What are some common bookkeeping blunders that I can try to avoid when doing my own bookkeeping?

Running a small business is no leisurely cruise. It's more like captaining a ship through uncharted waters—turbulent, unpredictable, and often fogged in with ambiguity. In this environment, one wrong turn can leave you adrift or worse, sunk. And few things steer your ship more directly than your books.

Bookkeeping isn’t glamorous, but it is foundational. Done well, it charts your course and keeps your business afloat. Done poorly—or neglected altogether—and you may find yourself taking on water fast. Let’s explore the most common bookkeeping blunders that threaten small businesses and how to steer clear before the damage is done.

Ignoring Bookkeeping Until It’s Too Late

One of the most frequent (and dangerous) mistakes is treating bookkeeping as an afterthought. It’s tempting to “deal with it later”—right up until tax season, a loan application, or a financial emergency throws you into crisis mode. By then, you’re not working with real-time data. You’re piecing together a financial puzzle that’s months out of date.

This isn’t just inefficient—it’s risky. Without current, accurate books, you’re making decisions blind. You can’t know if your pricing is profitable, if your expenses are under control, or if you can afford that new hire or office renovation. It’s financial Russian roulette, and the house always wins.

DIY Bookkeeping: A Double-Edged Sword

Sure, you can do your own bookkeeping. And yes, tools like QuickBooks Online have made it more accessible than ever. But accessibility isn’t the same as expertise. DIY bookkeeping often leads to a false sense of confidence—until you’re knee-deep in uncategorized transactions, missed deductions, or a call from your accountant that starts with, “We need to talk.”

Many DIYers fail to reconcile bank accounts, misclassify income and expenses, and lean too heavily on software automation that was never reviewed by human eyes. The result? Financial reports that are flat-out wrong. And if you’re basing your strategy on faulty data, that’s not running a business—that’s gambling.

Mixing Business and Personal Finances

This is the bookkeeping equivalent of playing with fire while fueling your boat. Blending business and personal expenses doesn’t just complicate your books—it can compromise your liability protection and create a paperwork nightmare.

If you’re using one account for both your grocery runs and business expenses, untangling that mess later becomes a Herculean task. And in the eyes of the IRS or a court, it could even invalidate your LLC protections. The fix? Keep it clean. Separate accounts. Separate cards. Separate lives.

The Hidden Costs of Bad Bookkeeping

Bookkeeping mistakes aren’t just inconvenient—they’re expensive. We’re talking more than late fees or cleanup charges. Bad books can quietly sabotage your success by skewing your cash flow, misleading your decision-making, and inviting tax penalties.

Missing tax deadlines, overlooking deductible expenses, or misstating your revenue can lead to overpaying the IRS, underpaying vendors, or mismanaging your team’s payroll. Inaccurate books damage your credibility with lenders and investors. They can even delay or derail your business sale when it’s time to transition out. In short? Messy books bleed your business dry.

The Danger of Infrequent Reviews

Think reviewing your financials once a year is enough? Think again. Bookkeeping isn’t a one-and-done task—it’s a discipline. Just like checking the weather before setting sail, regular financial reviews help you anticipate risks and adjust course proactively.

At a minimum, review your books monthly. That means verifying transactions, reconciling accounts, reviewing your profit and loss, and checking for cash flow trends. Weekly reviews for transactions and cash positions keep things even tighter. Don’t wait for tax season to find out you’ve been leaking revenue for six months.

Misusing QuickBooks and Other Tools

QuickBooks can be a lifesaver—or a liability. It’s a powerful tool, but it won’t fix bad processes or poor judgment. Too many business owners assume that the software will do the thinking for them. Spoiler: it won’t.

Auto-categorized transactions? Often wrong. Chart of accounts? Frequently misconfigured. Report settings? Not tailored to your business. Without oversight from someone who actually knows what they’re doing, QuickBooks becomes a slick-looking house of cards.

If you’re going to use accounting software, invest the time to set it up properly—or pay someone who can. The reports it generates are only as good as the data and structure you put into it.

