Common Myths About Bookkeeping

Have you ever heard that bookkeeping is ‘just data entry’? That it is ‘not that hard’? Perhaps you’ve even thought: “Hey, if it’s not that hard, maybe I can do it myself, or get my girlfriend/wife/cousin/brother to do it? Surely all I have to do is click the ‘ok’ button, right?”

Well sit tight because this article will debunk a few of the most common bookkeeping myths. In case that wasn’t clear: no. it’s not just data entry, and no, you can’t just click the ‘ok’ button and expect the correct outcome, as tempting as it may be.

Can I just do it myself? Of course, you have the option to do your own bookkeeping, however, it becomes a case of what you value more. Your time or your money. Doing your own bookkeeping doesn’t necessarily save money, because it can be costly in your time, and can increase your risk of errors. Behind each click of the OK button, do you understand what is happening in your accounting system? Do you know if you have allocated it to the correct account line in your chart of accounts, and have you accurately picked up the GST amounts? On the flipside, bookkeeping is a service and will cost money, but will free up your time for you to work on what you are passionate about. What do you value most?

Won’t I lose control? Some business owners may feel anxious about relinquishing control of their accounts over to a bookkeeper, which is completely normal. A good bookkeeper will work with you to understand your business and needs, and tailor a bookkeeping service to suit – it may be a full handover, or only parts of the work. Whatever you feel comfortable with, and will help alleviate the pressure off you.

Are bookkeepers only needed during tax time? Ideally, your bookkeeping should be managed in a regular and timely manner so that you have the most up to date information about your business. Bookkeepers may also prepare your monthly or quarterly Activity Statements for the ATO, however typically bookkeepers are not licensed to income tax returns. They will however work alongside licensed tax agents and accountants to prepare the necessary information so they can prepare your final tax calculations.

Bookkeepers are expensive. Many bookkeepers do not cost any more than other professionals you may engage – like what you would pay to have a plumber come and fix your blocked pipes, or electrician come and install new lights in your home. Qualified bookkeepers need to hold minimum qualifications, demonstrate a level of experience and undertake ongoing professional development to be licenced to deliver their service. This will incur a cost, but it is important to also consider the value you are receiving, and potential time and errors you are saving.

Bookkeepers are just low-level accountants. Bookkeepers and accountants work in alignment with each other, but there are clear boundaries on what each professional will provide as a service. Bookkeepers are typically detail-focused on the minutia of a business, whereas accountants typically focus on the higher-level strategic planning, tax obligations and advisory services.

Anyone can do bookkeeping. This is possibly one of the greatest myths that needs to be debunked. In 2009 the law changed and required anyone providing services around payroll and GST interpretation to be a licenced BAS Agent. If you are undertaking bookkeeping services, for a fee, and are interpretating the applicability of GST on transactions when clicking ‘ok’, you need a licence. So your girlfriend/wife/cousin/brother could be in breach of the law if they are undertaking your bookkeeping without the requisite licence.

At Tashly Consulting, we are licensed BAS agents and can assist you with your payroll, BAS, and bookkeeping needs. We offer Bookkeeping Packages and BAS Review & Lodge Services if you need help tidying up your records or have fallen behind in your obligations. We can also provide Adhoc Consultations via zoom meeting, or face to face, for any queries you may have, as well as Xero training if you would prefer to keep your bookkeeping in-house but need help getting started.