Bookkeeping isn’t just data entry—it underpins every decision you make in your business. Poor bookkeeping leads to missed deductions, cash flow problems and ATO penalties. Below are five common mistakes we see in small businesses and how to avoid them. Staying on top of your books will save you time, money and stress.
1. Mixing Personal and Business Finances
Keeping personal and business transactions in the same account makes it almost impossible to see how your business is performing and can lead to incorrect tax claims. The ATO recommends separating business and private expenses. Open dedicated business bank and credit card accounts, and consider using accounting software to track spending. This ensures you only claim the business portion of expenses and simplifies GST and income tax reporting.
2. Failing to Reconcile Regularly
Reconciling your books means comparing your records with your bank statements to catch errors and missing entries. Without regular reconciliation, you may overstate cash balances or forget invoices, affecting cash flow and making BAS lodgement stressful. Set a schedule—weekly for busy businesses or monthly at minimum—to reconcile bank accounts, credit cards and payment platforms. Cloud software can automate reconciliation, but you should still review matches manually.
3. Ignoring BAS and PAYG Deadlines
If your business is registered for GST, you must lodge a Business Activity Statement (BAS) and report GST, PAYG instalments and PAYG withholding. The ATO sends BAS when it’s time to lodge, and lodging electronically may give you extra time. Missing BAS or PAYG deadlines can attract penalties and interest. Use calendar reminders or an accountant to ensure lodgement and payment are on time. If cash flow is tight, contact the ATO or your tax professional before the due date to arrange support.
4. Mishandling Payroll and Superannuation
Employers must pay superannuation guarantee (SG) contributions for eligible employees at least quarterly. From 1 July 2025 the SG rate is 12 %, so update payroll systems accordingly. Use Single Touch Payroll (STP)–enabled software to report payroll information each pay cycle and make a finalisation declaration by 14 July each year. Late super payments may incur the super guarantee charge, which is not tax deductible. Regular reconciliation of payroll, PAYG and super ensures staff are paid correctly and legal obligations are met.
5. Poor Record Keeping and Lost Receipts
You’re legally required to keep records of all transactions relating to tax, super and registrations. Records must show the date, amount and description of each transaction, including GST information. The ATO’s record‑keeping rules state you must keep records for at least five years, maintain data integrity and ensure data can be reconstructed. Losing receipts or failing to document the purpose of expenses means you may miss legitimate deductions or be unable to substantiate claims during an audit. Use digital tools such as apps to photograph and store receipts or email invoices into your accounting software.
Bonus mistake: DIY Bookkeeping Without Seeking Advice – while modern accounting software simplifies bookkeeping, it doesn’t replace professional advice. Tax laws change, and incorrectly classifying transactions can lead to penalties. Regularly consult with a registered tax or BAS agent or an accountant to review your books, adjust for accruals and depreciation, and provide strategic insights.
Simple Steps to Improve Your Bookkeeping
- Use cloud accounting software for real‑time data and automation.
- Set aside GST, PAYG and super in a separate account.
- Schedule regular reconciliation and BAS preparation.
- Keep digital copies of receipts and back up data.
- Review reports monthly to spot trends and issues early.
Talk to Carmody Accounting About Stress‑Free Bookkeeping
At Carmody Accounting, we offer outsourced bookkeeping that’s accurate, compliant and tailored. Our services include full setup and training on Xero, MYOB or QuickBooks, BAS and payroll processing to meet deadlines, record‑keeping systems that meet ATO standards, and regular performance reports so you understand your numbers.
Ready to stop worrying about your books? Book a free consultation and find out how our bookkeeping services can save you time, minimise tax and keep your business on track.
FAQ
- Q1. How long do I need to keep business records? You must keep most records for at least five years. Some records may need to be kept longer, such as super contributions or fringe benefits tax records.
- Q2. What happens if I miss a BAS or PAYG due date? Late lodgement or payment can attract penalties and general interest charges. If you’re struggling to pay on time, contact the ATO or your tax professional before the due date to discuss support options.
- Q3. Why is separate banking important? Separating personal and business transactions helps you meet tax obligations and ensures you claim only legitimate business expenses. It simplifies record keeping and gives you a clearer picture of cash flow.