In the UK, small business owners in sectors like entertainment, property investment, and health & beauty often wear many hats from performing or managing bookings, to dealing with tenants, or serving clients on the salon floor. But one area too many overlook (or dread) is accounting.
The truth is, accounting mistakes are more than inconvenient they can cost you money, damage your business reputation, and land you in trouble with HMRC.
Here are 10 of the most common accounting mistakes business owners in these three industries make and how to avoid them.
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1. Mixing Business and Personal Finances
Whether you’re a DJ getting paid in cash, a landlord collecting rent, or a beauty therapist buying stock, using the same bank account for everything makes it hard to track business transactions accurately.
Solution: Open a dedicated business bank account and always use it for business income and expenses. This not only simplifies bookkeeping, but also helps you remain compliant if HMRC ever audits you.
2. Not Recording All Income (Especially Cash)
Cash payments are still common in salons, gigs, or short-term rentals. Failing to record these can result in underreported income a serious offence in the eyes of HMRC.
Solution: Log all income, regardless of amount or method. Use a till system, mobile payment app, or basic spreadsheet. Declare everything.
3. Missing VAT Registration or Misunderstanding Thresholds
Once your turnover exceeds £90,000 (2024/25 VAT threshold) in a 12-month period, you’re required to register for VAT. Many business owners in entertainment or beauty delay this risking penalties.
Solution: Monitor your turnover monthly. If you’re approaching the threshold, consult an accountant to prepare and adjust your pricing structure accordingly.
4. Poor Receipt and Expense Management
No receipts = no deductions. Whether it’s studio hire, travel to a gig, or salon supplies if you don’t keep clear records, you lose money at tax time.
Solution: Go digital. Use apps like Dext or QuickBooks to store receipts and categorise expenses on the go. Make it a habit.
5. Misclassifying Repairs vs Capital Improvements (Property Specific)
Landlords often confuse general maintenance (deductible) with capital improvements (not immediately deductible), leading to inaccurate tax filings.
Solution: Know the difference. Fixing a leaky tap is an expense. Installing a new kitchen is capital. Keep separate records and get professional advice when in doubt.
6. Failing to Budget for Tax
Many entertainers, therapists, and landlords spend earnings without setting money aside for tax only to panic come January or July.
Solution: Allocate 20–30% of your income into a separate account as a “tax pot.” It’s a simple way to avoid last-minute scrambles.
7. Inaccurate or Late Bookkeeping
Leaving bookkeeping until the end of the year leads to missed deductions, forgotten expenses, and rushed returns not to mention possible penalties.
Solution: Set aside time weekly or monthly to update your records. Use software like Xero, FreeAgent, or KashFlow many of which are MTD (Making Tax Digital) compliant.
8. Neglecting to Track Business Mileage or Travel
Entertainers travelling to gigs, property owners doing viewings, and mobile beauticians often forget to log their business travel losing out on allowable expenses.
Solution: Use a mileage tracking app (e.g., MileIQ, TripLog) or maintain a simple travel diary with dates, destinations, purposes, and distances.
9. DIY Accounting Without Sector-Specific Advice
Each industry has its quirks from royalty payments and licensing fees to rent relief and VAT on beauty products. Relying on generic advice or doing it all yourself can be risky.
Solution: Work with an accountant familiar with your industry. They’ll understand what you can legally claim and how to structure your finances efficiently.
10. Failing to Report Capital Gains (Especially in Property)
Selling an investment property? Many landlords forget or delay reporting capital gains which should be done within 60 days of sale for UK residential property.
Solution: Keep detailed records of purchase price, improvement costs, and sale details. Notify HMRC and pay any CGT owed promptly to avoid fines.
No matter how talented you are as a performer, investor, or practitioner financial mismanagement can quietly undermine your hard work. But it doesn’t have to. With the right tools, habits, and professional support, you can build a strong, compliant business foundation.
Avoid these common pitfalls, and your accounting won’t just be about survival it’ll become a powerful tool for growth.