Common bookkeeping mistakes to avoid
The most common bookkeeping errors we see from our customers and how to fix them
These five mistakes account for the majority of bookkeeping errors we correct when reviewing client records.
The five most common errors
- Mixing personal and business transactions: always pay business costs from the business bank account, never from a personal account. If you do pay personally, record it as a director's loan and reimburse correctly
- Missing invoices: every sale must have an invoice in Xero. Cash received without an invoice is still taxable income
- Duplicate entries: bank feeds occasionally create duplicates. Check for duplicates before reconciling and delete one
- Wrong VAT code: applying 20% to a zero-rated cost or applying No VAT to a standard-rated cost distorts the VAT return
- Uncoded transactions: leaving bank transactions in the unreconciled list means they are excluded from financial reports and VAT returns
💡 Good to know: On our Accounting Standard plan, you’ll get a quarterly Xero health check and on our Accounting Scale plan, this happens monthly. As part of the check, we flag any of these issues that we spot. But catching them weekly rather than waiting for our review makes corrections much faster.
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