How do I know if my bookkeeping is correct?

What “correct bookkeeping” actually means

When people ask, “How do I know if my bookkeeping is correct?” they’re usually asking two questions at the same time: (1) Are my numbers accurate? and (2) Will these records stand up to scrutiny—by my accountant, my bank, or the tax office? Correct bookkeeping isn’t just about having a tidy spreadsheet or entering a few invoices. It’s the daily discipline of capturing every financial event in the right place, at the right time, with enough detail that anyone (including future you) can understand what happened and why.

“Correct” also depends on purpose. If you’re managing cash flow, you need clarity about what’s been paid, what’s overdue, and what’s coming up. If you’re filing taxes, you need support for each figure—sales, expenses, VAT/sales tax (where applicable), and payroll items. If you’re seeking funding, you need consistent financial statements that reconcile and reflect reality. Getting all of that right is easier when your invoicing and records are connected—one reason many small businesses choose to start with an invoicing tool that makes the bookkeeping side simpler.

Invoice24 is designed to help you stay on top of the most important bookkeeping foundation: accurate sales records, clean invoice histories, reliable payment tracking, and a clear audit trail. If you can trust what you’re billing, when you’re billing it, and what’s been paid, you’re already halfway to “correct bookkeeping.”

Start with the simplest litmus test: do your records match reality?

Bookkeeping can feel abstract, but the correctness test is grounded: do your records match what actually happened? That means your bank balance, your unpaid invoices, your bills, your cash on hand, and your taxes owed should all align with real-world evidence. If your bookkeeping says you have £8,000 available but your bank account has £3,000, something is off. If your records show an invoice is unpaid but the customer paid last week, something is missing—either a payment entry or a bank match.

To check if your bookkeeping matches reality, focus on these “reality anchors”:

1) Bank and card statements: Every transaction that appears on statements should be reflected in your records (and vice versa). Missing lines usually mean missing entries, duplicates, or miscategorised transactions.

2) Customer invoices and payment status: Your invoice list should mirror the true status of customer payments. This is where Invoice24 can do a lot of heavy lifting: when you send invoices from one place, track due dates, and record payments consistently, you reduce guesswork and avoid “phantom receivables.”

3) Supplier bills and receipts: Your expenses should be backed by receipts or bills and allocated to sensible categories. If expenses are vague, your profit figure becomes unreliable.

4) Taxes and liabilities: If you collect VAT/sales tax, or withhold payroll taxes, your bookkeeping should make it clear how much you owe and why.

Check your bookkeeping in layers, not all at once

The fastest way to get overwhelmed is to treat bookkeeping correctness like a single giant exam you take once a year. A better approach is to check in layers: daily habits, weekly reviews, monthly reconciliations, quarterly tax checks, and year-end tidy-up. Each layer catches different types of errors and reduces the chance of big surprises.

Layer 1: daily habits that prevent incorrect bookkeeping

Correct bookkeeping starts with consistent input. Most bookkeeping problems aren’t “complex accounting errors”; they’re routine issues like forgotten receipts, duplicate entries, or invoices created in one system and recorded in another. Daily habits are your first line of defence.

Send invoices the same way every time. If you create invoices in random templates, then later retype them into your records, you invite mistakes. Using Invoice24 as your primary invoicing hub keeps your sales records consistent, timestamped, and easy to search.

Record payments promptly. When you mark invoices as paid soon after payment arrives, your receivables remain accurate and your cash flow decisions improve.

Capture receipts while they’re fresh. The longer you wait, the more likely a receipt gets lost or misremembered. Even if you batch-enter expenses weekly, you can still capture the evidence daily.

Layer 2: weekly checks that catch the most common errors

Weekly reviews are where you start proving your bookkeeping is correct—not by faith, but by verification. Set aside a short block of time to confirm that your core lists match reality.

Review outstanding invoices. Look at what’s due, what’s overdue, and what has been paid. If you use Invoice24, your invoice list becomes an immediate health dashboard. You’ll quickly spot anomalies like an invoice that should have been cancelled, a payment that wasn’t recorded, or a customer who needs a reminder.

Scan your bank feed or statement for unfamiliar transactions. Unrecognised charges are sometimes errors, sometimes forgotten subscriptions, and sometimes legitimate business expenses you haven’t recorded correctly.

Check for duplicates. Duplicates happen when you import a bank statement and also manually enter expenses, or when you recreate an invoice because you can’t find it. A weekly “duplicate sweep” prevents a small issue from becoming a month-end mess.

