Is your Bookkeeper doing what you need them to do?
The most important thing in any business is to ensure you hire a professional and experienced bookkeeper that you can trust.
It is surprising how many business owners opt for price over quality when engaging people to look after the heart and soul of their business. If you engage unqualified and inexperienced people, or opt to take a chance and try to muddle through yourself (even though you may not know exactly what is required) you will end up paying a higher fee for someone else to come in and fix the mistakes left behind. Most businesses would not know where to begin when reviewing their bookkeeping or their bookkeepers’ work this is why we hope the following will help you review your exact position with regards to the bookkeeping services currently being provided to your business.
Bank accounts and control accounts (such as GST, PAYG and Superannuation) not reconciled for long periods of time. In most cases these entries tend to be duplications.
Duplication of Entry
Duplication of supplier of bills which resulted in double payments! In a similar vein, a list of credits owed to the business that hasn’t been applied. Bookkeepers should at least, monthly, reconcile back to supplier statements. These mistakes would not happen if they follow this process.
A good bookkeeper should regularly update bank and credit card reconciliations, payment processing, and more importantly, invoicing of debtors. This will update the business owner with their current position and allow plans for contingencies and further business development.
Payroll and superannuation
Many bookkeepers don’t know how to set up the Payroll Categories, Employee Card Files and Superannuation and Entitlement calculations accurately in the accounting software, thus resulting in inaccurate entitlement balances, superannuation calculation and PAYG Withholding obligations. Is the appropriate information being correct recorded in your accounting software to ensure a smooth EOFY process with regards to Payment Summary reporting.
Incorrectly separating personal accounts from business accounts
It is crucial that bookkeepers separate these correctly to ensure business and personal transactions are recorded and accounted for correctly.
Bookkeepers who don’t understand Fringe Benefit Tax (FBT) or when to apply it
In the last 8 months, the ATO has audited and recouped hundreds of thousands of dollars from some of our clients in FBT and interest charges. These amounts should have been provided for and paid over many years. Unfortunately, their old bookkeepers didn’t know about the business FBT obligations, so the businesses suffered a huge ATO debt. In keeping with this, it is vital that your Bookkeeper and Accountant have an open and close relationship to ensure all FBT obligations are covered.
Failing to account for GST correctly
This applies especially when dealing with GST on imports, insurance, motor vehicle registration bills that have components of GST and GST Free on the invoice. We have seen bookkeepers who post these transactions incorrectly in the accounting software and then in turn claim incorrect GST credits on the Business Activity Statement (BAS) lodged with the tax office.
Incorrectly categorising income and expenses
Bookkeepers should review the profit and loss spreadsheet reports at least monthly. This report shows a comparison of incomes and expenses on a month by month basis. Review if any expected incomes or expenses are missing. An example would be the monthly rent, if you rent your premises and pay monthly. Check if there is one transaction missing when it should appear in every month. Keep in mind that the figures shown will be those without GST included.
Tax and compliance obligations
Sometimes bookkeepers are not aware of compliance obligations and lodgment dates. It’s amazing how many we’ve come across who aren’t aware of how and when to complete these forms and lodgments.
Not filing paperwork
Bookkeepers must file receipts and invoices for goods, services or other business acquisitions purchased by the business. This also applies for invoices or receipts you provide for sales and services rendered by the business. A good bookkeeper should create some simple systems that enable you and your bookkeeper to have easy access to the information.
Most accounting software packages have ways for you to review your files for accuracy. The MYOB AccountRight Live accounting software range comes equipped with the ‘Company Data Auditor’. This is a great tool that gives you a complete overview of your business and enables you to review key areas and perform maintenance tasks.
Now you’re better equipped with what to look out for when hiring a bookkeeper. Always engage the assistance of a qualified and reliable bookkeeper and keep in mind that this service is also tax deductible. Hiring a qualified bookkeeper helps you focus on what you do best and that is growing your business while ensuring your record keeping is up to date.
If you have any questions, please do not hesitate to contact our office, 07 4151 8898.
Petra Galea | Bookkeeper | The Money Edge | Bundaberg