With another year gone it’s time to start the new financial year. Have you set your new financial year resolutions yet? Perhaps it is to have more money in the bank, break into new markets or maybe make your accountant smile and clean up the accounts. Ok it might not make us smile but you can at least make sure you get the best bang for your buck.
Over the past year we have seen a number of clients take on doing their own GST and for the most part this works fine IF you use an accounting system. Unfortunately, a number of businesses continue to use Excel, or a paper ledger. Some of these ledgers are very large and complex. Using excel (or paper) is fine in some circumstances. i.e if you are managing your own rental property. Note I say property, not properties, unless you have great tenants that always pay on time, into separate bank accounts and there are never any issues, this works fine.
However, we see time and time again a formula is missed or you have a dyslexic day with the calculator. As a result, when your accountant goes to import your data at the end of the year they are left scratching their heads. After all, we know that last year when we told you to make an adjustment you wanted to know “why”. So we need to isolate the problem. What happens after the initial cursing is often time consuming and down right costly to you and us. You see few accountants believe they are so perfect that they never make a mistake. So we often start by looking at our end first. Was it the same as your information? Great, so now that we know its not our fault, we start looking at your records. After much wasted time we often find a mistake that has been repeated on an entire column in excel. Or maybe it was simply using the wrong figure when calculating the GST component of a sale. The end result is the same, more wasted time correcting the issue, talking to you the customer then letting IRD know about the adjustment.
Maybe your excel is perfect, or you cross check then double check the paper ledger. Sure you can do your own GST, and continue to use a free excel spreadsheet, or cheap ledger from warehouse stationery. But just remember we don’t give you your accounts back in an excel spreadsheet or a handwritten profit and loss. Your information needs to be converted to another system before we (as accountants) can do any real work with it. Depending on the size this can take anywhere from ½ an hour to hours worth of time importing, correcting, recording. Do you think that free ledger is such a great value when you still need to pay your accountant to do all of the above?
Stop being a scrooge and work things out with your accountant. Often they are willing to work with you. We just had a client that was paying someone else to do the bookkeeping. Unfortunately, by the time we imported all the data and sorted things out it was costing us a lot of money. We are now arranging things so that we will sort out the bookkeeping for the same fee and we have all the information there at the end of the year. So what will the client get out of it? To start with they will have accounts done a lot sooner than 11 months after the end of the year. They will also benefit from having the ability to ask about provisional tax and get some tax planning advice that will save them considerably more than our fee will ever be.
In the accounting world, doing clients annual compliance work is becoming more and more of a by product of doing things right the first time. We and many accountants are now working more closely with you as a client on a two monthly basis (if not monthly/ more frequently) and providing up to date management reports. In some cases we provide regular tax estimates or at least an option for doing a tax review (normally around January/ February) to make sure we are recording things properly and not paying tax unnecessarily.
By Shawn O’Grady
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Keep an eye out for May’s article!
TAX DATES TO REMEMBER
7th Aprl 2014 - Terminal Tax Payment date for those taxpayers with an Accountant...
20th April 2014 - monthly employers PAYE payment…
* 7th May 2014 - Bi monthly GST Return for February/March 2014...
* 7th May 2014 - Six monthly GST Return for October 2013 /March 2014...
* Inland Revenue allows an extended period for payment
Posted on Tue, 1 April 2014
by Shawn O'Grady