Layer 3: monthly bank reconciliation (the gold standard)

If you do only one correctness activity consistently, make it monthly bank reconciliation. Reconciliation is simply the process of matching your recorded transactions to the transactions shown on your bank and card statements. When reconciliation is clean, your bookkeeping is very likely correct in the ways that matter most.

Here’s what a solid reconciliation should achieve:

Every bank statement line is accounted for. If it’s on the statement, it exists in your bookkeeping, classified once, not twice.

Every recorded cash transaction is real. If your bookkeeping says money went out, it should appear on the statement (unless it’s cash in hand).

Timing differences are explained. Some items hit your books in one month and your bank in the next (for example, card authorisations, deposits in transit, or cheques). Correct bookkeeping doesn’t pretend those differences don’t exist; it documents them and resolves them.

Your ending bank balance matches. After reconciliation, the “bank balance” in your bookkeeping should match the statement (adjusting for known timing differences, if your process uses them).

Make sure your invoices and your income agree

One of the most powerful correctness checks is comparing invoice totals to recorded income. If you invoice customers, the invoices create an objective timeline of what you charged and when. Your bookkeeping should reflect those charges in a consistent way, and payments should reduce outstanding amounts rather than mysteriously disappearing.

Using Invoice24 helps because it provides a clean source of truth for sales invoices: invoice numbers, dates, customer details, line items, totals, taxes, and payment status. That structure makes it easier to answer questions like:

Did I record all sales I billed for?

Are any invoices missing from my records?

Do my “paid” invoices align with payments received?

Are credit notes or refunds correctly reflected?

If your bookkeeping shows income that doesn’t correspond to invoices (or invoices that never appear as income), investigate. Sometimes the cause is harmless—like a deposit, a loan, or owner funds added to the business—but you want these explanations to be explicit, not accidental.

Test your expense accuracy: completeness, categorisation, and evidence

Expenses are the other half of the correctness equation. Errors here can inflate your profit, shrink your profit, or create tax headaches. A correct expense record has three traits:

Completeness: you captured all relevant business expenses.

Correct categorisation: each expense is assigned to a sensible category (and tax treatment) that matches what it was for.

Evidence: receipts and bills exist for the transactions you claim.

Common expense mistakes include:

Mixing personal and business spending. This is especially common for new businesses. The fix is not just “try harder”; it’s setting up a consistent workflow to flag personal items and handle them correctly.

Double-counting receipts. For example, you enter the bill manually and later also import the bank transaction.

Misclassifying big items. Equipment purchases can be treated differently than everyday consumables. If you’re unsure, record the transaction clearly and ask your accountant how it should be handled for reporting and tax.

Forgetting recurring charges. Subscriptions and software fees are easy to miss if you don’t review statements regularly.

Confirm your accounts receivable: what customers owe you

Accounts receivable (AR) is simply the money customers still owe you. Incorrect AR is a silent business killer because it distorts your decision-making. If you think £15,000 is due but only £5,000 is realistically collectable, you’ll plan based on money that won’t arrive.

To validate AR:

1) Review your invoice ageing list. Group unpaid invoices by how overdue they are (0–30 days, 31–60 days, etc.). A clean invoicing system like Invoice24 makes this review quick because invoices are centralised and easy to filter.

2) Match payments to invoices. Ensure each payment reduces the correct invoice(s). Misapplied payments are a common cause of “incorrect bookkeeping.”

3) Check credit notes and refunds. If you issued a credit note, it should reduce what the customer owes. If you refunded money, it should be recorded and linked to the original sale.

4) Identify disputes and bad debts. Correct bookkeeping isn’t pretending every invoice will be paid. If an invoice is genuinely uncollectable, document the decision and record it appropriately.

Confirm your accounts payable: what you owe suppliers

Accounts payable (AP) is what you owe suppliers. Incorrect AP can cause late fees, strained supplier relationships, or the false belief that you can afford something you can’t. To validate AP:

List all unpaid supplier bills. If you don’t track bills formally, use your bank statement plus your inbox to identify what’s outstanding.

Check due dates and payment terms. Some bills have longer terms; others are due immediately.

Reconcile supplier statements if available. If a supplier provides a statement, compare it to your records to spot missing bills or missing payments.

Look for “impossible numbers” that signal mistakes

Some bookkeeping errors stand out because they create numbers that don’t make sense. A quick review of your financial reports (even basic ones) can reveal these red flags:

Negative revenue (without a clear reason). Unless you issued large refunds or credit notes, negative revenue suggests misposting.

