HWI Chartered Accountants Auckland

In business there are lots of little things that you can do to help yourself and minimise the risk of error and omission.

Here are a few common pitfalls:-

• Before you claim GST on anything, check that you have a GST invoice from a GST registered supplier. The GST thresholds have been increased, and it is likely that some small scale operators will not be GST registered, which means you cannot make a claim for GST on their invoices;
  
  
• Irregular GST amounts:- Some suppliers particularly lawyers and overseas insurance companies, cannot charge GST on the entire amount of their invoice, double check that you only claim the amount of GST as listed on the invoice, sometimes it is best to manually enter these GST amounts into your creditors or general ledger systems to prevent the computer from calculating GST at 12.5%.
  
  
• Check the invoice you receive against the order you made or the packing slip that came with the goods. Some suppliers have cash flow problems and may be tempted to overbill. From time to time scam artists send invoices for pro-forma advertising. Advertising that no one in your organisation would have ordered.
  
  
• Restrict access to your own firms' unused stationery. Have the minimum required amount of receipt or invoice paper available. Make sure it is signed out of the unused stationery locker. Used receipts should at some point be reconciled back to the general ledger system. It is as simple as copying and pasting your sales ledger to excel and sorting on the invoice number. Missing invoices should be cancelled and in your possession. Otherwise what were they issued for and who by?
  
  
• Computerised banking:- Your bank may only cover you in the event of theft provided you adhere to their security rules. If they prompt you to change your password – do it. Also make sure your computer systems have up to date antivirus and spyware software. Computers should be backed up daily, and the backup should be stored off site.
  
  
• Don’t insure personal vehicles through the company insurance. Small business owners sometimes are tempted to put their car on the company insurance list. It is a rule of insurance that the company cannot insure something which your company does not own, in the event of an accident you may find yourself not covered regardless of having paid the premium.
  
  
• Physical security:- When someone leaves your employment, cancel their burglar alarm entry code and make sure you get all your keys back. Ideally, your keys should be of a registered kind that only a lock smith can make with your permission, not the standard key that anyone can duplicate at a kiosk or hardware store.
  
  
• Don’t store client information on laptops for any longer than absolutely necessary. Laptops are easily stolen and confidential information should be treated with care and respect. Treat it like it was your own information.
  
  
• Business mail should be collected from your company’s post office box. Don’t encourage cheques to to be sent to an unsecure letterbox.
  
  
• Small entities should mark paid invoices with the cheque or payment details, the date of payment, and the ledger code it was posted to and who authorised it. This is to prevent the double payment of invoices.