sheet, manual cash-book, or accounting software, you should be able to retrieve the information that is required to comply with your obligations to government agencies. Furthermore, you should keep all data safe and secure with back-ups of all computer systems.

Not registering all bank transactions

Regardless of the bookkeeping system you use, you have to register the money going in and out of your business. All transactions have to be recorded, plus: a detailed check of all items going through your bank account has to be carried out to avoid getting in trouble with tax authorities.

Neglecting it until the last moment

Of all these common mistakes, this one is the most common since most ‘self-made’ bookkeepers don’t have the time to do it. Leaving your bookkeeping to the end of the year or to the end of the quarter may seem like a good option, but it’s not since it can be harmful to your business for the following reasons:

Mixing personal and business finances

Another common mistake: sole traders often choose to open one bank account, merging personal with business finance. That might seem the most convenient and cheapest way of operating, but it’s not since it causes extra work when it comes to writing up the books. It also introduces an element of doubt in the mind of HMRC inspectors as to the validity of business expenses. They will also tend to treat all bank receipts, including personal items, as business income. Owners of limited companies must be particularly careful. Any drawings from a company bank account must either be for salary or dividends.

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