Don't 'assume' in Accounting!

Welcome to Better Business Insights. I'm Liz Jarvis and today we're going to talk about assumptions. You know, you've heard the saying, “Don't assume, it will make an ass out of you and me.”. Wish I had my whiteboard. A S S U M E assume.
Sometimes in accounting, we have to assume. When we're setting up budgets and projections, we have to assume. When we're making models of your expected profits or whether or not a business is viable, we assume a number of things.
Those assumptions should be carefully documented. And you as the Business Owner, should have an idea of what's been assumed in any of the financial information that's given to you about your business. You cannot leave it to others, because others can really get it wrong. They don't know your business as well as you do. It needs to be collaboration. Collaboration between the Business Owner and the person doing the books and building the model. All that sort of thing.
Another area that it's important not to assume, is the relationship between you and your Accountant. I'm not a tax agent anymore, I don't do tax returns and all that sort of thing.
We help Business Owners as an additional service to what their Tax Agents do. But don't assume that they're going to tell you if you're doing badly or if you can do better. Let's face it, they're human. I've seen examples where business is going downhill fast, but the Accountant didn't mention anything. So the Business Owner was left thinking “Well, he didn't say anything, I must be going, okay. I'll just keep doing what I'm doing.”.
They won't always reach out to you. The modern accounting process is often that you're uploading information, somebody behind the scenes is processing that information. The tax return comes out. And particularly if you're not doing well, they won't go much further than that, because if you're below the tax threshold and you're not going to pay any tax, they don't feel like they’ve got to look that hard and they'll produce your tax return.
This might be okay in your first year of business, but if you're not even making enough money to meet the tax-free threshold, it's not worth the effort. So, don't assume that they're going to tell you how you're doing unless you ask.
It's important that you get a relationship with your Accountant, the person that's doing your taxes, or if that doesn't work out for you, then reach out to someone like myself and add that relationship into the mix.
They can still do your tax and your accounting and all of that stuff. We'll help you interpret and we'll help you make better business decisions. As you interpret that information, we'll help you work out, whether there's garbage in / garbage out, or whether you're on track.
I hope, this helps. Remember, ‘don't assume it'll make an ass out of you and me’. Come and visit me next time. Have a fantastic day.

Every human is prone to assuming! In the whirlwind of everyday business it's easy to assume your accountant has got your back. But have they? Watch this video for some insights on what's important to discuss with your accountant - especially if your want them to provide forecasting for you.

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