A lot of our new clients and prospective clients ask us how you can tell if their bookkeeper is doing what they are meant to. How do I know I’m not getting ripped-off? Perhaps the very reason you are thinking like that, might just be your answer.
You need to know that your business is being looked after by someone that is a trusted professional. A Professional Bookkeeper is someone who will be an investment IN YOUR BUSINESS, and not a liability.
Below are some points of what we consider to be the most common areas that an unqualified bookkeeper might be neglecting and possibly causing you a bookkeeping disaster:
1. Unmonitored Cash flow
Cash flow is key to any business and definitely too any successful business. A good bookkeeper knows this and will provide your business with a clear overview of your current financial position on a regular basis. If your bookkeeper hasn’t discussed cash flow with you then how do you know how your business is functioning?
2. Bank Reconciliations not being completed frequently
If your bank and credit card accounts are not being reconciled for prolonged periods, this can lead to duplicated payments, debtors that can blow out beyond what trading terms you have allowed and does not help to give you a clear picture of your financials and cash flow. Ask your bookkeeper what dates the accounts are reconciled to and how often the accounts are being reconciled.
If your supplier bills are duplicated, then this results in double payments (once you pay someone it can be very difficult to get funds back). The opposite can occur as well with duplications of credits owing to the business giving an inaccurate financial position. Bookkeepers should at the very minimum be reconciled back to supplier statement monthly.
4. Payroll & Superannuation
Bookkeepers are not created equal and some don’t know how to setup payroll and superannuation and entitlement calculations accurately in your accounting software.
This can lead staff to being paid more (or less) than what is required. A big mistake we often see is bookkeepers not applying the required 9.25% super on the correct earnings. When engaging a bookkeeping service, if you need Payroll & Super services, make sure they have experience in providing this service.
5. Incorrectly applying GST
Just the same as not all Bookkeepers are created equal, not all invoices are created equal and not all have the same allocation of GST. There are a lot of variances when dealing with GST. Insurance, Car Registrations, Imports, Staff Amenities – these all have components of GST and GST Free on the invoice. If not being entered correctly, you could be claiming the incorrect GST credit on your Business Activity Statement (BAS).
6. Not understanding what the reports and numbers mean
Your Bookkeeper should not only check your reports regularly and advise you of your financial position, but they should understand what the numbers on the reports mean. Regularly reviewing the P&L (profit and loss) and the Balance Sheet helps to keep your business on track.
7. Compliance Obligations
As a business owner in Australia, you have many Compliance Obligations that need to be adhered to. Some bookkeepers are not aware of common compliance obligations and lodgement dates. Your bookkeeper should be ensuring your work is being completed in a timely manner to allow for all compliance obligations to be met on time to avoid any penalties and late lodgement interest payments.
8. Filing System
A filing system doesn’t have to be elaborate or cost a lot of money, but it needs to be consistent, orderly and kept up to date. This will give you easy access to all the information when needed. A simple filing system is valuable to your business as it allows you and/or your bookkeeper to easily access information when it is needed. Do you spend wasted time trying to put your hands on important documents? Invest some time setting a functioning filing system to save you time and money in the future.
9. Staying up to date with bookkeeping industry changes.
It is vital that your bookkeeper stays abreast of any changes that can affect any aspect of Bookkeeping for your business. They need to be consistently and constantly learning and keeping up to date. Keeping current with the updates in software offerings is important too, because any changes can improve the services being offered to your business.
10. Not knowing when to get Professional Assistance.
This is critical! A bookkeeper must be able to determine when they need to ask for help. Weather that is contacting your accountant to get instructions on how to set up a loan, or getting information from the ATO on GST handling or FBT rulings, your bookkeeper needs to know his or her limits and not guess as this can be an extremely costly to your business if a mistake is made. If your bookkeeper isn’t sure on something, do they just go ahead or do they seek further advice.
Always engage the assistance of a qualified, efficient, reliable bookkeeper and then you can rest easy knowing that your business is in good hands.
These are just some guidelines in what you should look for. Of course not all bookkeepers lack experience and qualifications but there are some out there that do, giving the good ones a bad name. It’s like most industries out there, there will always some that are hardworking, diligent and experienced and then are some that are not.
Pricing isn’t always an infinitive guide, but quite often cheapest is not often the best option. If you engage a cheaper and less experienced bookkeeper, often you will end up having to pay a more qualified Bookkeeping Service to correct their mistakes. Unfortunately this happens all too often in our industry, and can cause a lot of unnecessary stress.
The most important thing that you as the business owner can do is to check that your bookkeeper is qualified and experienced. There are a few places you can check. If you want a registered BAS Agent, check the Tax Practioners Board register – http://www.tpb.gov.au/tpb/agent_register.aspx.
Some other places you can a qualified bookkeeper is to check with your accountant, more often than not, they have a least one bookkeeper that has impressed them and it is always great if your bookkeeper and accountant can work well together.