A Bookkeeping and Tax Emergency
Emergency plans come in all forms. This one is about a Bookkeeping and tax emergency. Ok, Emergency may be a little strong, but almost 300 unreconciled items in Xero says something. Combined with two overdue BAS, a disaster is imminent, unless they get on track quick smart.
I spoke with this new client a few months back. They have a new business and a young family. Her husband is working in the business full-time. She has been studying and attempting to do the bookkeeping in her spare time.
I am responsible for the accounting work on an unrelated business of hers. She was keen to have me take on her Husband’s business, which would allow me to oversee all of their tax obligations.
She invited me as an Adviser in to her Xero file. I explained how Receipt Bank would be invaluable in clearing backlog and showed her a quick demonstration. The demo gave her all the information she needed to decide to give it a go. We signed her up for Receipt Bank and I set up her file. She headed off excited with the thought of getting the bookkeeping up to date. Only then would I be able to help her sort out their tax obligations, which she understood.
A change in priorities
Life got hectic for her and as a result, bookkeeping dropped down the priority list. In fact, two months ago she started a full-time job! I completely understand bookkeeping being a low priority as would most small business owners, especially with young families.
However, the Tax Office aren’t quite so understanding. They expect on time lodgements and payments and they don’t just go away. Although they are pretty good at helping you get on track, burying your head in the sand is the worst thing you can do with them. They expect business owners to take their obligations seriously.
Today my new client met with us again, and we have worked out an Emergency Plan.
The Emergency Plan
We will get the bookkeeping up to date as a one off project. We will then prepare and loge their outstanding BAS’ and speak to the Tax Office about minimising any interest and penalties and arrange a payment plan, if required.
They have a contractor that they pay for labour hire. We will ensure that they are following the applicable Superannuation Guarantee and Workcover rules.
I will then be able to do some tax planning and give them an idea of what they will need to pay in income tax and when, as well as an estimate of GST that will be payable for the next quarter and when.
This Emergency Plan should get her out of the overwhelmed state she is in. It will also get them on track with their cashflow planning.
The Regular Plan
Once the Emergency Plan is complete, we will work out a Management plan and provide as much ongoing bookkeeping assistance as they require at a set monthly rate. This helps them know what the cost of their bookkeeping and accounting service will be and allows it to be spread over 12 months, further assisting with cashflow planning.
We are excited about helping get our new client on track and she is excited about not having it hanging over her head.