5 Common Mistakes Small Business Owners in UAE Make in Their Bookkeeping

If you are an owner of a small-scale business you know the struggles behind juggling matters like sales, marketing, product development, and operations at the same time every day! Due to such a situation, often bookkeeping tends to be kept aside by many. It is a grave mistake to do so. Not thinking about bookkeeping is one of the worst bookkeeping mistakes you can ever make as a small business owner.

For any successful business, good bookkeeping practices are very important. It can give you the best financial insights for you to make smart business decisions, avoid failures and grow your business rapidly.

Unfortunately, most small business owners are not well aware of the need for bookkeeping and how it can be done well. To get started, we would like to draw your attention to the 5 common mistakes small business owners in UAE can make in their bookkeeping.

5 Common Bookkeeping Mistakes Small Businesses Make

Take note of the below-mentioned mistakes and ensure that your business doesn’t end up making one.

1. Records not accurately kept

Keeping accurate records is one of the most critical aspects of bookkeeping. It seems simple but it is often the most overlooked one regarding bookkeeping. Until it’s too late, many small business owners don’t understand the importance of keeping accurate records. For example, many businesses might keep aside tracking expenses or look at the receipts thinking that it can be “done later”. Investing in bookkeeping software will be the worst idea for them because they feel it's unnecessary or very expensive. Truth be told, for the success of your business accurate record-keeping is critical. It can help you make informed decisions, track your progress, and keep you away from making costly mistakes. If records are not kept accurately, you could end up missing out on deductions, overpaying taxes, or making other major mistakes.

Determining who is on staff and who isn’t is also very important. With so many independent consultants, freelancers, and contractors, determining who is who can be very difficult. You might need to face significant consequences, including lawsuits and tax penalties if you have misclassified your contractors and employees.

2. Not being Up-To-Date

Not staying updated is yet another common bookkeeping mistake made by small business owners. ‘Not staying updated’ includes not keeping track of changes in tax regulations and laws and also not recording transactions promptly. You can ensure compliance with all relevant regulations and avoid costly mistakes by recording transactions promptly. The key to effective bookkeeping is communication whether you choose to outsource the work to a professional or hire a part-time bookkeeper to make sure everyone is on the same page and avoid errors. Yet another example of a common mistake is paying a bonus to an employee and not reporting it to the bookkeeper. Another one would be not providing the bookkeeper with relevant receipts while buying supplies.

A fundamental aspect of determining the financial health of your company is by reconciling your books with bank statements. Make sure it’s done consistently and properly. At any given time, if you want to identify how much money you have in hand or to discover bank errors before they become major problems, reconciling your books is a necessity. By hiring an experienced bookkeeper you can take care of the complicated process of reconciliation with ease.

3. Records not organized

Yet another common bookkeeping mistake that small business owners make is not organizing their records properly. This can lead to various bookkeeping errors, duplicate entries, lost receipts, and more.

A few of the simple methods by which you can organize your bookkeeping records are:

• Use of bookkeeping software: By employing bookkeeping software you can avoid bookkeeping mistakes and better track your finances


• Creating a system: Create a system like setting up a designated area for bookkeeping records or creating folders for each month.


• Hire a bookkeeper:


• Consider hiring a bookkeeper if you are not comfortable handling bookkeeping by yourself. You can organize your records and avoid bookkeeping mistakes by employing a bookkeeper.

4. Having no understanding on what to look for

Not knowing what to look for is another common mistake small business owners make. In doing so, you tend to make incorrect assumptions about your business’s finances and also overlook important financial information.

Below given are some of the few things you need to look for when reviewing your bookkeeping records.

• Trends: Includes decreases or increases in profit, expenses, or revenue.

• Red flags: Includes looking out for red flags such as unusual transactions or late payments.


• Opportunities: Includes keeping an eye on opportunities for improving your bookkeeping process or saving money.

If you neglect to track your reimbursable expenses, it would be equal to your money going down the drain. In doing so, you not only lose out on valuable tax deductions but lose money in the process. To make the process of tracking easy and consistent you can employ various expense-tracking apps and programs. Make sure you always have the habit of tracking your expenses as and when it occurs so that you don’t overlook your expenses and damage your company’s financial standing in the long run. Just as important as saving your receipts is tacking reimbursable expenses. Receipts help you maintain a physical track in the event of an audit whereas the other allows you to track the financial health of your business.

5. Deciding on ‘Do it Your Own’

Finally, one of the most common bookkeeping mistakes done by many small business owners is thinking that bookkeeping can be done on their own. While bookkeeping by oneself is not a bad idea, it’s not the best idea. It is easy to make mistakes especially if you don’t have any experience in accounting or bookkeeping.

Hiring the best accounting firms in UAE can save you time and money in the long run. If you have a question about your bookkeeping practices or are looking to improve your financial record keeping, connect with the best audit firms in UAE today!