Accounting for business owners

You can't run a business without accounting - at least not without headaches. You can run a business without becoming an accountant - but you do need to understand the basics. You might think your software can do it all - but it is only as good as the way it's used. You can get someone else to do it all. That will cost you, but free you up for more important tasks. However, it may still get you offside with IRD (which can be expensive) if the other person gets it wrong.

Even if you did that, you'd still have to collect and collate all of the information and deliver it to the person doing the accounts. It's always a good starting point to keep separate bank accounts for the business from your personal accounts. (These days most accounting software offers bank feeds to save time.) Plus you're still responsible for accounts and taxes, even when you use a third party. (That's why it helps if they have professional indemnity insurance.)

What does accounting cover anyway. Well the first thing most people are interested in is selling stuff and getting paid for it - sales and debtors. The other side of this is buying stuff and paying for it - purchases and creditors. And then there's keeping track of where money's coming from and where it's going to. Generally, that's done by some sort of cash book.

Of course, some of these things raise other issues. For example, not everything that's purchased is for sale. Some of it is to keep the business running (e.g. power), and some of it is used to run the business for several years (e.g. assets such as a car). These things often involve finance arrangements, and the main cost is not allowed directly as a business expense, but through depreciation allocated over the estimated useful life of the asset.

Then there are other complications required by the IRD. GST is one such thing, as is personal "wages" from your business. And then there are special rules around items with both business and private benefits, such as FBT.

All in all, it's complex - despite the government's wonderful "tax simplification". It's certainly simpler than say the USA - even our GST is simpler than across the ditch. But lack of knowledge is no defence - so relying on advice from "down the pub" can be risky for your business.

Advisors
Our approach

Advisors

How can you get someone who knows their stuff and will look after your interests first rather than theirs? Many people look for an accountant - which is a good start. If you think this is complex, many people in the USA use a tax attorney, reflecting how complex their systems are.

But when you say accountant, what do you actually mean? Anyone can call themselves an accountant. Some bookkeepers even call themselves accountants, and some accountant's who aren't part of either professional body do an adequate job. But how can you tell if someone is a good accountant or best avoided. I've seen accounts done by people who don't even bother to check the balance (under double-entry accounting one side says where funds are from, and the other where they have gone), let alone make sense and have reasonable checks on the transactions.

Some of us are either Certified Public Accountants or Chartered Accountants - but so what? Well, to be able to call ourselves that we have standards to maintain. We have to be members of CPA Australia - the dominant body in Australia but relatively new to NZ, or of CAANZ (TransTasman body that replaced the Australian and NZ Institutes of Chartered Accountants). They have rules and standards to follow (including continuing education), and disciplinary committees to enforce them. They require their members to have professional indemnity insurance. That doesn't mean we are perfect (the occasional court or disciplinary case is testimony to that), or that we all offer the same services. But it does ensure you have a higher chance of getting a minimum standard of service.

Our approach

How do we handle the role? First, we find a system that suits you and your business. There's more about these elsewhere on the site, but basically to eliminate the difficulties encountered we don't work from boxes of papers. Alternatively, we will do your accounts via bank feed - that avoids many of the traditional hassles by providing us with electronic copies of your bank statements, and tools to analyse these more quickly than usual.

There are several systems to choose from - which one generally isn't as important as the way you use it. You might want a simple system to keep track of your sales and debtors. Now you can get simple tools to do that - but for many people, if they're doing that, then using a full accounting system is not a lot more difficult and if done right can save time (money). For example, a system that includes creditors produces GST returns and accounts without extra effort. You'll have to provide these for your end of year accounts anyway - so it makes sense to us the same system for everything.

It's easy for me to say it's not difficult (I am an accountant), but I've seen new clients walk in and say there's not much to do - it's in XYZ program. Often accountants take what they can from that system and enter it into their own system - double effort for no benefit. That's where we believe we are different. We help you set up your system, train you in it, solve problems with you, review it at year end, and produce your accounts from it.

One of the key benefits on how we work is that our aim is to have you produce accounting information of such high quality that at year-end, there is little extra for us to do. And since our fees are fixed, it's in our interest to for you to get it right first time. We'd much rather answer queries as they arise than keeping them all till year end - and often have you forget about them, or have multiple incorrect cases because it wasn't dealt with correctly the first time.

You may be thinking that sounds expensive, but it's not. We guarantee that by charging a monthly amount that is fixed with no unforeseen extras. In the first year or two, it may mean we spend more time than we would recover under the traditional time and cost model - but we assume it will settle down after that - so we don't charge for the extra time.

The other thing you may be thinking is that's all well and good - but I'm not in your area. So what? As long as you have broadband internet, we can deal with you almost entirely via the internet. As well as email and Skype, we use another program (TeamViewer) to let us see your data on your system. We use yet another program (Dropbox) to transfer your accounting file when we need it. Of course that's not required if your software is "in the cloud". And we use SecuredSigning to eliminate postal delays in getting work signed and returned.

When you ask for help, we come into your office without leaving our office. You can see what we're doing, and learn from that. Or if something's going wrong, you can repeat it so we can see and help solve it.

So if you think it would be good to have someone on hand when needed to master your accounting program, and produce your accounts and do your taxes, give us a call (or email or Skype) and let's have a talk.