I am calling this the "Mistake post". Wait. Did I post this by mistake?.... No, I promise. This is a bookkeeping post about the mistakes that quietly cost business owners money. There are many, so I will take one mistake at a time. This post is only about Mistake 1. Mistake 1: Mixing personal and business spending One coffee here, one grocery bill there, and by the end of the month nobody knows whose money was spent. Yes, that coffee was a "business meeting". With yourself. It looks small. It is not. Here is what it quietly does to your business: Your profit becomes wrong. Personal costs sit inside business expenses, so the numbers do not show how the business is really performing. Your bank reconciliation becomes slow. Every personal payment needs an explanation before your books can match the bank statement. Your tax work becomes harder. When costs are mixed, it is difficult to prove which expenses truly belong to the business. You lose clarity. You cannot tell how much the business earned and how much you took out for yourself. Check your statement once a week. Small habit. Clean books. Much less stress at year end. Mistake 2 is coming in the next post, so follow along so you do not miss it.

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Cover image for Your books say $180,000 profit.

Your books say $180,000 profit. Reality says $135,000. 😬 Episode on accrual expenses 👇 The case: A small trading company came to us at year-end. Their profit looked great, but they had only recorded bills they had already paid. What was missing: ✅ Audit fee: work done in December, invoice not yet received ($20,000) ✅ Utilities: December usage, bill arrives in January ($10,000) ✅ December salaries: paid in January ($15,000) That is $45,000 of expenses that belong to this year but never touched the bank account, so they never hit the P&L. The fix: Dr Expenses $45,000 Cr Accrued liabilities $45,000 The lesson: Accrual accounting records an expense when you incur it, not when you pay it. If you only look at your bank, your profit is overstated, your tax is wrong, and your decisions are built on a number that isn’t real. 💬 Comment “ACCRUAL” and I’ll send you a simple month-end accruals checklist. Follow for the next contra episode 🎬 Hashtags: #Accounting #AccrualAccounting #AccrualExpenses #Bookkeeping #AccountingTips #FinancialLiteracy #SmallBusiness #Entrepreneur #Startup #Founders #Finance #CFO #Accountant #ACCA #LearnAccounting #BusinessTips #AccountingCaseStudy #contra #CountingCrux

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A client asked me last week: “Why is there still a balance sitting in prepaid? I already paid all of it.” Fair question. Honestly, it’s one of the most common things business owners get confused about. Here’s how I explained it. When you pay your trade licence for the year, that money has left your bank. But you haven’t used the whole year yet. So the unused part isn’t an expense yet. It’s something you’ve paid for and still own, like a credit waiting to be used. Say you pay 10,350 for a 12 month licence. Each month, 862.50 moves into expenses. Whatever hasn’t been used by 31 December stays on the balance sheet as prepaid. The client still wasn’t fully getting it from the schedule alone, so I broke it down year by year. 2020, 2021, 2022. Same prepayments, just showing how much was used and how much was still left at each year end. That’s when it clicked for them. The visa, shared desk, insurance and licence costs all work the same way. Pay now, use over time, expense a little each month. If your accountant keeps saying “prepaid” and you nod along, ask them to show you a schedule like this. It’s your money, you should be able to see where it is. This is part of my contra series, where I explain accounting without the jargon. #accounting #prepaidexpenses #smallbusiness #UAE Check it out (https://contra.com/p/N2MscqgY-prepaid-expenses-explained-the-way-i-explained-it-to-my-client)

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Prepaid expenses, explained the way I explained it to my client

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Fatima Akbar

Accurate Books. Clear Financial Insights. Stress-Free Tax