Know your numbers, understand accounting

We business owners have a pretty good understanding about accounting. But let’s be honest, anything overly complicated we rely on our accountants advice even though we don’t completely understand it. This is wrong.

If your accountant has bought up some feedback, it’s probably important you understand the details before disregarding the decision making to your accountant. Accountants like consultants are there to advise, not make decisions. So offloading your accounting decisions before understanding it is not a great idea. Sure, we pay our accountants good money for their advice but at the end of the day they are not instantly liable for the actions of the business.

An accountant, like any consultant, will provide advice and then adjust their communication based on your response. At the end of the day, you are there customer and they want to make you happy. If you sound too busy to care or not interested in understanding the issues they have raised, then they will retract and accept that they have raised the issue and done their part in informing you. What you do with the information is up to you. This is why you should spend sometime understanding what your hired professional help is suggesting.

After working with a number of accountants I can now filter the good ones from the bad ones. A good accountant is well informed and will raise feedback with or without your initiation. This can become time consuming, but has been extremely helpful in ensuring my businesses have cashflow and consistent accounting practices that simplify my life.

A few things that are important to understand in accounting and book keeping Are:

  • Accurate inventory tracking (including losses)
  • Quarterly BAS (GST payments and claims)
  • Completing regular Bank reconciliations
  • Recording payments made by an individual instead of the business
  • Payroll/superannuation records and ato deadlines
  • Small business depreciation benefit
  • Capital depreciation
  • ATO industry benchmarking
  • Director Debits and Credits
  • Deductible business expenses

It has been a long journey understanding the ins and outs of accounting practice, but investing in understanding will assist in ensuring your business survives the hardest 3 years of start up. It will allow you to see how much cashflow you will have and how much capital you require to sustain growth and stability in your business.

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