I have been running a freelance business on the side for several years now. I’ve never been particularly good at the ‘business’ side of it. I didn’t even do 5th form accounting. My ‘books’ consist of saving copies of my invoices and receipts and then adding them up every 6 months to do my GST return. It seemed to work ok. I thought my ‘record keeping’ was pretty good in that regard – I do keep everything.
This system was working fine for me until I got an income tax return that I hadn’t saved for. Holy hell, that gave me a fright. I moaned to mum about it and she asked me if I’d remembered to depreciate my photocopier. I think she may have asked me in Portugese, because it sure as hell made no sense to me. When I gave her my what-the-hell-are-you-talking-about look she suggested I talk to her accountant.
I was a little nervous about going to the accountant as I figured he’d probably find holes in my ‘system’ and tell me that I owed the tax department thousands, but I guess it was better to find that out earlier rather than later. I went to see him and he told me that he reckoned he could probably shave a grand or so off my tax bill, which would be only partially swallowed by his fee. I walked out feeling good about things.
I dropped my ‘books’ off to him. He asked where my ‘accounts’ were. I told him he was looking at them. He pointed out that most people keep some sort of ledger, rather than just wads of paper. I thought he was going to cry. That made me nervous. He mentioned that it might take him a month or so to ‘sort them out’. Shite.
He called me several times over the couple of months that followed, asking me to justify certain things. I pleaded ignorance. After all, I am. When he was finally done he called and asked me to go in and see him. When I sat down he told me that things weren’t looking good. I just about had my babies on the spot. Turns out there was no need – they may not have looked good to him but they looked damn fine to me. I owed no tax at all. Apparently the business was running at a loss. Hardly surprising, considering the fact that I was using it as nothing more than a second bank account. It was never supposed to keep us alive – it was just extra income on the side.
He suggested that I buy MYOB (Mind Your Own Business) and get my ‘books’ in order. He said it was easy to use. He lied. It might be easy for accountants and anyone who knows what a Chart of Accounts is. That wouldn’t be me. So I did a course in the weekend. Well, kinda. What I actually did was manipulate the tutor into sorting out my books during the lunch break. Yesterday I got another GST return. I pushed a button in MYOB and out popped my return. Hallelujia!
I should have employed the services of an accountant years ago. Of course I may change my mind on that – I haven’t had his bill yet.