“I Wish I Had Handled My Finances Sooner”
When I started my handmade business, I focused intensely on creativity. I dedicated my efforts to designing products and growing my brand. I connected with customers who loved my work.
Bookkeeping? That was an afterthought.
I told myself, “I’ll deal with it later.” I thought that as long as I was making sales, my business was thriving. But as orders piled up and expenses grew, I realized I had no clear picture of my finances.
Sound familiar? If you’re a handmade business owner, you probably started out of passion, not because you love spreadsheets. But here’s the truth: Neglecting bookkeeping can cost you time, money, and business growth.
Today I share with the 5 bookkeeping mistakes I made as a new business owner.
To help you avoid the mistakes I made, let’s break down five common bookkeeping pitfalls—and how to fix them.
1. Mixing Personal and Business Finances
I used my personal bank account for everything in the beginning. It felt easier—until tax season rolled around, and I had no idea what was personal and what was business-related. It was a mess.
🚨 Why This is a Problem:
- Confusing records make it harder to track profit.
- Tax preparation becomes a nightmare.
✅ How to Fix It:
📌 Open a dedicated business bank account and credit card. It keeps your finances clean and organized from day one.
📌 Treat your business like a business—separate expenses mean less stress and more financial clarity.
2. Ignoring the “Small” Expenses
I used to think, “It’s just a few dollars—it doesn’t matter.” But those small costs—shipping tape, coffee during a supply run, craft fair parking fees—add up fast.
🚨 Why This is a Problem:
- You lose track of real expenses, making it hard to see your actual profit.
✅ How to Fix It:
📌 Track every single expense, no matter how small. Use a notebook, an app, or accounting software to log purchases in real time.
📌 Save receipts—even digital ones. Those little purchases mean big tax savings later.
3. Not Tracking Inventory Costs
I’ll admit it—I once priced my products without fully calculating the cost of materials. I was guessing. And that meant I was undercharging and losing money without realizing it.
🚨 Why This is a Problem:
- You lose track of materials, leading to waste or stock shortages.
✅ How to Fix It:
📌 Start an inventory system—even a simple spreadsheet will do. Track what you buy, how much you use, and the cost of each item.
📌 Regularly update your Cost of Goods Sold (COGS) so you know exactly what it costs to make each product.
4. Procrastinating on Recording Transactions
I used to say, “I’ll do my bookkeeping later,” but later never came. And then? I was scrambling to sort through months of transactions, trying to piece everything together.
🚨 Why This is a Problem:
- Missing records lead to errors, lost income, and missed deductions.
- You end up with a stressful, last-minute mess at tax time.
✅ How to Fix It:
📌 Set a weekly bookkeeping habit. Block off 30 minutes every Friday to update your records—it’s much easier than fixing six months of chaos.
📌 Use bookkeeping software (like QuickBooks or Wave) to automate some of the work.
5. Not Asking for Help When Needed
For a long time, I thought, “I can figure this out on my own.” But as my business grew, so did the complexity of my finances. I finally hired a bookkeeper—and it was one of the best decisions I ever made.
🚨 Why This is a Problem:
- Struggling alone wastes time and energy you can use for growing your business.
- You will make costly financial mistakes without realizing it.
✅ How to Fix It:
📌 If bookkeeping feels overwhelming, consider hiring a professional bookkeeper or tax accountant—even just for a one-time setup.
📌 Join business groups or workshops where you can learn financial best practices from other entrepreneurs.
Bonus Tip: Know Your Numbers, Grow Your Business
If you take one thing from this, let it be this: Understanding your finances gives you power. It helps you price better, plan smarter, and grow stronger.
💡 Don’t wait until tax season to get organized. Start today by tracking expenses, separating finances, and setting bookkeeping habits.
📥 Bonus: Want a simple way to stay on top of your finances? Download our free “Small Business Financial Toolkit” to streamline your process and avoid these common pitfalls.
🚀 Click here to get your free toolkit now!
By avoiding these common bookkeeping mistakes, you’ll gain control over your finances, reduce stress, and build a profitable handmade business.
Here’s to turning your creativity into a thriving business! 🎉
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