How Often Should You Update Your Books? Monthly vs Weekly Bookkeeping
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Top 10 Most Common Bookkeeping Mistakes, And How to Avoid Them
August 13, 2025
QuickBooks Tips
Bookkeeping is the process of recording and organizing the financial transactions of a business. All of the income and expenses related to the business must be accurately recorded, and that is the job of a bookkeeper. Bookkeeping is the foundation for accounting and for a prosperous business. With the help of this service, business owners have the necessary data to make good financial decisions. But, as with everything, there are some common bookkeeping mistakes that can happen.
Contents:
Inconsistent or Late Invoicing
One of the most common bookkeeping mistakes is related to invoicing. This mistake leads to cash flow problems. It’s when a business spends more money than it brings in. This usually ends up with debt or even bankruptcy. It might not seem like such a serious problem are first, but not being able to pay your bills on time can begin a very toxic cycle. You cannot pay one big bill, then two bills, then take on a loan that you cannot pay back, and so on. To avoid this mistake, you want to have a clear schedule. You know that on the 15th of the month, invoicing is being done. You could use a software program that helps automate invoicing.
Mixing Up Income and Expenses
Recording transactions in the wrong category can start a war within the company! Besides the incorrect financial statement, it can even end up with legal problems. If this mistake happens, when you want to check financial reports to make a decision, you will probably end up making another mistake. That’s why it would be best to use some standard charts to record income and expenses. Bookkeeping issues like this one are easier to avoid now with the help of AI and automation. Moreover, after entering any information, it’s best to check again. Get yourself a bookkeeper who understands categorization, or train the staff that you already have.
Misclassifying Employees
As a business owner, you will see that you will probably need all types of employees. From full-time to part-time, to contractors. It’s important to classify all of them correctly. You might want to save on taxes or just simplify the work. Whatever the reason for doing this may be, it’s better to avoid it. But this mistake often happens unintentionally. Therefore, especially when hiring someone new or working with contractors, contact an employment lawyer.
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You can contact us anytime if you have questions or encounter a problem with your bookkeeping program.
Not Backing Up Data
Another one of the most common bookkeeping mistakes is not backing up the financial records. There are many things that could happen that would result in losing all of the data. Human error is one of them, next to a cyberattack or hardware failure. When starting your business, there should be a plan in case any of those things happen. So, besides protecting your services, you also need to back up the data. Use a cloud-based software that does automatic backups. Also, encrypt the sensitive data that you have. Most of the time, when all data is lost, there is no way to get it back.
Mixing Business and Personal Finances
One of the types of bookkeeping errors is mixing business and personal finances, which is also known as commingling. When finances are mixed together, you don’t have a clear report on either of the situations. Therefore, besides cash flow problems, legal issues will also appear. To avoid common bookkeeping mistakes, it would be best to have separate accounts and record everything carefully. Always pay yourself a salary; do not just take random withdrawals when you need them. And keep your personal transactions off the books. This article published by SmartCompany also discusses this problem.
Bank Reconciliation Neglecting
Bank reconciliation is when you compare and match the bank account with the financial reports. This comparison helps with spotting any inconsistencies. Neglecting bank reconciliation increases the risk of missing errors or even fraud. This is an essential step that should never be ignored. What a bookkeeper cannot do is offer you advice, but a bookkeeper can spot inconsistencies and fix them.
Don’t Ignore Small Purchases
The first step we can take to avoid common bookkeeping mistakes is to acknowledge them. And another common mistake is ignoring small purchases. You would be surprised to find out how many bookkeepers are doing this. Unfortunately, small purchases pile up, and then they become a problem. Of course that we, at Proledge, do every single task that is necessary to ensure the safety and accuracy of your financial records.
Not Reconciling Receivable and Payable
Inaccurate financial statements are the result of the mistake of not reconciling accounts receivable and payable. If this task is not done, small inconsistencies cannot be spotted, which means that fraud cannot be spotted. The overall cash flow management will be affected by this mistake, too. Accurate and efficient bookkeeping makes the tax season easier. But it also avoids fines and legal problems.
Delayed Data Entry
If you have the type of bookkeeper who waits until the end of the month to do all of the data entry, you need someone new. This leads to various blind spots and forgetting to enter data. If you need to invoice a client on the 1st of the month, and you wait until the 31st, there is a big chance that this won’t get done anymore. And, you surely realize that not invoicing a client is not a good thing for your business. There should be a schedule, either daily or weekly, that should be followed no matter what.
Duplicate Entries
Because we just talked about entries, there is another mistake that happens, and it is duplicating them. Entering the same invoice twice will lead to believing that the income is higher than it actually is, which could potentially lead to overspending and needing a loan. And entering the same expense twice can make you believe that the costs are higher than you thought, which could, again, lead to a loan. It’s fundamental that every transaction is recorded once, in the correct category, and triple-checked afterwards.
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