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Are you the victim of bad bookkeeping advice?
If so, don’t feel bad. Everyone has heard something like this from a loved one or even a supposedly professional bookkeeper:
“Don't worry about it, your credit card and bank statement has all the information for your business.”
In case it isn’t clear:
Advice like this is bad. Really bad.
According to ATO assistant commissioner Kath Anderson: “Quite often it’s well-intentioned family and friends. We hear of people being down the pub and hearing what their mates and colleagues claim”
If you’ve followed advice like this, it’s important to start with forgiving yourself first. Then forgive those who don’t know any better.
After all, even with the best of intentions, these people do not realize that their bad bookkeeping tips and tricks put your wealth at risk.
But wait – there’s more bad bookkeeping advice you need to be aware of and avoid.
For example, there’s the myth of using your bank statements instead of proper receipts. This myth has even been circulated by banks as a selling point at their branches. Fortunately, they were forced to stop.
And for the record, let me tell it to you straight:
A bank statement is never enough to substantiate your business expenses. You always need proper tax invoices and tax receipts for all business related expenses.
Deakin University Associate Professor Adrian Raftery puts it like this:
“If you don’t have receipts and are fudging it… you are flouting the rules”
Again, if you’re guilty of following this myth, start with forgiveness. And then change your ways - quick.
Yes, life for most business owners is hard, but the law is the law. And even if the hardest part involves turning away from the bad advice and false opinions given by loved ones, you’re ultimately the one responsibility for your business.
But again, it’s not just family. Far from it…
Even some tax professionals out there are leading good business people astray.
Yes, you read that right.
The Speed Of Government Retribution When Business Owners Break Tax Laws
And you don’t have to take it from me. Here’s what ATO assistant commissioner Kath Anderson said in her interview for Fairfax:
“There are some people who need further education, even in the agent population… Where we see a large claim that looks inaccurate we take action on that straight away.”
Action? Audit? Will you be next?
Here’s an even more important question:
Are your books in order? Do you keep all your receipts and invoices so they don't fade?
The Shocking Truth About Storing Your Receipts Improperly
Thermal receipts become unreadable within few months to a year. And you cannot use fading as an excuse anymore, as all modern accounting software allowing you to store the receipts electronically (eg. photos, scans, PDFs).
Storing your financial documents in shoeboxes also doesn't cut it. Even a decent spreadsheet leaves your information far too vulnerable.
Every year, Australian Taxation Office significantly increasing its investigative by implementing new technologies and algorithms. If you were flying under the radar this past year, are you going to avoid swift action for the coming tax year?
Your answer should be a resounding, “No!”
In 2017, the ATO conducted around 450,000 audits and reviews. These investigations resulted in nearly $1 billion in adjustments and more than 1300 prosecutions. Some people paid penalties of up to $360,000 and even served time in prison.
How To Avoid Stiff Tax Penalties And Sleep Easy At Night
Keeping your books in order is required by legislation. But what exactly does that mean?
For starters, it means that you must store all supporting documentation for 5 years. Payroll comes with an additional requirement that business owners store their records for 7 years.
Obviously, there are more details to cover, but get this:
At aVers we are making it as easy as possible for our clients. Here’s what you get when you choose to have your bookkeeping covered by us:
- Fully automated accounts receivables. This service allows you to see clearly everyday how much money clients owe to you and how much profit you have made. Half done integrations through unsupervised clearing accounts are only creating mess. Our iBookkeep and Harli Processes are integrated into Xero and have been tested over multiple years.
- Rerouting emails allows aVers iBookkeep system and Data Engineering Crew to catch payable bills on the fly. This process typically sorts 50% of your bookkeeping needs. We will also work with your suppliers to make this process as smooth as possible.
- For all the little bits and pieces we offer all our clients a quick and easy to use iBookkeep App. This simple app allows you photograph every receipt you receive and send it to us with just a few taps on your mobile phone. We know that a lot of other companies are forcing their clients to take photo or scan of every single invoice. But unlike other companies, aVers offers processes that make photographing your receipts easy and even fun.
In sum, we place true control over your business and its bookkeeping back into your hands. We have completely replaced full-time bookkeepers with reliable best practice Accounts Management, Cash-Flow acceleration, and BAS services.
It is a great feeling knowing that should the ATO audit you record, your information is fully compliant and available at a click of a button.
So let me ask you this:
Would your business be able to survive an ATO audit or review? Or would you need the sell your family home to pay the adjustments or the fines?
For a peace of mind, call us now for an on-the-spot quote. We’d love to help you and your business rest at ease and avoid the damage caused by following bad bookkeeping advice we’ve seen destroy so many other entrepreneurs and business owners.
Responsibility Is On You
40% of businesses that failing, are failing due to financial mismanagement. Des Byron Manager Liquidator from Jirsch Sutherland Insolvency Solutions: "So often we see business people in financial distress blame their situation on bookkeepers, the “accounts person” on someone else who was “supposed to look after that side of things”. We know that those kinds of excuses simply do not cut it. The responsibility for the business operations and its financial position ultimately rests with the business owner. It can be a burden, but that burden is eased if business owners get and listen to the right advice, implement robust reporting systems and have the right bookkeeper to help them. With the ATO and other statutory bodies becoming more tech savvy, business owners must do the same – best way to do that is to talk to someone who knows how to help!"