For Faturoti Taiwo & Co., Chartered Accountants — Lagos, Nigeria
Running a small business in Nigeria is already challenging — from rising operating costs to regulatory demands and stiff competition. But one silent business killer often goes unnoticed: poor accounting practices.
Many Nigerian SMEs fail not because their products are bad, but because their financial records are inaccurate, incomplete, or poorly managed. At Faturoti Taiwo & Co., we have seen firsthand how common accounting mistakes lead to tax penalties, cash flow crises, and business collapse.
Below are the top accounting mistakes Nigerian business owners must avoid — and how to fix them.
1. Mixing Personal and Business Finances
This is the number one accounting mistake small business owners make in Nigeria.
Why It’s Dangerous:
- Distorts financial records
- Makes budgeting impossible
- Attracts suspicion during tax audits
- Prevents you from knowing if the business is truly profitable
Fix:
✔ Open a dedicated business bank account
✔ Never pay personal bills from company funds
✔ Use accounting tools to separate all transactions
2. Poor Record-Keeping (or No Records at All)
Many SMEs run with zero documentation — no invoices, receipts, payroll records, inventory logs, or bank reconciliation.
The Risks:
- Wrong tax filings
- Loss of money due to errors
- Inability to track debts owed
- Missing out on investor or loan approval
Fix:
✔ Keep daily records of sales and expenses
✔ Use cloud accounting tools (e.g., Zoho Books, QuickBooks)
✔ Hire an accountant to review your books monthly
3. Ignoring Tax Obligations (FIRS & State Taxes)
Failing to comply with FIRS, LIRS, or other state revenue requirements is one of the quickest ways to destroy your business.
Consequences:
- Heavy penalties and interest
- Business closure orders
- Criminal charges for deliberate evasion
Fix:
✔ Register for necessary taxes (TIN, VAT, CIT, PAYE, etc.)
✔ File returns on time
✔ Work with a tax professional
At Faturoti Taiwo & Co., we help SMEs remain 100% compliant and penalty-free.
4. Not Tracking Cash Flow
Cash flow — not profit — keeps your business alive.
Many profitable Nigerian businesses still fail because they run out of cash.
Warning Signs:
- Customers owe too much for too long
- No money to restock
- Salaries becoming difficult to pay
Fix:
✔ Monitor cash inflows and outflows weekly
✔ Prepare cash flow forecasts
✔ Improve debt collection processes
5. Underpricing Products or Services
Without proper cost accounting, many SMEs undercharge — especially in competitive markets.
Results:
- No profit
- Inability to grow
- Cash shortages
Fix:
✔ Know your true cost price
✔ Include overheads (rent, salaries, utilities, marketing)
✔ Review pricing every 6 months
6. Hiring Unqualified or “Cheap” Accountants
Many businesses rely on:
- Friends
- Relatives
- Untrained staff
- “Street accountants”
This often leads to financial disasters.
Fix:
✔ Work with certified professionals
✔ Verify experience and qualifications
✔ Invest in proper financial management
Faturoti Taiwo & Co. provides expert accounting tailored for Nigerian SMEs.
7. Not Reconciling Bank Statements
If you’re not reconciling your bank account regularly, your books are already wrong.
Risks:
- Fraud goes unnoticed
- Errors accumulate
- Cash flow becomes inaccurate
Fix:
✔ Reconcile statements monthly
✔ Use accounting software
✔ Allow an accountant to verify your books
8. No Budget or Financial Plan
Running a business without a budget is like driving blindfolded.
Why It Destroys Businesses:
- Overspending
- No financial discipline
- Inability to plan growth
Fix:
✔ Create a yearly and monthly budget
✔ Track performance vs. budget
✔ Adjust when necessary
9. Not Keeping Proper Payroll Records
Mistakes in employee payments can cause disputes and attract penalties.
Fix:
✔ Maintain payroll registers
✔ Deduct PAYE correctly
✔ Remit taxes by due dates
✔ Document staff salaries and benefits
10. Avoiding Professional Financial Advice
One consultation can save your business from years of financial struggle.
Benefits of professional advice:
- Better tax planning
- Improved profitability
- Full compliance
- Accurate financial reporting
How Faturoti Taiwo & Co. Helps Nigerian Businesses Avoid These Mistakes
Our team provides:
✔ Monthly bookkeeping
✔ Full tax compliance (FIRS & State)
✔ Payroll management
✔ Business advisory
✔ Financial planning & budgeting
✔ SME accounting system setup
We help you stay compliant, profitable, and financially organized — with zero stress.
Need professional accounting support?
Contact Faturoti Taiwo & Co. today.
Accounting mistakes are silent killers — but they are 100% avoidable.
By staying organized, complying with tax laws, and working with professionals, your business can stay profitable and grow confidently.