Francois Marais

Looking for an affordable accountant, dentist or plumber? I often see people on Face book looking for recommendations for affordable service providers like accountants or web designers whilst also asking for the best accountant / web designer at the same time. This puzzles me as usually the best and cheapest or most affordable do not go hand in hand with the best.

It is viewed as unprofessional for professional accountants to advertise their rates.

This blog entry is aimed at explaining how small businesses can make their accountant more affordable or reduce the annual accounting bill.

Accounting fees are calculated by taking into account the time spend on doing the work, direct costs such as traveling as well as the complexity of the work involved.

Before any work is undertaken it is reasonable to ask for a quote. As much as clients do not appreciate unpleasant surprises, accountants dislike writing off bad debt or handing over clients for legal collection.

There are a few things business owners can do to “make their accountants more affordable”. These measures would be aimed at reducing the time, direct costs and complexity of the organizations set of books.

It follows that clients can expect to pay less for accountants if their books are done properly throughout the year.

Where larger businesses can appoint qualified or semi qualified bookkeepers to do the books on a full or part time basis it often falls on small business owners to do their books themselves. As the years go by small business owners normally get better at keeping a decent set of books. (Experience does count when it comes to reducing your accountants’ fees.) The appointment of the right admin staff is of utmost importance if you plan on reducing your annual accounting bill.

Any company, sole proprietor, trust or close corporation is expected to keep a record of the daily income and expenses of the organization. The first step in ensuring that your books are accurate is to ensure that your cashbook is regularly reconciled to your bank statements. This gives the assurance that all transactions in your bank account have been captured correctly.

Small business owners often receive cash and pay cash for expenses. These cash transactions also need to be captured accurately and ideally should be reconciled regularly with the physical cash on hand.

Failing to keep a proper set of accounts not only will lead to larger accounting bills but can also lead to very disruptive extended audits by the receiver of revenue. Business with a turnover above R1 million rand per annum are required to register for Value Added Tax which requires even more stringent record keeping of transactions. Business Owners who register for VAT need to know the requirements of issuing valid tax invoices and claiming input vat on valid tax invoices.

Fortunately accounting software programs like Sage One has become both affordable and user friendly. For small businesses it is even possible to keep a proper set of books using a spreadsheets like Excel or Google spreadsheets which can be shared online with your accountant.

Managing debtor’s books is of vital importance for any business to manage their cash flows. One way of ensuring that your debtors’ books are accurate is to send our monthly statements to clients who normally would advise you if they do not agree with their statements. Likewise one should also reconcile the statements of your suppliers with your set of books. Your accounting system should be an important tool to manage the affairs of your business and that is only possible if the books are kept accurate.

I would advise new small business owners with little bookkeeping experience to not wait for the financial year to end before presenting their books to their accountant but to invite their accountant after the first few months to advise on the accounting system. With new businesses registered for VAT this would be non negotiable as non compliance with the VAT Act can be very expensive.

Your bank statements should be filed in chronological order and your invoices should be file in a manner that is easy to trace from your ledger accounts. Hopefully your business is profitable enough that you can appoint a qualified or experienced person to assist you with the monthly bookkeeping. It can be more affordable to arrange for your accountant to visit you every two months as opposed to monthly to assist in doing the bookkeeping of the business. You can also save on accounting fees by learning to do your own VAT and PAYE returns. If you have one or two employees earning fixed salaries it should not take long to learn how to complete the monthly PAYE returns via E-Filing.

All businesses are expected to now pay provisional tax, even if it is a new business that has just started out. By having a proper set of books one can be more assured that you do not over – or under pay your provisional tax. It can be very costly to pay provisional tax on profits that does not exist.

Whilst most businesses are driven by sales and not admin systems it does help decision making and internal control if you have a proper set of books. Failing to do so can lead to sustaining losses which the business can not carry. Businesses with cash and fast moving inventory should specifically ensure that measures are in place to do regular stock takes and cash ups to detect possible theft by employees and or customers and to ensure that gross profit margins are in place to sustain the business.