[LINK] private question for off list - consulting

[Roger Clarke]

At 10:24 +1000 6/12/13, Robert Brockway wrote:
>(5) Outsource your accounting.  Really.  It is a time sink.  You would be
>better off spending the time writing quotes or doing just about anything
>else.

Personally, I'd say 'insource your book-keeping', but 'outsource the 
accounting and tax' except to the extent that you feel comfortable 
avoiding the extra cost.

If you don't do your own book-keeping, your records become a mess, 
and your accountant guesses each year based on the shoe-box of 
partial data thrown at them, and it costs you more for the accountant 
and more for tax - because, unless you're constructively dishonest, 
you almost never fall short on the revenue-side, but you always do on 
the expenses (= tax-deductions) side.

By book-keping, I mean MYOB or some better-quality product, up to 
'trial balance' stage.  (I designed and wrote accounting systems in 
the 1970s, and spec'd some more in the late 1980s, and I can't 
believe how poor-quality MYOB is).  And if you do that, then of 
course you can print the P&L as well, quarterly will do, and have 
some idea of roughly what your business actually looks like.  (Even 
if the accountant does 'correct' a few things later).


>(6) I used the 'accrual method' of accounting.  I consider this to have
>been a mistake.  When it comes to late payments you may find yourself
>paying tax on money you haven't received yet.  I did.  The alternative is
>called 'cash accounting'.  Obviously there are pros and cons.  Talk to
>your accountant about which system is right for you.

For a business like this, I'd use cash accounting, as you say 
*especially* on revenue.  The exception is depreciation, done at year 
end.

I haven't accrued or prepaid anything other than depreciation since I 
started my consultancy company in 1982.


Oh yes, and incorporation does make it look better, and makes 
insurance easier, and makes it a lot cleaner when bidding in other 
people as well (even for small quantities of sub-contracting), and 
being bid in by other people, and it really shouldn't cost much.


-- 
Roger Clarke                                 http://www.rogerclarke.com/

Xamax Consultancy Pty Ltd      78 Sidaway St, Chapman ACT 2611 AUSTRALIA
Tel: +61 2 6288 6916                        http://about.me/roger.clarke
mailto:Roger.Clarke at xamax.com.au                http://www.xamax.com.au/

Visiting Professor in the Faculty of Law            University of N.S.W.
Visiting Professor in Computer Science    Australian National University