by Rob Boon
Business owners must be very conscious of spending their money on items that will benefit their business, make it profitable, help it grow and provide the owner with a return on investment while taking account of the associated costs and business risks with a view to minimising these to an acceptable level.
Many times I hear of and see business owners who believe that they are more than capable of doing their own bookkeeping or engaging the services of general admin staff to perform these all important tasks. This approach will inevitably end in a situation where many or all of the following situations will result.
- Transactions are allocated to an incorrect general ledger account which can result in;
- More tax being paid that should be paid
- Tax being avoided which can result in fines and penalties being imposed should it be discovered in an audit
- EXAMPLES: Expense being claimed for a the purchase of a capital asset item, revenue being recorded against the sale of a capital asset item, gains or losses on the sale of capital asset items. Payment of GST liabilities allocated to expenses when paid, and Payment of PAYG withholding allocated to expenses
- Transactions allocated the incorrect GST coding which can result in :
- GST being claimed as paid that was not paid
- GST being claimed that is not permitted to be claimed
- GST being paid on non GST applicable items
- Incorrect BAS and IAS submissions
- EXAMPLES: GST claimed on goods or services that are GST free or Input Taxed
- Unreconciled accounts such as;
- Bank accounts
- Credit cards
- PAYG Withholding
- GST Collected and Paid
- ATO client integrated accounts
- Loan accounts
This is not meant to be an extensive list but just a few examples of things that can and very often do go very wrong, and when they do, they are quite troublesome problems to correct and get worse as time passes. Using inexperienced and unskilled people to keep your business accounts is false economy.
I am currently assisting a client to get back on track with their accounts that were done over an extended period of time by inexperienced and unskilled people engaged to maintain the bookkeeping tasks for the business. The ATO had sought more information on BAS returns dating back to 2010 which nobody did anything about which resulted in the threat of a tax audit which is where ABBS were engaged to sort it all out and bring the accounts up to standard, answer the outstanding queries and bring everything up-to-date. The solution has involved reworking accounts for a number of years to account for business loans, inter-entity loans, revision of BAS submissions, wages, superannuation and PAYG withholding plus much more. Add to this the fines and penalties that have amounted to a few thousand dollars, it is easy to see how this threatens the very existence of his business entities
As you can imagine this has not been a cheap exercise to correct and when the original cost of the bookkeeping services are added to the rectification cost, it would have been cheaper to employ a qualified and skilled bookkeeper in the first place. Unfortunately most business owners still do not recognise this basic and fundamental issue until they are put in the same situation because the prevailing view is that it would not happen to them. The reality though is somewhat different with many business owners coming to ABBS when they are sinking quickly into what can seem like an unresolvable situation. ABBS have qualified and skilled bookkeepers that can assist you with all your bookkeeping needs.
We invite you to take a look at Our Team from the menu at the top of this page. To look at the primary services we offer, click on the “Services” menu at the top of this page for a general outline of services we provide. You can also leave a message in the Contact section, and someone will contact you within 24 hours.
We do work in close collaboration with some very skilled accountants and would be happy to recommend one to you if needed. We believe in integrity, so recommendations are provided based on our faith in the ability of the accountant to meet your needs, and we do not receive any commissions, inducements or payments for such recommendations.
My next blog post will be focused on the value that an appropriately qualified and skilled bookkeeper will bring to your business. Thank you for taking the time to read this blog post, and look forward to your company on my next blog post, stay tuned.