7 Benefits For Hiring a Professional Bookkeeper
With the extra burden of BAS (Business Activity Statements) for small business owners, demand for bookkeeping has grown enormously but there’s been an influx of inexperienced practitioners offering their services. The Federal Government responded by passing the Tax Agent Services Act 2009* requiring registration to prepare BAS statements. This has meant that more than ever, you need a qualified bookkeeper to take care of your day-to-day financial needs. Here are seven benefits to hiring a professional bookkeeper.
Avoid costly DIY mistakes
The Australian Association of Australian Bookkeepers said that no nationally recognised standard, minimal government governance and shortfalls in education opened the “flood gates” to a litany of basic BAS mistakes causing GST revenue leakage estimated in the billions of dollars per annum and a mind-set of “no-ones watching” from the bookkeeping industry. Common DIY mistakes are:
- late lodgement of BAS and PAYG;
- paying incorrect superannuation contributions;
- invoicing incorrectly;
- incorrect GST coding usually resulting in under-claiming or over claiming GST credits;
- failure to keep backup records.
These mistakes are due to lack of training, inappropriate education or lack of experience leading to the risk of high fines and penalties from the ATO or an accountant having to amend the books at a much higher hourly rate than a professional bookkeeper would charge.
An onsite bookkeeper gets to know your business
As your business relationship develops with your bookkeeper, they will start to understand your business and the key performance indicators. So many businesses fall into the trap that when an in-house bookkeeper leaves taking their knowledge of the business with them. With an outsourced bookkeeping company you can be confident that the bookkeeping service will retain all the information about your business and keep good backup records with off-site storage facilities.
Get access to specialised skills
The title bookkeeper can range from data entry clerks to qualified accountants but still perform the responsibilities of a bookkeeper. A professional bookkeeper will have years of experience under their bookkeeping belt, be well versed in bookkeeping practices and legislation, experienced in different types of bookkeeping packages and provide a management and boutique level of accounting. A professional bookkeeper will also be adequately insured which is important as they have a duty of care over the professional advice they provide to clients.
Reduced labour costs
By outsourcing your bookkeeping services on a needs only basis rather than employing a full time bookkeeper, you only have to pay them when you use their services. As reduced labour costs, if a bookkeeping company is outsourced, an outside provider’s cost structure and economy of scale can give their the bookkeeping company an important competitive cost advantage as well. Companies that do their own bookkeeping have higher labour, training and capital expenditure costs, all of which must be passed on to customers.
Improved efficiency of work
Improved efficiency of work is a major benefit of hiring a professional bookkeeper. A company bookkeeper may have additional roles in the company which may take up their time, valuable resources and focus but a professional bookkeeper works in a specialised role where bookkeeping is all they do and it’s done to a very high standard. In the case of a full time bookkeeper going on an extended holiday or leave, a replacement needs to be found who may not be familiar with your bookkeeping procedures at considerable cost to the business.
Bigger picture mentality
The cost of an in-house bookkeeper compared to hiring a professional bookkeeping service is higher when you factor in costs like superannuation, office space, annual leave, sick leave and other benefits. You also have to weigh up the long term costs and have a bigger picture mentality in hiring a professional bookkeeping service in regards to reduced tax liabilities, no penalties in regards to late lodgement fees and the updated and accurate reports can be used to better forecasting of your business.
Stricter ATO regulations for BAS Preparers
The Tax Agent Services Act 2009 requires people who offer BAS services to be registered by the Tax Practitioners Board (a new national body)* and meet the requirements of the board. There are penalties of up to $22k for unqualified bookkeepers that perform BAS related work. This means that if you have an unqualified bookkeeper, you will have to pay your tax accountant to review any BAS work and will be paying the tax accountant rate instead of paying a qualified bookkeeper at a lower bookkeeping rate.
A professional bookkeeping service should be a natural extension of your business and act as a business partner without taking up valuable office space. With the new laws coming into effect on March 1 2010, it is far more cost effective over the long run to hire a bookkeeper who is professional, qualified and experienced to reduce your tax liabilities, reduced accounting costs in reworking the bookkeeping and avoid unnecessary fines and penalties from the ATO for poorly prepared tax returns.
* Comes into effect March 1 2010. If you are already registered as a Tax Agent you will be deemed as registered under the new law until your current registration runs out, at which time you will have to re-register with the new board.
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