Should I DIY my Bookkeeping?

It is one of the most common questions I get, usually from new start up business. It is also a conversation I have with my more established businesses.
With any new start up business capital is usually at a premium and keeping costs as low as possible is an absolute priority. Having said that there are many reasons why your DIY bookkeeping might not work for you.

As a business grows, taking on more sales, administration, and staff there is usually a premium on your time. The last thing you want to do after a busy week is sit down and complete your bookkeeping. And that is usually when the problems start.

As you ignore the figures you may find outstanding debtorsincrease, cash flow deteriorating and bookkeeping mistakes being made. So what is likely to happen if you ignore your Bookkeeping?
1. Not claiming valid tax deductions
If you think about it this makes a lot of sense. Accountants and bookkeepers spend years becoming qualified so the chances are they know the rules a lot better than you do. If you Do It Yourself the chances are you may not be claiming all your expenses. This over a period of time can cost you a lot of money in increased taxes.

2. Claiming GST credits without valid tax invoices
Under the GST Act there are very specific rules on when you claim GST and what evidence you need to claim GST. Believe it or not but having a tax invoice is not good enough. It also depends when you got the invoice.Get it wrong and your tax inspector might be sympathetic but don’t expect anything more from them – except a demand for GST you should not have claimed and the interest due. Ouch!

3. Claiming GST credits& Tax Deductions for private expenses
Unfortunately, a lot of businesspeople doing DIY bookkeeping make this mistake. If an expense is partially private then only the business part is a tax deduction and you can claim GST only on the business part. Normally when we are busy we forget these things and claim the whole amount.

4. Claiming GST credits where the supplier is not registered for GST
Do not assume that you can claim GST on all expenses. In order for you to claim GST the supplier has to be GST registered. For example you use a mechanic to repair your car. This service normally incur GST but if the mechanic is not registered for GST, you cannot claim it.
5. Not invoicing quickly and letting overdue debtors fall through the cracks
I see this often. When your business grows your bookkeeping will take a back seat and you will not focus on the numbers. Not focusing on the numbers will mean you cannot see how well you are doing until problems start arising.

6. Paying incorrect employee super contributions
Superannuation payments are actually quite complicated. Get it them wrong and your bookkeeping can become very expensive. If there is one thing that displeases the ATO it is Superannuation not paid or incorrectly paid. Some employees are due Superannuation, others are not. Most people do not realise it but if you employ contractors then Superannuation may be due.

7. Missing deadlines for PAYG or BAS
When a business owner becomes busy dealing with sales and day to day issues become more important than keeping the books. It can become quite easy to miss a couple of BAS forms and payment to the ATO. Unless a business has good cashflow making two or three BAS payments in one go can be very difficult and we find that when a business falls behind in BAS’s and payments it can be very difficult to keep the business on track.

Having read the above what should you do? Well, it depends. If you have the time, enjoy doing your books, then you should DIY yourbookkeeping. As soon as you feel that any of the above 7 beginning to occur you need to consider getting the experts in to make sure that your bookkeeping is not only up to date but ensures that the lack of bookkeeping does not hold and damage your business.

Crystal Clear Bookkeeping will help you to save time and money with your bookkeeping by:

  • Reduce Your Tax By At Least 10% Guaranteed
  • Fixed Monthly Bookkeeping From $89/Month
  • Full Money Back Guaranü tee
  • Free Phone and Email Support
  • Great Management Reports – get  crystal clear clarity over your figures and get back into control of your finances.

Call us today on 0731626311 to see how we can help you save time and money with your bookkeeping!

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