Not only does it keep you out of trouble with the taxman, but good accounting gives you a picture of how you are doing and allows you to track trends and make business decisions.
That’s why it’s important to ensure your books are handled by someone trustworthy and to get sight of your numbers as quickly as possible. So, where do you go about finding this person?
First of all, you need to consider whether you are looking for a bookkeeper, an accountant or both. If you’re a Pty Ltd. or your business is required to be audited, you will definitely need an accountant or an accounting officer, who will sign off on your books at year-end. Most businesses, though, will probably need a bookkeeper, and can then employ the ad hoc services of an accountant if and when necessary.
My advice to business owners is to entrust the everyday running of the books to a bookkeeper rather than an accounting firm, and to use the services of an accountant instead for specific value-add, such as consulting on tax changes or an external opinion on your business’s finances.
You see, accounting firms often employ trainee accountants to do the basic bookkeeping, which means that the person handling your day-to-day accounts is likely to change every year. There’s no continuity. By choosing to use a bookkeeper, who may have decades of experience and does this for a living, you ensure that continuity is there.
Furthermore, an accounting firm will likely charge you their hourly rate for even basic bookkeeping services, whereas you are likely to get a better rate from a bookkeeper.
The most important thing to understand is that however you choose to run your accounting, you cannot abdicate responsibility. You need to be on top of your finances. If someone asks you a question about your business’s finances and you have to call the bookkeeper to ask, you’re in trouble. It’s when you don’t know the ins and outs of your books that people can steal from you.
This means that you need to get financial information from your bookkeeper or accountant quickly.
Accounting should not be a record-keeping exercise you do just for SARS. It should help you take business decisions, so you need to know what’s going on every week, not once a year, a year after the fact.
When it comes to finding a good accountant or bookkeeper, the same advice applies as if you were hiring anyone else. Go through an interview process. Get referrals – but don’t just assume that means the person is right for you. Do your homework. Get references and ask questions.
Importantly, once you’ve hired someone, keep giving feedback. “Train” the person on how you want things done. Remember – it’s your business, so you need to look out for it, not just assume that your accountant or bookkeeper will!
Pieter Scholtz is a business and executive coach and SA’s Master Licensee for global franchise company - ActionCOACH