Being an exacting accountant, with all those horribly strong type-A personality traits, it almost hurts me to say this but one of the biggest mistakes I made when starting out was not realising that business isn’t about doing a great job or working incredibly hard. Yes, those things are really important but not the most important.
What I’ve come to realise is that business is more about the stuff in between; the keeping everyone happy stuff! From explaining to customers why you’re worth it to tactfully dealing with incompetent staff and suppliers (because let’s face it, the good ones take care of themselves, don’t they). Communication skills and relationship building are huge. It’s almost as if you have to become a professional Happy-Maker!
Maybe if my brain was more wired towards marketing, I would’ve worked this out earlier but what my big accountant brain does know, for sure, is the rookie mistakes new business owners constantly make, when it comes to the bookkeeping side of things:
1. Trusting a loved one with the books
Oh this is a goody! Just because they know more than you, and you feel nauseous just thinking about accounting, it doesn’t mean it’s a good idea to offload your accounting onto Mum, Dad or the neighbour’s cat. If they make one simple mistake it’ll cost you double when the IRD finds it three years later.
2. Doing your bookkeeping on spreadsheets
I know you love DIY but please don’t do it with accounting. Reinventing the wheel, without oceans of financial experience, is plain stupid. Investing a little money on proven systems, right at the start, with a proper chartered accountant will save you money and head pain.
3. Not looking at the invoices
Why people refuse to look at these things I do not know. You’ll find most of the answers on these little bits of paper (although admittedly, not the meaning of life itself). Need to know if there’s GST on Google-AdWords, look at the invoice! Not sure how much of your customs bill is Duty, then look at the invoice. Even better upload the invoice to Xero so it’s super easy to retrieve four years later when you’re sweating through an audit.
4. Using logic instead of legislation
Please don’t do this. If tax law was about logic it wouldn’t take seven grueling years to become a chartered accountant.
5. Thinking “it’s all in xero“
No, no, no! It’s not all in Xero. Xero is only as good as what you’ve put into it and everyone gets things wrong. When you print your GST return, take a look at the detail and make sure it’s okay before submitting it to the IRD. Try doing a real stocktake and checking if it agrees to what Xero is saying. Lecture over!
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Boutique Financial Chartered Accountants & Business Commentators
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