Avoid these costly errors and keep your finances in check.

Running a small business comes with countless responsibilities — and accounting is one of the most important. Unfortunately, many UK small business owners unknowingly make simple accounting mistakes that can lead to cash flow issues, compliance problems, and even fines from HMRC.

Here are five common accounting mistakes — and expert tips to help you avoid them.

✅ 1. Mixing Personal and Business Finances

One of the biggest traps for new small business owners is using the same bank account for personal and business expenses. While it may seem easier at first, it creates confusion, makes tracking expenses harder, and can cause trouble during tax season.

How to avoid it:

• Set up a dedicated business bank account
• Use a business credit or debit card for all company-related expenses
• Track personal withdrawals as “owner's drawings” or salary

Separating your finances helps maintain cleaner records and protects you in case of HMRC audits.

✅ 2. Not Keeping Accurate Records

Failing to keep up-to-date and organised financial records is a major issue for many small businesses. It can lead to missed payments, incorrect tax filings, and incomplete reporting.

How to avoid it:

• Record income and expenses regularly (at least weekly)
• Save invoices, receipts, and bank statements
• Use digital accounting software like Xero, QuickBooks, or FreeAgent
• Back up your data securely

Good record-keeping not only helps you stay compliant but also gives you a clearer picture of your business’s financial health.

✅ 3. Doing Everything Yourself

Many small business owners try to handle their accounting alone — often because they want to save money. However, DIY accounting without proper knowledge often leads to mistakes that can cost more in the long run.

How to avoid it:

• Work with a qualified accountant, even if it’s just quarterly
• Hire a bookkeeper or virtual assistant if you’re too busy
• Automate tasks like invoicing and payroll

Bringing in professional support helps you stay focused on growing your business while ensuring your finances are in expert hands.

✅ 4. Missing Tax Deadlines

Missing key tax deadlines — like Self Assessment or Corporation Tax returns — can result in penalties, interest charges, and a negative relationship with HMRC.

How to avoid it:

• Mark key dates on your calendar:
• 31 January (Self Assessment filing & payment)
• 31 July (Payments on account, if applicable)
• 9 months after your financial year-end (Corporation Tax payment)
• Use reminders or alerts in your accounting software
• Hire an accountant to manage your filings

Planning ahead helps you avoid the last-minute rush and costly mistakes.

✅ 5. Not Reviewing Financial Reports

Many small business owners only look at their finances once a year — usually when filing taxes. This approach misses important insights into profitability, cash flow, and business performance.

How to avoid it:

• Review your profit and loss statement monthly
• Track cash flow and budget forecasts
• Use financial reports to make informed business decisions
• Meet with your accountant quarterly for strategic reviews

By understanding your numbers, you can identify problems early, spot growth opportunities, and stay on course.

Final Thoughts

Small accounting mistakes can lead to big problems — but with the right tools and support, they’re easy to avoid. The key is to stay organised, plan ahead, and seek professional help when needed.

At East London Accountants, we help small businesses across the UK stay on top of their accounting — from bookkeeping and tax returns to payroll and strategy.

👉 Book your free consultation today and let’s make your finances work for you.