Business Basics: The Importance of Good Bookkeeping

Bookkeeping is vital for the long-term success of any business. Recording all of your income and expenses helps you to establish the areas where the business is doing well, where could be improved, and can also help you spot any potential problems. Recording sales and purchases is also very important so supplier accounts don’t get overpaid, or even paid twice by mistake. Properly tracking sales is equally important, so you know which customers haven’t paid. You must also track any bank accounts, cash, and credit cards.

Collectively this is known as bookkeeping. The importance of good bookkeeping services cannot be underestimated and should be a priority for any business owner. Apart from the advantages for the business, all owners have to be aware that they could be subject to a Revenue Audit.

Coping With A Revenue Audit

The Revenue has several ways of deciding which companies they will audit. Technology has given them access to more data, and many quick ways to interpret it. They will look to see if your gross profit percentage is similar to other businesses in the same industry, and if yours are considerably lower, they may want to check your records to see why.

They sometimes go through a period where they target a particular trade, and you are more likely to have to face an audit if you are in a cash business, the construction industry, or a property rental company. Sometimes a business will be looked at because of an anonymous tip off. There are also random checks, the equivalent of company names picked out of a hat. Although this type of audit isn’t as common, it does mean that no one is totally exempt from a visit from the Revenue.

An audit can look at every transaction for the initial year they are checking, or they can focus on one particular area. If they find significant tax due for the first year they focus on, they can go back a further five years. If they continue to find large underpayments in those years, they can go back as far as they like.

They also perform assurance checks. This is often handled by letter and usually involves them asking for proof of a particular expense or transaction, such as a subscription to a professional body. If you can provide what they are asking for and they are satisfied with it, they will leave you alone, but there are times when an assurance check turns into a full audit.

What do you do if you get the notification of an Audit from the Revenue? Most people’s first reaction is panic, even if they have nothing to hide. If your bookkeeping is all in good order, your accounts and ultimately any tax returns will have been completed from the correct information.

The best way to deal with a Revenue Audit is to let whoever handled your bookkeeping and your accountant deal with it. This may sound an expensive choice, but in the long run it could save you a lot of money. The Revenue will ask questions you might not know the terminology for, or you could just misunderstand what they are after and give them the wrong answer. That can be costly, and very hard to prove afterwards that you have misinformed them.

As well as any underpayment of tax, you could be charged interest and a penalty of up to 100 per cent of the lost revenue. Revenue audits are one of the most profitable parts of the tax office when compared to the amount of inspectors they have dealing with PAYE visits, VAT visits and full audits, so they are not likely to stop in the foreseeable future.

Good Bookkeeping Made Easy

Bookkeeping is never easy if you don’t understand the principles and how it should all go together. Some people will employ a person specifically to carry out this task for them and some will have a whole department dedicated to bookkeeping. Then there are those who put the job into the hands of their accountancy firm, as many also do with their company secretarial services.

The outsourcing option is much more common than you may think, and actually makes good sense.  You can be certain that your accountant would only employ people that know the job inside out, and you should have no concerns about the quality of the work. It really is a case of handing over your paperwork to the bookkeeping department of your accountants and leaving the rest to them.

There is the added bonus they will know how your accountant works and how they like things presented to them. Anything that makes your accountant’s job easier reduces their bill, and that can be offset against the bookkeeping costs. You can also be sure your books and records will be completed in time to meet any Revenue deadlines, so will avoid incurring fines and penalties for late submission.

Putting all costs to one side for a moment, knowing your records are being handled in a proper manner can take a lot of stress off your shoulders and let you concentrate on what you should be doing, running your business.

Clients of Kane Bergin and Company know they can trust us to handle their bookkeeping, without any problems, as well as offering services for payroll, tax consultancy, auditing and accounting, company secretarial and various other services you and your business may need. We are large enough to have all the expertise you could ever need, but small enough for you to still have a personal service.

Whether you are a self employed one man band, or owner/manager of a larger business, we will not charge you to have a chat and you will not be committing yourself to anything by discussing your requirements with us. Just call to arrange an appointment and find out how Kane Bergin and Company could be the best option for you. Ring us today on 01 969 6306.