Can You Completely Rely On Your Bookkeeper?

One of the things that a business owner needs to ensure is hiring a professional and experienced bookkeeper.  While this can be a challenge to those who own a small business, a bookkeeper who knows how to carry out the most crucial task in a business can provide business owners much greater peace of mind. However, there are instances when a business owner loses track of the business’ day-to-day transactions and relying heavily on the information that the bookkeeper provides is the only available option. Unfortunately, business owners are taken by surprise once they see financial statements in chaos. Where exactly does the problem lie?

Common mistakes bookkeepers commit:

1.    Failure to reconcile bank accounts for long periods of time. This mistake can be costly if not properly addressed. If you are the type of a business owner who leaves everything to your bookkeeper, without taking time to evaluate or check the financial statement, duplications in entries become unavoidable.

2.    Unmonitored cashflow. Business owners do not have the time to update bank and credit card reconciliations, payment processing and invoicing of debtors. This is why a bookkeeper needs to regularly update these records. Monitoring cashflow regularly allows the business owner to receive update of their current position so contingency plans can be formulated for future business development.

3.    Making a mistake in assigning accruing annual and personal entitlements. Bookkeepers have the ability to set up the entitlement calculations and superannuation in the accounting software and their job includes ensuring that the numbers are calculated accurately. As a result, employees are paid more than the 9% super based on their ordinary times earnings. If this is not corrected immediately, it can become a costly mistake for both the bookkeeper and the business owner.

4.    Unable to understand when Fringe Benefit Tax (FBT) should be applied. Old bookkeepers had erroneously entered wrong information causing businesses to suffer due to huge ATO debt. This could have been avoided, had the bookkeepers understood FBT and the schedule that the tax must be applied.

5.    Posting GST transactions incorrectly using the accounting software. Another mistake that can cause a diabolical mess is entering the wrong information in the accounting software causing figures to mix up. Dealing with GST requires accuracy to ensure that the Business Activity Statement (BAS) that is lodged with the tax office contains the correct information.

6.    Failure to categorise expenses and income. The profit and loss spreadsheet reports are one of the essential tools that bookkeeper use to know the business’ current standing. If the bookkeeper fails to review the reports and correct entries, reports become more vulnerable to a myriad of mistakes.

7.    Overlooking tax and compliance obligations. Bookkeepers may not be completely aware of lodgment dates and compliance obligations that business owners fall behind payment schedule. These dates are critical to every business and a bookkeeper needs to be aware of these important dates.

8.    Not filing invoices and receipts. Aside from financial statements, bookkeepers must also keep a record of receipts and invoices because they allow businesses to keep track of sales and services rendered. A bookkeeper must have a simple filing system that provides business owners and bookkeepers access to the essential business information.

Andrew Donnelly

Written by : Andrew Donnelly

Andrew Donnelly is a degree qualified accountant and registered tax agent. He is the principal of Brisbane Bookkeepers, which provides bookkeeping services to small businesses in Brisbane and its immediate surrounds.

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