Five Questions To Ask Your Bookkeeper

A business owner has the right to obtain information from the bookkeeper to find out if the business is still doing well. Your business may be in the right direction, but it can be a different thing once you scratch beneath the surface. If a business owner fails to check the records from the bookkeeper, it may be too late before you find out that you are falling behind your tax payment schedule and do not have a steady cash flow. This is indeed very unfortunate for a business owner, but the main problem is due to the failure to monitor the activities of a bookkeeper. As a result, you become clueless as to why your business does not give you the outcome you are expecting.

1. Is it possible to reconstruct reports so they are easy to read and aligned to my needs?

When you are reading financial reports that you cannot easily interpret, it is as though your head is in the clouds. Business owners may take time to obtain basic bookkeeping techniques and when they do, bookkeepers are expected to renovate reports so that they are much easier to read. If you find it difficult to read reports, your bookkeeper should be open to revising them.

2. Are my bookkeeping packages tailored to the needs of my business?

Bookkeepers should be aware of the needs of your business. Just because they are providing bookkeeping services does not necessarily mean that one size fits all. It is also their obligation set up packages that perfectly fit the industry your business is involved in.

3. Can you think of a way to reduce business expenses?

Due to inefficiencies of bookkeeping services, a business owner may spend more than usual. If a bookkeeper does not see the underlying issues of a business, the financial aspect of your business will sure suffer. Your bookkeeper should provide you a range of plans to reduce cost.

4. Are you speaking to my accountant on a regular basis?

A bookkeeper is not the only person responsible for the business finances but the accountant as well. This is why a good bookkeeper should liaise to the accountant to confirm updates. When a bookkeeper communicates with the accountant at least twice a year, they will be able to capture changes that took place in your business. The accountant will also give guidance and advice if there are changes made to the system.

5. What processes and systems have you created for my business to run smoothly?

These days, business owners are keeping up with the changes in bookkeeping. With that said, a bookkeeper should be able to recommend a system that will promote efficiency in every business transaction made. The use of bookkeeping software can make a huge difference not only in terms of getting the job done but also in ensuring that accurate information is entered.

These questions are going to be helpful in setting your expectations as a business owner. You will be able to know if a bookkeeper can provide your needs and help you achieve your goals.

Do You Need A New Bookkeeper?

A bookkeeper is going to be an essential entity of your business. They are responsible for ensuring that the financial aspect of your business is well taken care of. Some examples of tasks that a bookkeeper needs to carry out include filing tax returns, lodging timely payments, keeping receipts and releasing correct reports. In short, a bookkeeper makes the life of a business owner easier. However, when a bookkeeper fails to deliver on the tasks it promises, it is about time you rethink things.

A business owner may need to face the consequences of hiring an efficient bookkeeper if the problem is not addressed right away. There are warning signs that allow a business owner to identify the signs of an inefficient bookkeeper.

1. Financial reports are not submitted in a timely manner.

The financial report is one of the paperworks that a bookkeeper needs to keep an eye on. This report is time-sensitive because this is where business owners determine which direction their business is heading. When this essential report is not submitted in a timely fashion, the business owner is denied of the chance to go over it. When late submissions become a habit, you need to find out the underlying causes for these delays. Is it the lack of resources that deter a bookkeeper from submitting reports? If so, both bookkeepers and business owners must explore viable solutions.

2. The bookkeeper does not schedule a meeting to discuss financial reports.

An access to the financial report is important so you will keep track of your financial activities. When there is lack of information, a business owner will not know about the steps that need to be done in order to resolve bookkeeping issues. You have the right to know about the details of the financial report so you will be confident that ATO receives correct and accurate information about your business. Scheduling a meeting also allows you to correct mistakes, which can wreak havoc on your business especially when it comes to filing tax returns

3. Your bookkeeper is no longer committed to your business.

Commitment is important for a bookkeeper to succeed in carrying out bookkeeping tasks. Without commitment, a bookkeeper will feel as though the daily task is an obligation. When a bookkeeper is committed to helping your business get bookkeeping tasks done, a business owner will no longer have to worry about them.

4. Frequently receiving mails from ATO.

When mails from ATO are received frequently, you need to conduct your own investigation so you will know what really is going on with your bookkeeping task. Essential details must be handled properly and recorded on a regular basis. You may need to schedule an appointment with the bookkeeper so you will know what is going on with your finances. If they cannot provide satisfying answers, you may need to look for a more reliable bookkeeper to do the job. Your business is more likely to suffer if you are going to allow an inefficient bookkeeper to take care of your financial activities.

Why DIY Bookkeeping Is A Big No-No?

Bookkeeping is a task that demands accuracy because the financial information is used for analysing the financial standing of a business. Taking on all your bookkeeping practices can be a problem in the long run especially if you do not have sufficient knowledge and training. Bookkeeping tasks should be left to a bookkeeping professional to ensure that everything is in order. One of the problems that business owners will face due to DIY bookkeeping is poorly submitted financial data. It is difficult to resolve ATO queries if your financial data indicate potential problems.

Common DIY Bookkeeping Problems:

1.    Losing records. Business owners often lose track of important receipts, which are used for filing tax returns and claiming for GST. These receipts need to be recorded regularly so you can present a detailed record to ATO in case they need it. When you resort to DIY bookkeeping, these important things are overlooked.

2.    Unable to deal with bookkeeping software’s complexities. While the basics of bookkeeping software can be learned, there are still some complexities of bookkeeping software that you need to tackle so you will know what needs to be done. When there are underpayments on your tax returns, the tax office will penalise you for it. However, you can save yourself from the stress that the process gives when you leave your bookkeeping software to an expert.

