How much does it cost your business when the record keeping falls away?

One of the intriguing things I notice from time to time are clients who are their own worst enemies. They’re happy doing their books, even if they are not sure they are entering transactions in their accounting program correctly.

But what happens when they enter a transaction they have to get absolutely right, realise after they have posted the transaction that it’s incorrect but cannot leave it to years end for the accountant to fix it. This is what happened to a new client of mine. Let me explain….

I was asked by an accountant to help a client bring their books up to date. The client had not lodged their last two BAS’s. It was explained to me by the client that they had messed up a pay run in April and didn’t know how to fix it.

The client’s internal administrator continued to enter other transactions for the next two quarters except payroll, not wanting to create a larger and more complex mess. The penalties of two missed BAS lodgements and not lodging the PAYG Annual Summary on time are high, but what troubled the business owner was not knowing the company’s cash flow position. He knew he had to pay the GST and PAYG for two quarters but was unsure what the amount was. He didn’t know whether his business had enough money in the bank to cover his obligations.

Six months after entering the initial messed up payroll transaction, the owner finally discussed the missed BAS lodgements with his accountant. The accountant took it upon himself to find someone with expert knowledge to untangle the mess. All is well now, but the moral of this story is not to leave your books in such a state, as your business health depends on accurate and up to date record keeping.

If you would like to discuss your bookkeeping requirements or how to improve your record keeping, contact info@bookkeepingconcepts.com.au