In my field, it is disconcerting how many business owners I meet on a daily basis that don’t have the right bookkeeper or accountant in place, and are now paying the price. And I mean “paying” in every sense of the word; trying to negotiate payment plans with SARS, or hiding from the Sherriff of the court who has arrived to attach their possessions, or SMEs having to liquidate. Far too often their stories are all the same – they didn’t understand or have a grasp of the finances of their business.
Sure, a good bookkeeper or accountant will cost you money. Sure, there will be daily, weekly, monthly and annual administration, but in order to keep your fingers on your financial pulse, it is simply a no-brainer to have a good professional by your side.
It’s not just about the numbers though. An effective bookkeeper and accountant should also be delivering a good service to you, and make it their business to understand your business, and advise you accordingly.
Here are some of the things that a good bookkeeper/accountant should be doing for you:
■ Advise of all necessary registrations and fees
Your bookkeeper/accountant should ensure that you are properly registered, not only as a company, but also with all the different legislative bodies specific to your industry. For example, having your liquor license if you run a bar or restaurant. If you have staff (and that includes yourself), you need to be registered as an employer both with SARS and the Department of Labour, and so on. They also need to ensure that all annual fees (where applicable) are paid and up-to-date.
■ Accurate and sound accounting principles
The bookkeeper/accountant should also ensure that your books are maintained on a monthly basis, that they are accurate and calculated, recorded and documented in compliance with the Generally Accepted Accounting Principles (GAAP) requirements.
It is the responsibility of the bookkeeper/accountant to ensure that the monthly/bi-monthly and annual statutory requirements are met on or before the deadlines.
■ Keep you up-to-date with legislation
Legislation changes all the time. Your bookkeeper/accountant needs to keep up-to-date with current changes, and also proposed changes in the future. Especially changes in terms of SARS (VAT and Tax) could have a financial implication on your company if they are not correctly and timeously implemented.
It is imperative that your bookkeeper/accountant advise you in advance of any changes that will affect you. Imagine the waste of money and resources if the business owner only found he has to pay VAT monthly when he reaches the R35 million turnover per annum mark, 6 months after he has met that particular milestone? The penalties and interest would be absolutely staggering!
■ Monthly financial statements and management reporting
Here’s the thing though, if you are given reports or statements that you have no idea how to read, these reports/statements are actually not worth the paper that they are printed on! So, it is therefore incumbent upon both you and the bookkeeper/accountant to make sure that you understand what it is that they are giving you. There is no way that you can make an informed decision around the financial aspects of your business if you do not understand the reports.
■ Annual Financial Statements
In terms of the law, your Company is obliged to produce Annual Financial Statements. This is evidence to SARS (should they ask) what your financial status was during the course of the year and so that the Company taxes can be correctly calculated. This must also be done timeously by your bookkeeper/accountant and they must be signed off correctly in terms of the law.
In terms of the law, should your books be audited, it is the responsibility of the bookkeeper/accountant to assist the auditors with the auditing process and they must communicate and liaise with the auditors.
All of these issues should be done automatically and timeously by your bookkeeper and/or accountant, but that said, you – the business owner – remain accountable and responsible.
■ Building a relationship
As with most things in life, there are good accountants, and bad accountants. Make sure that whomever you choose is at the very least registered and properly qualified. As the business owner, you are ultimately responsible, so ensure that you pick bookkeepers and accountants that are not just a voice at the other end of the telephone, or just another invoice that you receive. You need people that you can build a relationship with, and that will have you and your company’s best interests at heart.
■ Ignorance of the law is not an excuse
Finally – understand that SARS will not accept “ignorance of the law” as a reason for non-compliance or non-payment. It is your responsibility to ensure that things are done and you will be held accountable. It is your business at the end of the day!
Nikki is an Internal Auditor and Business Administration Specialist. Contact her on 083 702 8849, email: email@example.com or www.viljoenconsulting.co.za for any policies and procedures that you may require.