Skipping Bank Reconciliations

If you’re not reconciling your accounts every month, your books are lying to you. Reconciling means making sure what’s in your books matches what actually happened in your bank account. It’s the financial version of a reality check.

Skipping this process leads to duplicate transactions, missing entries, and inflated or understated balances. You might think you have $20,000 in cash when you’ve actually got $5,000 and a bunch of unreconciled junk data. And when that illusion collides with payroll or a vendor payment? Say goodbye to trust—and maybe your staff.

A Messy Chart of Accounts

Your chart of accounts is the backbone of your financial system. It determines how income and expenses are categorized—and therefore how useful your reports are. If your categories are vague, duplicated, or set to default, your insights will be just as murky.

Too many businesses rely on a generic, one-size-fits-all chart. The result is financial reporting that doesn’t reflect reality. If your chart includes five different “miscellaneous” accounts or lumps consulting, products, and rentals into one income stream, you’re sabotaging your strategic planning.

Clean it up. Customize it. Make it tell the real story of how your business earns and spends money.

Failing to Track Receivables and Payables

You can’t steer your ship if you don’t know what’s coming in or going out. Accounts receivable and accounts payable are the currents of your business. Ignore them, and you’re headed straight for cash flow catastrophe.

If you don’t track who owes you money—or when it’s due—you can’t follow up in time. If you don’t know what you owe or when it’s coming due, you’ll be constantly surprised by cash shortages. Cash flow problems are one of the top reasons small businesses fail, and poor bookkeeping is almost always part of that story.

Set up systems that automate reminders, monitor aging invoices, and keep you in control of your money’s movement.

Treating Payroll Like a Side Task

Payroll isn’t just writing checks. It’s a legal and financial tightrope. Classifying workers incorrectly, miscalculating withholdings, missing deadlines, or failing to track benefits and paid time off—all of it can land you in serious hot water.

And let’s be honest: your team deserves better than late paychecks and messy W-2s. Proper payroll management ensures compliance with federal, state, and local laws. It also helps you avoid lawsuits, fines, and employee dissatisfaction. This is not an area where you can afford to “wing it.”

Use a reputable payroll system or partner with a provider who knows your state’s rules (they vary more than you think).

Waiting Too Long to Hire a Professional

There’s a point in every business when doing it yourself becomes a liability. And when it comes to bookkeeping, that point often comes sooner than you expect.

A good bookkeeper doesn’t just record transactions. They spot trends. They flag risks. They prepare your reports and communicate your financial picture in ways that empower you to lead better. They’re not a luxury—they’re a strategic asset.

If you’re struggling to keep up, doubting the accuracy of your reports, or simply tired of the stress, it’s time to bring in a pro. The peace of mind alone is worth it. The financial clarity? That’s priceless.

Signs Your Books Are Already in Trouble

If you’re wondering whether your books are on track, ask yourself:

• Do I know my profit margin this month?

• Can I produce an accurate balance sheet on demand?

• Do I know who owes me money—and who I owe?

• Are my books reconciled within the last 30 days?

• Have I used my reports to make a business decision in the last 60 days?

If the answer to any of these is “no” or “I’m not sure,” there’s a good chance your books are off course.

Steer Smart, Not Blind

Your financials are the compass and map of your business. When they’re accurate, up-to-date, and reviewed regularly, you can steer confidently. When they’re a mess, every move becomes guesswork—and that’s a risky way to operate a vessel.

Bookkeeping doesn’t have to be scary, but it does have to be consistent, accurate, and strategic. Whether you manage it in-house or outsource to a trusted professional, the goal is the same: know your numbers, trust your reports, and use your data to navigate smarter.

Because the truth is, most businesses don’t fail from one big wave—they sink from slow leaks. Don’t let your books be one of them.

Need a Trusted Navigator?

At Salsbury & Co., we specialize in guiding small businesses away from financial icebergs and toward sustainable, strategic success. Whether your books are a disaster, a little dusty, or just in need of a second set of expert eyes, we’re here to help.

Don’t wait until your ship is taking on water. Let’s chart a better course—starting today.

This Q&A does not constitute legal, accounting, or tax advice and

does not address state or local law.