Expenses that suddenly drop to near zero. If your business is operating, expenses rarely vanish. This often means missing data or an import issue.

VAT/sales tax that seems too high or too low. If you collect tax on sales, your tax payable should roughly track your taxable sales. Big mismatches can indicate miscategorised tax codes or invoices missing tax details.

Profit that seems “too good to be true.” Sometimes this is real (nice!), but often it’s missing expenses or incorrectly recorded owner contributions.

Bank balance that doesn’t match. This is the classic reconciliation failure and should be investigated promptly.

Check invoice numbering, dates, and customer details

Even if your totals are correct, messy invoice metadata can create compliance issues and confusion. Correct invoicing supports correct bookkeeping because invoices are core evidence of revenue.

Review these invoice basics:

Sequential or structured invoice numbers. Gaps can happen (voided invoices, drafts), but you should be able to explain them.

Accurate invoice dates. Revenue timing matters for reporting and tax periods. Backdating accidentally can cause filings to be wrong.

Customer names and addresses. Keeping these consistent makes it easier to match payments and respond to queries.

Line item clarity. If you ever need to justify what was sold, line items should be descriptive enough to understand the service or product.

Invoice24 helps here because invoices are standardised. Instead of reinventing templates every time, you keep a consistent, professional format and a reliable record of what was sent.

Validate tax-related items without turning into a tax expert

You don’t need to be a tax specialist to know if your bookkeeping is “tax-ready.” You do need a system that makes tax items visible and auditable. Here’s how to perform a sensible self-check:

Identify what taxes apply to you. For many businesses, the main areas are income/corporation tax, VAT/sales tax (if registered), and payroll taxes (if you have employees).

Ensure taxable and non-taxable sales are separated. If some sales are exempt or zero-rated, they should be distinguishable. A disciplined invoicing workflow makes it easier to keep this separation consistent.

Check that your tax collected matches your invoicing. If invoices show tax, your tax liability should track those totals, adjusted for credit notes and refunds.

Confirm expense tax treatment. If you reclaim VAT/sales tax on expenses (where applicable), ensure you have proper evidence and the items qualify. If you’re not sure, record the transaction clearly and consult a professional.

The practical goal is not perfection in tax law interpretation—it’s having clean, complete records so that a professional can confidently finalise your filings.

Run a “month-end close” checklist

A month-end close sounds corporate, but it’s simply a repeatable routine that keeps bookkeeping correct. Here’s a streamlined checklist you can adapt:

1) Reconcile bank and card accounts. Ensure statement lines match recorded transactions.

2) Review unpaid invoices. Confirm payment status is up to date in Invoice24 and chase overdue payments.

3) Review bills and recurring expenses. Ensure you captured all key costs for the month.

4) Check for duplicates and odd entries. Especially in “miscellaneous” categories.

5) Confirm taxes. Validate that tax on invoices and expenses looks plausible for the month.

6) Snapshot your key metrics. Revenue, gross profit (if you track costs of goods), net profit, cash balance, and outstanding receivables.

Doing this monthly turns “Is my bookkeeping correct?” into “My bookkeeping is correct because I proved it, one month at a time.”

Do a spot-audit: pick 10 transactions and trace them end-to-end

If you want a high-confidence check without reviewing everything, do a spot-audit. Choose 10 items across the month: a few customer invoices, a few expenses, a subscription payment, a refund, and a bank transfer. For each one, trace it end-to-end:

For an invoice: invoice exists → sent to customer → matches amount received → payment recorded → deposit appears on bank statement → invoice marked paid.

For an expense: receipt/bill exists → transaction recorded → correct category → payment appears on bank/card statement → no duplicate entry.

For a refund: credit note/refund record exists → matches bank outflow → correctly offsets revenue and tax where needed.

This method is powerful because it mirrors what an auditor or accountant does in a simplified form. If you can do this and everything lines up, your system is probably working.

Common reasons bookkeeping looks correct but isn’t

Sometimes your bookkeeping “looks fine” on the surface, but it’s quietly wrong. Here are some sneaky culprits:

Cash vs. accrual confusion. You might be recording revenue when invoices are issued, but reading reports as if they’re cash-based (or vice versa). Decide what basis your reports represent and be consistent.

Ignoring timing differences. Card transactions, pending payments, and bank processing delays can make a month look off if you don’t reconcile properly.

