Bookkeeping errors rarely announce themselves. They accumulate quietly — a mis-coded expense here, a missed reconciliation there — until they distort every decision you make.
1. Mixing owner drawings with business expenses. It hides your true costs and inflates your VAT reclaims. Always run drawings through a Director's Loan Account.
2. Leaving unreconciled items to 'sort out later'. Later never comes. Reconcile weekly and challenge every unknown transaction.
3. Miscoding capital and revenue. Capital items should be on the balance sheet and depreciated. Coding them to expenses distorts profit and can trigger HMRC questions.
4. Ignoring credit notes. Un-applied credit notes make debtors look bigger than they are and mask cashflow issues.
5. Not reconciling VAT quarterly. Small errors compound. Reconcile control accounts every quarter, not just at year-end.
6. Running payroll separately from the ledger. Payroll must be journalled properly each month so wages, PAYE, pensions and net pay all reconcile.
7. Using the wrong VAT scheme. Businesses on Flat Rate but with high input VAT are often overpaying by thousands per year.
8. Not backing up documents. Cloud is not a backup strategy on its own — keep audit trails and receipts in a second location.