There's a surprisingly common misconception among business owners that because they've got an accountant, their bookkeeping must be in good shape.
Unfortunately, the two don't necessarily go hand in hand.
You can have an accountant preparing your annual accounts, submitting your Corporation Tax return and keeping you compliant with Companies House, while the underlying bookkeeping is an absolute shambles.
And you might not even realise it.
The Problem With Once-a-Year Accounting
Let's say your accountant prepares your accounts nine months after your financial year-end.
They identify a few errors, make some adjustments, calculate your tax liability and submit everything.
Job done?
From a compliance perspective, perhaps.
But what about the other eleven months?
Who's checking that your bank accounts are reconciled? That your VAT is being treated correctly? That your customers have paid? That your expenses are properly recorded?
More importantly, who's making sure the numbers you're using to run your business are actually reliable?
Because accounts that are technically correct nine months after the event aren't much use when you're making decisions today.
When the Bookkeeping Goes Wrong
Sometimes the problem is obvious. Months of transactions haven't been entered, receipts are missing and VAT returns are overdue.
Other times it's considerably less obvious.
Your accounting software looks up to date. The bank feed is connected. There are figures on the dashboard.
But transactions have been duplicated, expenses incorrectly categorised, VAT wrongly claimed and customer balances left outstanding long after payment.
The software might look impressive, but the information it's producing is nonsense.
And that's potentially more dangerous than having no information at all.
Getting Back in Control
The good news is that these problems are generally fixable.
The starting point is a proper review of the accounting records to establish what's missing, what's wrong and what needs attention.
From there, it's a matter of correcting errors, reconciling accounts, dealing with outstanding filings and getting everything back into shape.
How long that takes depends on the scale of the problem.
But here's the important bit.
There's little point paying to get your bookkeeping sorted if you're going to be back in exactly the same position six months later.
The real objective should be to establish a straightforward, reliable process that keeps your financial information accurate and current.
Modern accounting software and automation can do much of the heavy lifting. And if bookkeeping isn't something you want to spend your time doing, outsource it.
Compliance Is Advisory
At Acumenica, we've always believed that compliance and advisory shouldn't be treated as entirely separate services.
Accurate bookkeeping is the foundation of both.
Without reliable numbers, you can't produce meaningful management accounts, forecast cash flow, assess profitability or make properly informed business decisions.
And an accountant can't provide particularly useful advice when the information they're working with is six months out of date.
So, if you've got an accountant but you're not entirely confident that your bookkeeping is accurate, it's worth asking a simple question.
Who's actually looking after your numbers?
Because there's a big difference between having your accounts done and having your finances under control.
