Meet Jack, an enthusiastic and completely fictional entrepreneur who recently started his own retail store. Jack decided that he could manage his business's finances without the help of an accountant for financial and business advice. After all, how hard could it be?
"Look!" said Jack "I cannot afford to pay an accountant a small fortune to tell me what to do, so I am going to run my business myself, including doing my books. I am sure I can pick it up pretty well as we go along".
Soon, Jack came across the dreaded task of calculating the Goods and Services Tax (GST) and Pay As You Go (PAYG) withholding. "What are all these numbers and acronyms?" thought Jack "AAH! No worries, I'll just wing it and with a business my size there is probably no one looking at it anyway!" Jack estimated his tax obligations using the tried-and-true method of guesswork.
Little did Jack know, the Australian Taxation Office (ATO) has a keen eye for such creative accounting and, a few months later, Jack received a 'friendly' letter from the ATO, filled with warnings and possible penalties and interest charges that made his entrepreneurial heart skip a beat.
Unfazed, however, Jack continued to manage his business's cash flow using a complex system of sticky notes, random scribbles, and mental calculations. "If I just keep an eye on the bank balance, I'll be fine!" he thought.
Unfortunately, Jack soon discovered that having money in the bank didn't necessarily mean he could pay all his bills. Suppliers, employees, and even his pet goldfish, Finny, were left wondering when their next paycheck would come.
As Jack's business started to grow, he made some bold financial decisions based on his gut feeling and a lucky coin toss. "This expensive, state-of-the-art espresso machine is sure to bring in customers!" Jack exclaimed. But it turned out that Jack's retail store, which primarily sold camping gear, wasn't the ideal place for coffee connoisseurs to congregate. The espresso machine gathered dust in the corner, serving as a costly reminder of just one of Jack's misguided investments.