Common Small Business Bookkeeping Errors

Dec 29, 2024 | 0 comments

Mixing Personal and Business expenses
When you use your business account or credit card for personal purchases or
transfer funds between personal and business accounts without clear
documentation, you’re creating a complex maze and making reconciliation more
painful than it should be. The extra administrative work increases the cost of
bookkeeping and accounting when every dollar should be used to grow the
business.

Likewise using your personal credit card for business expenses (often in the pursuit
of Reward points) creates the same reconciliation problems.
Accurately assessing your business’s true performance and profitability becomes
difficult without prior detective work, where every transaction requires meticulous
investigation to exclude any private expenses. Tax season transforms from a
straightforward process into a stress-inducing marathon of sorting, separating, and
justifying expenses.

Your Path to Financial Clarity and Discipline
The solution is surprisingly simple yet profoundly transformative. Establish a strict
separation between personal and business finances. This means dedicated business
bank accounts, separate credit/debit cards, and a disciplined approach to financial
management.

Maintain discipline and only use your business account for business
expenses. If you are just starting your business, you may need to inject funds into
your business account for expenses while your income is growing. This is preferable
to paying for business expenses from your private account. Likewise if you need to
transfer monies from your business to your private account for living expenses, do so
in large lump sum amounts and put a clear narrative in the bank transfer (eg.
Drawings or loan).

The Transformative Power of Clean Bookkeeping
By embracing these principles, you are creating a clear financial narrative for your
business. Imagine accessing your financial dashboard and seeing a crystal-clear
representation of your business’s health. No confusion, no guesswork. You deserve
to have the satisfaction and clarity of knowing exactly how your business is
performing at any point in time.

If your business accounts need a clean up to get it back into order, please feel free to
contact us on 0488 944 100 for an appointment or an obligation free chat over the
phone. Rodney On, your expert in Xero accounting software.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Article written by Rodney On at Gold Coast Central Bookkeeping.
Rodney is a Xero Certified bookkeeper based in Ashmore, Gold Coast. Providing Xero Set-up, Xero Training, and Xero Bookkeeping services.