Accounting may not be the most glamorous part of running a small business, but getting it wrong can quietly chip away at your cash flow, your credibility, and even your chances of long-term success. Many small businesses in South Africa don’t need a full-time accountant, but they do need a solid grasp of the basics to avoid preventable mistakes.
Here are five of the most common accounting missteps we see with small businesses, and how to avoid them.
1. Mixing Personal and Business Expenses
It’s surprisingly common for business owners to swipe the same card for both groceries and inventory. The problem is, when it comes time to do your books (or your tax return), it’s hard to figure out what was what. This muddies your financial records, makes compliance harder, and can even land you in trouble with SARS if you claim incorrect deductions.
The fix? Set up a separate bank account for the business, and make it a rule to keep personal and business spending completely separate - even if you're a sole proprietor.
2. Falling Behind on Bookkeeping
It’s easy to let bookkeeping slip when you're busy serving customers or growing the business. But when you don’t update your records regularly, you lose sight of your cash position, miss supplier payments, or forget to send invoices - hurting relationships and cash flow. Late recordkeeping also leads to errors, missed deductions, and painful admin at year-end.
Build a simple weekly routine: update your books, check your bank feeds, and reconcile transactions. Using cloud accounting tools like Xero, Sage, or QuickBooks can make this a lot easier.
3. Not Tracking Receivables (or Not Following Up)
Many businesses invoice customers and then forget about it, assuming the money will come in. But when payment gets delayed, or forgotten entirely, it hits your cash flow hard. It’s not just about sending the invoice, it’s about tracking whether it gets paid, and following up when it doesn’t.
Use your accounting system to track outstanding invoices and set up automatic reminders. Clear, consistent follow-up is essential, even if it feels awkward.
4. Confusing Profit with Cash
You might be making a profit on paper, but still struggling to pay your bills. That’s because profit includes non-cash items like depreciation and might count income that hasn’t been paid yet. Cash flow, on the other hand, reflects your real-world bank balance: and that’s what keeps your business alive.
Use cash flow forecasts to stay ahead. Know your inflows and outflows, and plan for slower periods, big payments, or VAT bills that can catch you off guard.
5. Not Getting Professional Help When You Need It
Trying to do everything yourself can save money in the short term, but may cost you in the long run, especially if you miss a compliance deadline, file incorrect tax returns, or lose track of expenses. Having a qualified accountant or bookkeeper to check in with, even once a quarter, can help you stay on track and catch problems early.
If you can’t afford one yet, consider using a part-time bookkeeper or outsourced accounting service until you’re ready to bring someone in-house.
Final Word
Accounting doesn’t have to be complicated, but it does need to be consistent. Avoiding these common mistakes can make a big difference to your financial health, reduce stress at tax time, and help you make better business decisions. If you put the right habits and systems in place early on, you’ll be in a far stronger position when it’s time to grow, apply for funding, or sell the business.Start writing here...