When looking for a tool that can make a hole in leather without leaving a large opening, try a diamond tip awl. They are awls with a diamond-shaped (think 4 corners coming to a point) blade and a very sharp point.
The sharp point allows it to cut into the leather, while the diamond tip pushed through. The result is a tiny “x” cut in the leather. Due to the material flexibility of the “x” cut, when thread passes through along with the additional space needed for the needle, it forms a tight seam. This is better than just a hole punched into the leather, as holes created like that would often be larger than the thread used and leave a loose-fitting seam once complete.
Diamond tip awls come in various sizes so the crafter can choose what size hole is most appropriate for the project. This is definitely a recommended leather working tool.