Bookkeeping isn’t just about keeping track of numbers—it’s about creating clarity and confidence in your business. But if the books aren’t done correctly, even the best intentions can lead to confusion, missed opportunities, or costly errors.
At Cambry Consulting, I’ve seen it all—from forgotten transactions and unbalanced accounts to year-end chaos caused by months of neglect. The good news? Most bookkeeping mistakes are easy to catch and fix if you know what to look for.
In this post, we’ll discuss some of small business owners’ most common bookkeeping mistakes and how to correct them before they cause more significant problems.
7 Common Bookkeeping Mistakes and How to Fix Them
1. Mixing Business and Personal Expenses
How to Spot It:
One of the most common (and sneaky) mistakes is mixing business and personal transactions in the same bank or credit card account. Although this may initially seem harmless, especially for freelancers or new business owners, it leads to disorganized records and headaches during tax season.
Look for unusual expenses in your business account—like grocery store purchases, personal subscriptions, or clothing—that aren’t on your business books.
How to Fix It:
- Separate your accounts: Always use a dedicated business checking account and credit card.
- Reclassify personal charges: Go through your bookkeeping software or records and mark personal transactions clearly so they’re not included in your tax reports.
- Create a process: Make it a habit to only use business accounts for business purchases moving forward.
2. Forgetting to Reconcile Accounts
How to Spot It:
Reconciliation matches your records with your bank and credit card statements. If you skip this step, you might not realize that transactions are missing, duplicated, or incorrectly entered.
Unreconciled accounts often show up as:
- Unusual account balances
- Transactions that seem “off”
- Discrepancies between your books and bank statements
How to Fix It:
- Reconcile monthly: Always compare your bookkeeping software against your actual bank and credit card statements.
- Use software tools: Programs like QuickBooks and Xero have built-in reconciliation features to make this easier.
- Bring in help: If reconciliation feels overwhelming, a professional bookkeeper can help you catch up quickly and accurately.
3. Misclassifying Expenses
How to Spot It:
Not all expenses are created equal, and your financial reports can get distorted when they’re categorized incorrectly. For example, classifying a long-term investment as a regular expense could skew your profit and loss statement and affect your budgeting or tax deductions.
Common red flags include:
- High amounts in “Uncategorized Expenses”
- Inconsistent use of categories (e.g., software sometimes under “Office Supplies,” sometimes under “Subscriptions”)
How to Fix It:
- Review your chart of accounts: Make sure you have the right categories set up for your type of business.
- Stay consistent: Apply categories the same way every time.
- Clean up past mistakes: Go through uncategorized or questionable entries and reassign them correctly.
4. Not Recording All Transactions
How to Spot It:
If your income or expenses seem lower than expected, there’s a chance you’ve missed recording some transactions. This often happens when:
- You accept payments through multiple platforms (like PayPal, Venmo, and Zelle) and forget to log them.
- You pay bills or contractors in cash or by check.
- You don’t connect all financial accounts to your bookkeeping software.
How to Fix It:
- Connect everything: Link all payment platforms and financial accounts to your software to ensure nothing slips through the cracks.
- Log transactions manually if needed: For cash payments or paper checks, be sure to enter them manually.
- Do monthly reviews: Regularly scan your income and expense reports to look for gaps or inconsistencies.
5. Failing to Track Receivables and Payables
How to Spot It:
If you don’t track who owes you money—or who you owe—it can lead to late payments, damaged relationships, or missed revenue. Signs of this issue include:
- Clients “forgetting” to pay (or you forgetting to invoice!)
- Vendors contacting you about unpaid bills you thought were handled
- Unapplied payments sitting in your books
How to Fix It:
- Use invoicing tools: Choose software that allows you to send, track, and follow up on invoices.
- Monitor aging reports: Review Accounts Receivable and Accounts Payable regularly.
- Reconcile payments: When a payment is received, apply it directly to the invoice—don’t leave it floating unassigned.
6. Not Reviewing Financial Reports Regularly
How to Spot It:
Even with bookkeeping in place, problems can go unnoticed if you’re not reviewing your financial reports regularly. If you haven’t looked at a profit and loss statement in months, there could be issues lurking beneath the surface.
Signs might include:
- Not knowing your net income or how much you’ve spent this month
- Surprises at tax time
- Difficulty answering basic questions about your business’s financial health
How to Fix It:
- Review monthly: Schedule time to review key reports such as your Profit and loss statement, Balance Sheet, and Cash Flow Statement.
- Ask questions: Don’t just look at the numbers—try to understand the “why” behind them.
- Work with a bookkeeper: A pro can not only prepare the reports but help interpret them so you can make informed decisions.
7. DIY Bookkeeping That’s Outgrown Your Time or Expertise
How to Spot It:
When you started your business, handling your books might have made sense. But as your business grows, so does the complexity—and the risk of errors.
Warning signs include:
- Spending hours each month on bookkeeping (and still feeling unsure)
- Avoiding your books altogether because it feels too overwhelming
- Falling behind month after month
How to Fix It:
- Know when to outsource: Your time is valuable. If bookkeeping is draining your energy or leaving you second-guessing your numbers, it’s time to bring in support.
- Work with someone who understands your business: At Cambry Consulting, we specialize in helping service-based businesses, freelancers, and solopreneurs stay organized and stress-free.
Don’t Let Bookkeeping Mistakes Hold You Back
Bookkeeping mistakes are common, but they don’t have to be permanent. With the right systems, tools, and support, you can clean up your books, avoid future errors, and feel confident about your finances.
At Cambry Consulting, we help small business owners simplify their bookkeeping, fix past mistakes, and stay on top of their numbers month after month. Whether you’re behind, confused, or just want a second set of eyes—I’ve got your back.
Ready to Clean Up Your Books?
Let’s take bookkeeping off your plate. I offer free consultations to help you determine where you are, where you want to go, and how we can get there together.