Bookkeeping Mistakes Solopreneurs Make and How To Avoid Them
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Bookeeping
Running your own business means wearing many hats — and bookkeeping is often the one that slips down the list. But keeping your finances in order doesn’t just save time; it helps you stay compliant, claim every deduction you deserve, and reduce stress at tax time.
Whether you’re just starting out or scaling your business, here are the most common bookkeeping mistakes entrepreneurs make — and simple ways to avoid them.
1. Poor Recordkeeping Practices
Not keeping accurate and organised financial records can lead to missed deductions, compliance headaches, and confusion when it’s time to lodge your return.
Example: Jasmine, a freelance designer, keeps all her receipts in a shoebox and only sorts through them once a year. When tax time rolls around, she can’t find half of them — and misses out on deductible expenses.
How to avoid it:
• Use the Solo app to track your income and expenses throughout the year.
• Regularly update your records so nothing gets forgotten.
• Keep digital copies of receipts and invoices for your accountant or bookkeeper.
2. Mixing Business and Personal Finances
Using the same bank account or credit card for both personal and business transactions makes it hard to track expenses and risks inaccurate tax claims.
Example: Tom uses his personal credit card for groceries and tools for his business. At tax time, separating the two becomes a nightmare — and he accidentally claims personal purchases as business expenses.
How to avoid it:
• Open a dedicated business bank account and credit card.
• Keep all business income and expenses separate — it’ll save you hours later.
• Regularly reconcile your transactions to stay on top of cash flow.
3. Incorrect or Missed Expense Claims
Many entrepreneurs forget to claim legitimate deductions — or accidentally claim personal costs as business ones — increasing the risk of audits or penalties.
Example: Lina works from home but forgets to claim part of her internet bill. She also claims 100% of her car expenses, even though she only uses it for work half the time.
How to avoid it:
• Learn which deductions you’re eligible for and claim only the business-use portion.
• Keep records showing how you’ve calculated shared expenses like home office or vehicle use.
• Review your expenses regularly to ensure accuracy.
4. Neglecting Tax Planning and Deadlines
Leaving tax preparation to the last minute can cause errors, missed deductions, and even ATO penalties.
Example: Steve waits until the end of October to do his tax return. He rushes, misses deductions, and lodges late — earning himself a fine.
How to avoid it:
• Mark key tax dates (like the lodgement deadline) in your calendar.
• Keep tax documents organised year-round.
• Consider working with an accountant to plan and optimise your tax position early.
5. Overclaiming GST on Expenses
Claiming GST on purchases that don’t include it — often seen with digital subscriptions or overseas suppliers.
Example: Priya subscribes to an international software service and assumes it includes GST. She claims it, but the invoice shows no GST was charged, leading to an incorrect BAS and a potential audit.
How to avoid it:
• Always check your invoices for GST details before claiming.
• Be extra careful with online subscriptions and overseas payments.
• Keep all tax invoices on file for easy verification.
6. Failing to Set Aside Funds for Tax Obligations
Not reserving money for tax liabilities can leave you short when payments are due — creating unnecessary stress and cash flow problems.
Example: Mike has a great first year in business but forgets to save for tax. When his return is due, he owes $6,000 and has no savings to cover it.
How to avoid it:
• Estimate your tax liability and regularly set aside a portion of income (e.g., 25–30%).
• Consider joining the ATO’s Pay As You Go (PAYG) instalment system.
• Treat tax savings as a non-negotiable business expense.
Key Takeaways
• Invest time in a proper recordkeeping system.
• Separate business and personal finances.
• Use an app like Solo by MYOB to simplify admin.
• Engage an accountant or bookkeeper early — they’re worth it.
• Double-check GST on your expenses.
• Always save for tax — future you will thank you.
Simplify Your Bookkeeping with Solo by MYOB
Solo by MYOB is the all-in-one mobile app built for entrepreneurs, freelancers, and small business owners. It helps you stay in control of your finances without the overwhelm.
With Solo, you can:
• Snap and track expenses
• Create and send unlimited invoices
• Accept in-person and online payments
• Automate tax and GST tracking
• Get simple cash flow insights at a glance
Don’t miss out on this exclusive offer thanks to Solo’s partnership with The Founders Union. For a limited time, get 12-months of Solo by MYOB free. Learn more or get started today.
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