We are reasonably clued up on accounting problem areas we come across. Some of these are so common we have decided to explain them here in the hope that some of these problems (and associated accounting headaches and costs) will be eliminated for those business owners who use their own accounting systems. If you're an accountant or bookkeeper, then please don't waste your time reading this (although we're always keen for corrections and suggestions).
If you don't have these valuable but admittedly boring skills, then read on. We have found some areas that can save a great deal of time if certain techniques are followed. The classic is GST. Although different systems handle this in different ways, doing a simple reconciliation with each return will identify any discrepancies.
While your lack of accounting expertise may concern you, one thing you have in your favour is knowing your business. The numbers in accounts represent what happens in the real world, and you can identify where the two may not match - so it is worth the effort understanding reports. In "The balance sheet barrier" Ronnie Corbett (and more recently Dawn French) says "The balance sheet is the window through which we view the firm". John Cleese replies "No, the balance sheet is the blind drawn by accountants to keep us in the dark".
It doesn't have to be that way - if things don't make sense, ask - and keep on asking. I suggest if you have a good accountant who understands your business, the chances are over 90% they will be right. But two things will happen. You will understand them better, and when there is a mistake (no-one is perfect), you will be more likely to pick it up.
These tips are all designed to provide a consistent approach to more challenging areas.
First, if you're going to try your hand at bookkeeping, you need to know some basic assumptions.
There are two issues that stand out apart from normal use. The first is wages, including PAYE and associated deductions, and the second is GST. These areas, in particular, have seen so many errors and so much cost that they are the greatest unnecessary accounting burden faced by accountants and their clients today.