After over thirty years advising small business it still comes as a surprise to see the number of small business owners who are only interested in their financial results when it is time to do their tax return.
Many still think that their accountant is there to ‘cook the books’ at tax time!
It is not surprising that almost invariably the business owners who approach their accounting in this way are those whose business is not doing well.
Three out of five businesses fail within the first three years owing to a lack of proper business planning and record keeping and many of them are those proprietors who adopt this ‘once a year’ method of accounting. That’s why they never improve.
Today’s accountant is more than just a ‘bean counter’. The new breed has developed expertise in many areas such as marketing, management, industrial relations law and computers. Indeed, the ‘number crunching’ that was such a large part of the accountant’s life has been largely taken over by computers. There is now no excuse for not receiving meaningful reports when they do actually mean something and not three months after the end of the period.
Making business decisions has always been difficult. Small business owners without the resources of large firms have always needed to stretch beyond the limit of their expertise in making many decisions. That’s what makes managing a small business so exciting. That’s what makes it so dangerous too!
Seminar participants say, “My accountant knew all the answers, “but I didn’t know all the questions”. Time after time our new clients tell us that they are seeking an accountant who will give them good advice when they need it - not when they ask for it!
But in a small business the buck stops with you, if you are not receiving the service you want - don’t just ask for it – insist on it!
One of the problems is knowing what to ask for! Your advisors should anticipate your need and supply you with what you need before you need it.
A new trap for small business proprietors that is becoming increasingly prevalent is for those who computerize for the first time. Many of the packages claim that you do not have to have any accounting knowledge to operate them and sales people use this as a selling tool. It is a half-truth at best!
Just knowing how the pieces move doesn’t mean you can play chess and we are seeing an increasing number of proprietors who have computer generated financial statements which are meaningless for tax purposes and give misleading information for management purposes.
This isn’t the fault of the computer package or the operator using it. It happens because the operator doesn’t know or understand some of the accounting principles necessary to make the system work.
Computers are supposed to make it easier but they are like any other tool which relies on the skill and knowledge of the operator. Your accountant should be involved in the initial planning regarding the requirements of the business. He/she should also be involved in the installation and training of the operator so that this valuable tool is used to the advantage of your business.
Remember, good advice doesn’t cost, it pays!
About the author Kelvyn Peters CPA is one of Australia's longest serving Tax Agents. He was registered in 1962 and accepted as a CPA in 1964.
He is well-known speaker and educator and is famous for his ability to rescue ailing small businesses.