Should we do our own Bookkeeping?

Many clients consider whether or not to do their own bookkeeping.

There are benefits to keeping the bookkeeping function in house including:

• Business has control over the timing of management reporting
• Mistakes can quickly be seen
• Most queries on transactions can be resolved by the business internally
• If done correctly it can save money on year end accounting fees

Reasons not to keep bookkeeping in house include:

• Business owner’s time can be more efficiently used doing things that make them money.
• Time consuming new skill to learn that is not part of core business
• ATO fine detail Rules change frequently, especially around payroll
• Items that are specifically tax deductible or specifically NOT tax deductible might be overlooked
• If not done correctly it could add an additional layer of complication to year end accounting. This can be made worse as it can be a long time after the event.

If you intend to keep the bookkeeping in house these are the things that need to be done regularly:

• Frequent accurate data entry (or processing of bank feeds) for amounts:

1. invoiced to customers
2. amounts paid to employees
3. paid to suppliers
4. amounts paid to ATO

• Processing should be done as accurately as possible in the first instance as many systems will change the bank reconciliation status of a transaction if edited.
• Monthly bank reconciliation ## for all operational accounts
• Quarterly bank reconciliation ## for low use accounts.
• Run your wages each pay period and lodge the Single Touch Payroll component
• Reconcile your payroll clearing account every month:

1. Payroll should reconcile to Zero if all pays have been correctly processed.
2. Any time Payroll clearing is not Zero is a red flag that something is wrong (perhaps someone has not been paid correctly)

• Reconcile PAYG Withholding account every month/quarter when calculating the amount to be remitted to ATO. The amount owing after payment of the quarterly withholding should be zero.
• Reconcile Superannuation Owing every month/quarter when calculating the amount to be remitted to ATO. The amount owing after payment of the quarterly withholding should be zero.
• Ensure that all Superannuation is paid with in 28 days of the end of the quarter.   Superannuation is ONLY decuctable if paid on time AND is cleared through your bank account PRIOR to 30 June of the year you want to claim it.    Late payment of Superannuation LOOSES the tax deductiblity, incurs ATO fees and requires additional cumbersome ATO paperwork to be completed.
• Within three months of the end of the tax year, once the bookkeeper feels they have done all they can for the financial year data entry they should communicate with the business’ accountant as follows:

1. Indicate the file is ready for the accountants review and further action
2. All Year-end Reconciliations made should be provided to the accountant to save the business the cost of having this work re-done
3. A list of checks made
4. A list of any queries or issues they want the accountant to specifically review

## Bank Reconciliation is the task of using the accounting software to check that all amounts in the accounting system align with the bank statement.

a) Bank reconciliation is a separate step to accepting of bank feeds. It is the formal verification that everything in the books of the business is as expected.

b) After the bank reconciliation is completed, we urge you to try not to edit transactions for risk of changing the figures that were finalised in the monthly bank reconciliation.

c) the amount of the bank account shown on the balance sheet aligns exactly to the bank statement/ bank reconciliation
If your accounting software has direct bank feeds, after a bank reconciliation has been completed, I recommend that any outstanding bank feeds up to the date of reconciliation are excluded.

Bookkeeper:

• perform accurate data entry on a day to day basis
• ensure all wages and tax obligations are paid on time
• ensure all business bank accounts are reconciled monthly
• ensure all low use bank accounts are reconciled quarterly
• ensure all clearing accounts are reconciled monthly
• assist with office automation
• ensure all processes are being undertaken as efficiently as possible

Accountant:

• to review the data and results
• ensure external and legislative compliance
• undertake income tax work
• Provide tax planning advice
• provide trend analysis,
• assist the business in planning for growth

This fact sheet is written as general information only and is not intended to be formal advice.

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