3.    Missing deadlines. Another way DIY bookkeeping can wreak havoc on your business is when you fail to lodge your tax payments on time. It is easy to keep track of important payment dates if you have a bookkeeping professional to deal with them. A bookkeeper will be the one to schedule and track due date so the necessary paperwork is completed on time.

4.    Cannot track expenses. It is difficult to identify the receipts relevant to your business and tax deduction if you have missed out on tracking your expenses. Even in petty cash, you need to make sure that you know where your money is going. If you do not keep receipts, you just cannot claim for every receipt you have. This is going to create chaos in your business.

Business owners may think that hiring a bookkeeper is costly, but running a business without a bookkeeping professional spells more trouble. Before you decide on considering DIY bookkeeping, think about the advantages of having a bookkeeper to complete the task. You will not worry about your expenses and tax payments because a bookkeeper will take care of them.

Is It Possible For Accountants And Bookkeepers To Collaborate?

When it comes to keeping businesses on their feet, accountants and bookkeepers have a significant contribution. Unfortunately, their services are deemed to be competitive instead of complimentary and this is the reason tension between these two camps build up. Why not offer the best of both worlds through collaboration?

When accountants and bookkeepers are working closely, essential information is fully reconciled. Business owners are also assured that the information is accurate. When incoming information is reconciled, it will be easy for accounting firms to focus on business-related issues such as cashflow, profit and business growth. There are several reasons for the gap between the accountant’s and bookkeeper’s work such as using the old accounting systems. When both camps see their roles as separate and there is lack of communication, there will be misunderstandings and friction.

Both parties must be aware of their roles in the business. Just because they have different roles to play does not mean they cannot work as a team. These days, accounting software can be used so bookkeepers and accountants can access the information at the same time. This makes collaboration and job tracking possible.

If there are problems that both parties may encounter, it is easy to track them once they access the same information through accounting software. The major roles of accountants include depreciation, company set up and ensuring that the best result is achieved at tax time. Bookkeepers are responsible for taking care of overflow work and bring up issues with the accountant before the year end.

Another benefit that a business owner can obtain when bookkeepers and accountants work together is efficiently generating leads through getting viable resources. When proactive approach is used, they can be a great team. With training and webinars, accountants and bookkeepers will have a clearer understanding of their roles.

How do bookkeepers and accountants position themselves?

•    Learn new skills. If there are gaps in your bookkeeper’s and accountant’s skillset, learning new skills will bridge the gap. It is not just enough that you are familiar with your responsibilities because you will also need to keep up with the technology. Accountants and bookkeepers should build on their IT skills so they can utilize accounting software effectively.

•    Consider complimentary services. Collaborative business relationships are effective in businesses because it helps the team offer referrals, share resources and give advice to make businesses grow. When there is a strong network, the business will also thrive.

•    Get to know the latest accounting technology. The first step to using accounting software is learning about the add-ons and features. Bookkeepers and accountants need to attend training sessions and utilise online training tools.

Collaboration also means embracing changes. Although technology advancements have made the roles of each party much easier, this does not mean that business owners no longer need bookkeepers and accountants. It will be convenient for business owners to work with accountants and bookkeepers if they work harmoniously. Each one has a purpose and no role is greater than the other. When businesses have a strong network, the goals that will encourage growth will be achieved.

Bookkeeping Mistakes A Business Owner Should Avoid

Being a small business owner is like walking on eggshells. You need to monitor your business closely to ensure its survival inspite of the tough competition among business industries. Unfortunately, there are instances when business owners lose track of the most important areas of business management. Your business is bound to fail if you take bookkeeping for granted. Aside from bad bookkeeping there are other reasons businesses fail. For instance, overlooking errors can take a toll on your record-keeping practices. If your data entries are incorrect, other areas of your business will also be affected.

1. Not tracking reimbursable expenses.

While small expenses may not hurt your business, habitually ignoring the task of keeping receipts can have a huge impact on your business. Small expenses are still part and parcel of budgeting and every item must be tracked so you know where your money has been spent on.

2. Not paying attention to backlog build up.

There is nothing wrong with focusing on the most important task that keeps the show on the road. However, constantly ignoring menial tasks such as bookkeeping may also get you into trouble and this can be stressful. Before the business opens, make sure you have a bookkeeping system so you can effectively keep track of other areas of your business without allowing a backlog to build up. Devote a specific day for reviewing both major and minor tasks.

3. Neglecting Bank Reconciliations.

Bank reconciliation is essential in bookkeeping process and just like other important tasks, this is something you cannot afford to neglect. Business owners should make it a habit to compare bank statements with accounting records to find out if there are errors that need to be corrected. Paying attention to bank reconciliation also prevent fraudulent activities that might be hurting your business if left unchecked. Business owners who fail to conduct bank reconciliation in a timely manner can lose thousands and make business suffer eventually.

4. Failure to learn the basics in operating bookkeeping software.

The idea of setting up a manual set of books for recording your business accounts can be a tiring process and be more prone to errors. Aside from the fact that the process is time-consuming, you need to pay close attention to details for you to make sure that the data you enter are correct. Every business should invest in a good bookkeeping software package that is not only easy to operate but can also minimise the amount of time you spend on the most important bookkeeping task. Business owners should make an effort to learn to operate basic bookkeeping software to gain deeper understanding of the information on the financial statement that a bookkeeper prepares.

5. Not having a separate personal and business account.

Your personal bank account needs to be separated from your business bank account because you can get everything mixed up if you do not kick the habit. A business owner may be faced with a tax problem if this issue is not addressed.

It is easy to overlook minor problems when you are too focused on the major areas of your business. However, bookkeeping is also essential because without it, your business will in chaos.