Blog post -
Common mistakes made by bookkeepers
Almost every entrepreneur I know has gone back to square-one a few times trying to get their books in order. Either the books were not set up correctly at the beginning, or circumstances caused the accuracy of the books to drop over time.
I ran a digital marketing agency for a number of years before the firm was acquired in 2011. We experimented with different scenarios to strike the right balance of cost vs service. We tried in-house bookkeepers, freelance bookkeepers, top-end accountants commanding a premium. It was one bumpy ride. Here is the short of it.
On at least three occasions we terminated relationships with accountants and bookkeepers who repeatedly billed us for work that was never approved. This is a problem not restricted to bookkeepers alone, but endemic to the entire professional services industry. Futurebooks set one flat monthly fee so you never have to check our bills.
Redoing the books.
The accountant tells you at the end of the year that the books have been prepared incorrectly. You were better off handing the accountant an Excel spreadsheet. We’ve had many clients contract Futurebooks to provide a rescue service, so I suspect this happens often.
Here today, gone tomorrow.
You hook a good bookkeeper and the service runs smoothly for six months. Then you receive an email one morning explaining they won’t be coming back. No hand-over of the books to another bookkeeper and no suggested replacement bookkeeper. Futurebooks will give you continuity.
A good bookkeeper spends a lot of time ensuring the books are accurate. However in my experience even good bookkeepers have not understood my business or industry, or spent time learning what my big ambitions are long- term. For instance if you are preparing a business for sale, your books and financial ratios need to look a certain way. Accounts fall victim to this trap. They are so preoccupied with tax minimisation, they overlook the business owners big ambitions.
In my first year of running a marketing agency, the accountant told me to purchase a QuickBook license for a cost $300. The license was installed, and the software never purchased. Watch out for firms who are flogging software as a reseller. Data entry into a software package should be the bookkeepers problem. Don't concern yourself with the type of software they use or ownership. Focus instead on reports and advice.
I used to say to all our bookkeepers: “We want to do more than add and subtract”. If nothing significant can be gleaned from investment, what was the point of the exercise? Bookkeeping must do more than fulfill government obligations. That’s why Futurebooks bookkeepers teach our clients one new insight every quarter. If we can catch a problem now, we can save you a lot of time and money later.
One bookkeeper we used had never heard of backing-up data files. One day her hard drive failed, and we had to start the books all over. Another bookkeeper revealed their PC had poor security, after it was stolen while he was taking public transport. An accountant I first did business with five years ago would regularly stack client records in the common areas of his office like hallways. Futurebooks circumvent all the security failures that human error can cause, by storing all your books on a cloud server.
Knowing what to claim.
Every business owner would love to claim every receipt on tax. Bookkeepers seem to divide into two camps when approaching claims. Very conservative or very creative. In my experience I have preferred bookkeepers who are very creative, and push the envelope. They look for loop holes. A qualified bookkeeper will know what will or will not be acceptable.
Being penalised with fines because of late submission of company tax or CPF can be avoided just by smart planning. One year of operation, almost every month our bookkeeper was late submitting CPF, and every month we were slapped with a fine. Futurebooks bookkeepers use notes and calendar alerts to track and schedule necessary paperwork to be completed and submitted on time.
In the advertising game, they say you are only as good as your last ad. Creatives are hired and fired on the strength of their last ad. They are highly accountable for the work they do. It is a brutal industry, but its also healthy because it demands the best from people. I think the bookkeeper / accounting world could do with a dose of this healthy medicine. If you have a story, do tell. You can contact us for a quotation.
Futurebooks is Singapore’s and Hong Kong’s most progressive bookkeeping company. We offer affordable, corporate-level bookkeeping and business planning to businesses with big ambitions. Live chat with us now. Visit www.futurebooks.com.sg.
- Business enterprise, General
- startup companies