Small business accounting: 5 common mistakes small businesses make
When starting out, many small businesses choose to take care of their own books. However, this can be the first of many mistakes, particularly if you have no experience in accounting. Here are some of the most common mistakes that you could fall victim to:
Mistake #1: Mathematical miscalculations
Armed with a calculator, you might think that nothing can go wrong when working out your earnings and outgoings. But it's all too easy to slip up and make mistakes, which can be difficult to spot if you're not used to working with numbers. Errors like this could cost your company in the long term, as you might not have the money to run certain operations, or tax time could hit you in a particularly bad way. It's always best to check figures several times or, even better, ask a professional to handle them for you.
Mistake #2: No backups
Too many small businesses forget to back up their financial records. Whether you're using professional software or not, it's important to have at least two copies of your books. This could be a paper and digital copy or linking your accounts to secure cloud storage. If you don't have any backups, you could quickly find yourself in hot water when your computer's hard drive fails and you have no information to give the taxman.
Mistake #3: Not setting a budget
It's essential to stick to a budget, not just so you know how much you can spend, but also to give you an idea of how your business is growing. Budgeting and forecasting can help you to plan your finances better and highlight areas where you need to cut costs or have room to spend a little extra.
Mistake #4: No separate business and personal accounts
When you use the same account for your personal finances as well as your business, things quickly become confusing. By keeping your finances separate, you'll always know what transactions were commercial and available to claim tax on, and which transactions were your own and unrelated to your business' budget.
Mistake #5: Trying to DIY on your bookkeeping
All of these common mistakes can be avoided by opting to choose a professional bookkeeping service. At Ascent Accountants we’ve been helping small businesses in Perth for many years now to stay organised and on top of their business’ tax, books and overall financials.
With our experience and technical knowledge we can help you better manage your business and free up your time so you can do what you do best and focus more on what you love doing.
And we’re guessing that’s not doing your own bookkeeping!
Need help with your accounting?
June is zooming by! Here’s another handy checklist for business owners—let’s get you sorted for EOFY and tick off those to-dos.
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Buying and selling property rarely lines up perfectly. The logistics of it all can be incredibly stressful. If you’ve found the perfect next home but haven’t sold your current one yet, a bridging loan can make your move easier, without having to wait on your current property sale. What is a bridging loan? A bridging loan is a short-term loan that gives you the funds to buy a new property before your current property has sold. It’s designed to bridge the gap between buying and selling. These loans are generally interest-only and are typically offered for up to 12 months, giving you time to sell and settle on your current home while already owning the next one. When would I need a bridging loan? You might consider bridging finance if: You’ve found your next home but haven’t yet sold your current one. You want to avoid renting or moving twice between sales. You want more time to prepare your home for market to get the best sale price. You're building a new home while still living in your existing one. How does it work? Peak Debt: The lender combines your current mortgage, the cost of the new property (including stamp duty and legal fees), and any interest (if it’s being capitalised). This total is known as your Peak Debt. Interest Only: During the bridging period, you’ll typically pay interest only — or the interest may be capitalised (meaning it’s added to your loan rather than paid upfront). Sell Your Property: Once you sell your existing home, the sale proceeds are used to reduce your Peak Debt. End Debt: The remaining balance becomes your End Debt, which then continues as a standard mortgage. An example of a bridging loan. Your current home loan = $200,000 New home = $800,000 Total bridging loan (Peak Debt) = $1,000,000 After selling your home for $600,000, that amount is used to pay down your loan Remaining loan (End Debt) = $400,000 Things to consider. Like any major financial decision, it’s important to understand all the moving parts before you commit. Time pressure: You typically have 6–12 months to sell. If you don’t sell in time, the lender may step in to sell the property and/or charge default interest. This is an extra interest rate that a lender charges when you fail to meet your loan obligations — in this case, not selling your property within the agreed timeframe. Interest costs: If interest is capitalised, it means you're not making repayments during the loan period, so the interest gets added to the loan balance instead of being paid separately. This means your loan grows each month. Making even small repayments can help keep this under control. Equity & serviceability: Lenders will assess how much equity you have and whether you can manage the loan during the bridging period. Loan-to-value ratio: If your End Debt ends up being more than 80% of the new property’s value, you may have to pay Lenders Mortgage Insurance (LMI). Existing loan setup: If your current lender doesn’t offer bridging loans, refinancing may be required — sometimes triggering break fees if your existing loan is fixed. This means you may have to pay a penalty if you end a fixed-rate home loan early (before the agreed term is up). Is a bridging loan right for you? That’s the big question. Bridging finance can offer flexibility and peace of mind, helping you move forward with confidence rather than being held back by uncertain sale timing. But it’s not without risk or cost — so it’s vital to understand the structure, timeframe, and repayment expectations. If you’re considering your next property move and want tailored advice on whether bridging finance suits your situation, talk to the team at Ascent Property Co. or Ascent Accountants. We can also put you in touch with finance brokers to discuss what is best for you.
That work perk might be costing you more than you think… Fringe Benefits Tax (FBT) is charged at a whopping 47% — the same as the top personal tax rate. That means lower salary or fewer benefits. So, while salary packaging can save tax, in many cases it ends up costing you more.
If you’re expecting a higher income this financial year, now is the time to act. We’ve put together 9 Smart Tax Planning Tips that could save you thousands — but they only work before 30 June.
