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. Accountants report they spend up to 30% of their time (read 30% of their fees) fixing bookkeeping mistakes. When you engage with unqualified and inexperienced people, you will likely end up paying more in the long run after someone else has come in to fix up the mess left behind.
Most businesses would not know where to begin when reviewing their bookkeeping or their bookkeepers’ work so here’s a few things to look out for.
- Ineffective reconciling
Bank accounts not reconciled for long periods of time
- Duplication
Duplication of supplier of bills which results 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
- Unmonitored Cashflow
Some bookkeepers fail to regularly update bank and credit card reconciliations, payment processing, and more importantly, invoicing of debtors. When done regularly 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 superannuation and entitlement calculations accurately in the accounting software, thus resulting in staff being paid much more than the statutory rate on their ordinary time earnings. As a result, they incorrectly assign accruing annual, personal and long-service leave entitlements – a very expensive mistake!
- Incorrectly separating personal transactions from business transactions
It is crucial that bookkeepers separate these correctly.
- Failing to account for GST correctly
This applies especially when dealing with GST on imports, insurance and motor vehicle registration that have both GST and GST-free components. We have seen bookkeepers who post these transactions incorrectly in the accounting software and then 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 reports at least monthly. This report shows a comparison of incomes and expenses on a month by month basis. Check to see 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 lodgement dates. It’s amazing how many we’ve come across who aren’t aware of how and when to complete these forms and lodgements
- Not filing paperwork
Bookkeepers must file receipts and invoices for goods, services or other business acquisitions purchased by the business. This also applies to invoices or receipts you provide for sales and services rendered by the business.
Great Perth Boookkeeping is an Accredited Licensee for the Pure Bookkeeping System. Developed in Australia and proven on hundreds of delighted clients every day, the Pure Bookkeeping System is a systematic and thorough approach to bookkeeping. We follow a series of checklists customised to each client’s specific situation to ensure that everything gets done and checked. You can be confident that the accounts we prepare will be accurate and reliable.
If you don’t already have that confidence contact Great Perth Bookkeeping for a FREE no obligation Health Check of your accounts system today!
For more information download our awkwardly titled FREE eBook Why Relying on Your Profit & Loss Report Can Send You Broke plus Ten (or 11) Tips on How to Improve Your Cash Flow plus Is Your Bookkeeper Really looking After You plus Much Much More!