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?
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A new way to claim work-related expenses is coming for the 2027 tax return — but there is an important catch. From 1 July 2026, eligible taxpayers can claim a standard deduction of up to $1,000 for certain work-related expenses, without having to substantiate each expense individually. Sounds simple enough. But before you assume you can claim $1,000 on top of everything else, there are a few things you need to know. The $1,000 Is the Maximum The new standard deduction is capped at $1,000. It is designed to cover certain common work-related expenses, such as work-related phone and internet, home office expenses, stationery and some travel expenses. You can't claim the $1,000 and then claim those same expenses again separately. If you have actual work-related expenses of more than $1,000, you can continue to claim your actual expenses under the existing rules, provided you meet the requirements and have the records to support them. Do I Still Need to Keep My Receipts? Yes: and this is where it is worth being organised. If you use the standard deduction, you don't need to substantiate the individual expenses covered by it. But if you think your actual work-related expenses could be more than $1,000, keeping your receipts and records throughout the year will allow you to claim your actual expenses instead. There are also some deductions that aren't covered by the standard deduction and can still be claimed separately if you are eligible. It's for Your 2027 Tax Return The new deduction applies from the 2026–27 financial year, so you won't use it for the tax return you are preparing now. It will first apply to your 2027 tax return, lodged from July 2027. Is the $1,000 a $1,000 Tax Refund? No. The $1,000 is a deduction from your taxable income. It doesn't mean you'll receive an extra $1,000 back from the ATO. The value of the deduction will depend on your individual tax circumstances. What Should You Do Now? The best thing you can do is keep track of your work-related expenses throughout the 2026–27 financial year. When it comes time to prepare your 2027 tax return, we can look at your circumstances and determine whether the standard deduction or claiming your actual expenses is likely to give you the better outcome. At Ascent Accountants, we can help you make sense of the new rules and make sure you're claiming the deductions you're entitled to: without claiming the same expense twice!
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