Understanding Your Role in Business Accounting
Today’s topic, whose job is it to do this, that, or the other thing in accounting, it can be a bit of a minefield. So, whose job is it? Whose job is it to decide what my profit and loss statement is going to look like? Whose job is it to decide what bank accounts I’m going to use? Whose job is it to process the accounting information as it comes from the bank? Whose job is it to decide what my taxable income is? Or my companies or my trusts or my, or my anything.
Whose job is it to decide whether I should invest in a new asset? Whose job is it to decide how much stock I need – or whether we should spend extra money before the end of the year? The truth is, it’s your job. It’s your job as the Business Owner to cover your own ‘ass’ and understand just enough, I call it functional literacy. Just enough you need to understand, just enough to make the right decisions.
But more importantly, if you understand just enough, you can seek collaboration from professionals that do know. You can’t afford to be left in the dark and leave it all to somebody else. As a Business Owner, you are so vulnerable to incorrect decisions about your business without the right information in front of you.
And if you’re not involved in the setup of your financial system, then you won’t want to read the reports, but the reports are really useful. The reports are actually really easy to read, if you’ve been involved in how they’re set up. Because the profit and loss statement of your business is the story of your business. What came in, what went out, what you spent money on and the categories that it should go into, need to make sense to you. Not to the Accountant. Not to the Bookkeeper that does bookkeeping for 10 different businesses in different industries. It needs to make sense to you and your engagement in that will allow you to be engaged in the reporting and results of your business.
And you’ll be much more inclined to read those financial statements regularly, to question the professionals that are helping you, whether it’s your Bookkeeper or maybe your wife’s doing the books – you still need to read them. You still need to have a look. So, whose job is it when it comes to tracking the profitability of your business? It’s your job, but we can help you.
So can your Accountant, so can your Bookkeepers, but be careful about where they fit in the spectrum too. The Bookkeeper’s job is to process the information that comes in from the bank, etc. And to reconcile that information against other things. Some untrained bookkeepers don’t really realise that they also should be reconciling your balance sheet items against external documents.
Whose job is it to lodge the tax return or lodge the BAS return? Sometimes Accountants just package all of that up – say “Don’t worry, we’ll look after it. We’ll do it all for you.”. And because the Business Owner has felt that’s all looked after, they feel away from that process, it’s not their job. And sometimes it can be quite disastrous not realising just where your business is at.
Or sometimes you can miss opportunities, because you’re just not focused in or thinking about your numbers. So, hope that helps. I hope it didn’t scare you. But as a Business Owner, please take responsibility for understanding what’s going on in your business at the financial end. Take time to review your financial statements on a regular basis and to ask your professionals – “What does this mean? Why is this so?”. Because after all, you know your business better than anyone, you know the ins and outs, you know what your intentions were. You will know whether or not the information has been processed correctly. I believe in you. Maybe I’ll get to meet you one day. Thanks for joining in on our Better Business Insights today. Have a great day.
Are you a business owner? How involved are you in your financial information ? Business will be better if you engage with your financial information and use it to make informed decisions. In this video I explain where you fit in with your accountant and bookkeeper. Don’t be deprived of the ability to use your financial information to make more profits.
