Accountants are an important part of an SME’s operations, but like the dentist, if business owners leave consulting an accountant until it’s too late, the pain can be excruciating. Gavin Dixon, CEO of Reckon Limited’s Business Division, recommends you regularly consult your accountant.
For new businesses, select an accountant that best suits the company’s needs. The best accountant or bookkeeper depends primarily on the volume of transactions, and thus the amount of time they will take to process.
Certified public accountants (CPAs) and chartered accountants (CAs) are readily available and both can meet the needs of just about every small and medium-sized business.
Accountants are there to help, not hinder, so business owners should work to build rapport early to facilitate smoother operations throughout the financial year. Keep your accountant informed. Supply the necessary accounting records in good order, consult prior to major business transactions and maintain clear channels of communication.
Ongoing and regular compliance tasks such as business activity statements, annual financial statements and income returns can be lengthy endeavours if not prepared correctly. By taking the time to correctly compile as much of this information as possible business owners can reduce the time their accountant spends on it, minimising costs and both the downtime and disruption to your daily company operations in answering the accountant’s queries.
Common Accounting Mistakes
Where business owners hurt themselves most is by not consulting their accountant prior to major, usually infrequent transactions.
All can have significant impacts on the business financials. By failing to consult your accountant, they can have serious consequences on capital gains tax, GST, income tax and even stamp duty that could well have been avoided if handled or structured differently at the outset. Some transactions, particularly those involving a superannuation fund, may even be illegal and could risk the fund’s existence as well as incurring substantial taxation penalties.
Accounting Fees
Controlling costs is vital for SMEs and there may be concerns that accounting fees are an unnecessary overhead to be cut to the bone. Accountants usually charge by the hour but business owners should not assume that the meter is running as soon as the accountant answers the phone. Understand the basis of an accountant’s fees and establish estimates before work is performed.
To stay within a budget, request a capped quote. Here, the accountant, after considering the assignment, agrees to charge no more than a quoted ceiling. If the job is completed for less, that lower amount is billed.
Technology has expedited the accounting process by enabling a faster transfer of information and communication between business owners and accountants. Accounting software, such as the latest version of QuickBooks for instance, facilitates the transfer of data files between accountants and business owners over the internet. This does not mean, however, that face-to-face meetings should be abandoned. By walking the property, accountants can get a better appreciation of the capital, staff and other resource requirements that make up a business.
The effective combination of electronic and in-person communication enables business owners to realise greater value for their accounting dollars and lessen the burden come tax time. In so doing, they can look forward to engaging their accountants, not postponing a meeting until the financial pain becomes too great.
-Gavin Dixon is the CEO of Reckon Limited’s Business Division (www.reckon.com.au). Reckon is the supplier of QuickBooks accounting software.
