I spend a lot of my time telling people they need a good bookkeeper to help them look after their business. But recently I have seen really vivid examples of how a bad bookkeeper can seriously damage a business. From bad work, incomplete work, unjustified work and unnecessary work all mixed in with no support and no accountability. The problem facing business people is how to know a good bookkeeper from a bad bookkeeper?[private_basic]The answer is straight forward. Only use a bookkeeper who is qualified. I can personally recommend members of the Institute of Certified Bookkeepers (my institute) and members of other UK professional bodies.
Any bookkeeper who is not qualified is a risk. Not necessarily because their work is bad (they may be technically excellent) but having to prove their abilities to a professional body is some comfort that they know what they are doing and that they are insured (a necessary requirement of membership) and that they are accountable to their professional body for disciplinary measures when things go wrong.
Under the money laundering regulations now in force, anyone in business as a bookkeeper HAS to submit to regulation and monitoring either by their professional body, or by HM Revenue & Customs themselves if they are unqualified. Do you know if your bookkeeper is registered? If they are not – they are breaking the law and acting for you illegally. Any bookkeeper found acting illegally is going to be subject to the rigours of the law and their clients are going to be suspected along with the bookkeeper.
You have a duty to ensure your chosen bookkeeper is registered under the money laundering regulations, insured, qualified and accountable. Do not leave this to chance – ask them today. Clues they are not acting legally:-
- never asked you for ID and proof of address
- never issued a detailed engagement letter
- never discussed your cash handling procedures and suggested improvements if found wanting
- refuse to name who monitors them for money laundering purposes
- carry no professional indemnity insurance
- have no letters after their name
- change the subject if you ask if they are qualified
- never seem to have any questions about your records even when you can see something isn’t right
- give evasive answers when asked even simple questions
- never ask you to give an accurate record of cash in hand at the end of the month to balance their books to
- your accountant has to redraft things you thought the bookkeeper had handled and charge you extra
Apart from all this, an unqualified bookkeeper can leave you in deep trouble with the Tax and VAT Office. I have seen numerous examples of this lately. The main problem in cash businesses, such as Pubs, is recording and balancing the daily/weekly/monthly cash movement through the business. Any gaps in this recording process leaves you totally exposed to assumptions of missing cash and/or sales leading to huge assessments to under-declared profits. Unqualified bookkeepers can choose not to defend the work they have done or argue why things they haven’t done were not necessary. You have no redress. You cannot force them via any professional body to make amends for their incompetance and hope their insurers will payout compensation.
The worst error I have seen recently is a pub that had a cash balance at the end of one VAT quarter of more than £12,000 – a nonsense sum for any pub anyway – but at the start of the next quarter the bookkeeper used a £nil balance from then on. What happened to the missing £12k? no-one knows. The Tax Office assume the worst and assume the publican is fiddling the records. The bookkeeper just says nothing and will not explain the mistake, nor even talk to the Tax Office about it.
What can the publican do about this bookkeeper – nothing. The potential tax bill and VAT bill are huge and are likely to put the pub out of business after 25 years and make the publican bankrupt.
Now you can see why the choice of bookkeeper is critical – and what the consequences are if you get it wrong.
Talk to your bookkeeper tomorrow – if they are trading illegally – sack them immediately and choose a qualified bookkeeper. Please ring me urgently on 0800 047 0731 if you need help resolving this. I will show you where you can find a good bookkeeper as a gesture of goodwill – no strings attached.