A common bookkeeping mistake I see contracting businesses make?
Calling someone a “consultant” when they're actually functioning like an employee.
And this is where bookkeeping can become more than recording transactions.
You hire someone.
They work almost exclusively for your business.
They use your systems and email.
They attend your internal meetings.
You pay them a fixed amount every month.
But in your books, they're sitting under “consultancy fees.”
You withhold 5% and move on.
The problem?
The label doesn't necessarily determine the tax treatment.
What matters is the substance of the relationship.
If the arrangement looks like employment, calling someone a consultant doesn't automatically make them one.
And if the relationship is later challenged, the business could face additional PAYE and other statutory obligations.
That's an expensive bookkeeping mistake.
But there's a bigger lesson here:
Your books should reflect how your business actually operates—not just what you called the transaction.
This is why I don't like looking at bookkeeping as:
“Just record the payment.”
The better question is:
“What actually happened here?”
Who was paid?
Why were they paid?
What is the nature of the relationship?
What documentation supports it?
How should the payment be treated?
Because sometimes the biggest bookkeeping mistakes aren't arithmetic mistakes.
They're classification mistakes.
And the wrong classification can follow you all the way to your tax return.
If you're a founder, take a second look at how you're classifying the people you pay.
Your books should tell the same story as the way your business actually operates.
Hi, I'm Eliezer Munene, a bookkeeper helping founders keep their books organised, reconciled and useful.
If you're unsure whether your records accurately reflect what's happening in your business, let's talk.
A clean classification today is better than an expensive explanation later.