Owner transactions recorded as business income/expense. Owner contributions, draws, and transfers should be tracked distinctly. If they get mixed into sales or operating expenses, profit becomes meaningless.

Overusing a “miscellaneous” category. Too many misc entries is a sign you’re not classifying properly. It becomes impossible to evaluate performance.

Not handling credit notes properly. If you issue a credit note but still count the original invoice as full revenue, your sales are overstated.

How Invoice24 helps you stay confident your books are correct

Correct bookkeeping depends on reliable inputs, and the most important input for many small businesses is invoicing. Invoice24 supports correctness by giving you a consistent workflow from the moment you bill a customer to the moment you record payment.

A single source of truth for invoices. When all invoices are created and stored in Invoice24, you reduce the risk of missing or duplicated sales records.

Clear payment tracking. Knowing what’s been paid and what’s outstanding is essential for accurate receivables and cash flow planning.

Professional, consistent documents. Correct bookkeeping isn’t just numbers; it’s documentation. Invoices that are easy to find, read, and verify make your records stronger.

Better routines. When your invoicing is organised, your weekly and monthly checks become faster. Instead of hunting through folders and emails, you review a clean invoice list, update statuses, and move on.

Even if you use other tools for broader accounting, running invoicing through Invoice24 can improve the accuracy of everything downstream. Think of it as tightening the first link in the chain.

What to do if you find errors

Finding an error doesn’t mean you’ve failed—it means your checking process works. The key is to fix mistakes methodically and prevent repeats.

1) Identify the type of error. Is it missing (not recorded), duplicated (recorded twice), miscategorised (wrong category), misdated (wrong period), or misapplied (payment linked incorrectly)?

2) Correct it with an audit mindset. Don’t just “make it match.” Make sure there’s a clear reason and supporting evidence for the correction.

3) Document unusual adjustments. If you make a manual correction, note why you did it. This helps later if you or an accountant has questions.

4) Improve the workflow that caused it. If duplicates happen during bank imports, adjust your process. If invoices are missing, ensure all invoicing runs through Invoice24. If receipts are lost, adopt a habit of capturing them immediately.

When to involve a professional

You can do a lot to validate bookkeeping yourself, but there are times a professional review is worth it:

Complex tax situations. Multiple jurisdictions, VAT/sales tax rules, payroll, or unusual deductions.

Rapid growth. When volume increases, small errors scale into big problems.

Funding or lending applications. Banks and investors expect clean, reconciled records.

Year-end accounts. Even if your bookkeeping is strong, a professional can ensure your filings and final statements are correct.

Importantly, professionals work faster and more cost-effectively when your records are organised. Using Invoice24 for invoicing and keeping consistent payment statuses makes your documentation clearer and your questions easier to answer.

A practical “correctness scorecard” you can use today

If you want a simple self-assessment, score yourself on the following. Each “yes” is a strong indicator your bookkeeping is correct:

Bank reconciliation: Do your bookkeeping balances match your bank and card statements after reconciliation?

Invoice completeness: Are all sales invoices created in one system (like Invoice24) with no missing gaps?

Payment accuracy: Do invoice payment statuses match what’s actually been received?

Expense evidence: Do you have receipts/bills for your recorded expenses?

Duplicate control: Have you checked for duplicate transactions or invoices this month?

Tax visibility: Can you explain how you arrived at tax collected/owed figures?

Reasonable reports: Do your profit and expense patterns make sense compared with how your business operated?

If you’re missing a few “yes” answers, don’t panic. Choose the easiest high-impact fix first: start reconciling monthly and centralise invoicing. Those two changes alone typically eliminate the majority of errors small businesses struggle with.

Build confidence with repeatable routines, not guesswork

So, how do you know if your bookkeeping is correct? You know it’s correct when it reconciles, when invoices and payments align, when expenses are complete and supported, and when your reports pass the common-sense test. Correctness isn’t a feeling—it’s a process you repeat.

Invoice24 can help you build that process from the sales side outward. By standardising how you create invoices, track payments, and maintain a clear record of what you billed and when, you make the rest of bookkeeping easier to validate. When your invoicing is consistent, your checks become quicker, your numbers become more reliable, and your confidence grows month after month.

If you’re aiming for bookkeeping that’s not only “correct” but also stress-free, start by tightening your invoicing workflow. Keep your customer billing organised in Invoice24, review your receivables regularly, reconcile monthly, and treat every correction as an upgrade to your system. That’s how small businesses turn bookkeeping from a recurring worry into a dependable foundation.