Winging It! : What Could Possibly Go wrong?

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.

Despite these setbacks, Jack was determined to keep his business afloat. He tried to cut costs by eliminating what he considered unnecessary expenses – like office supplies, employee training, and even the store's electricity. "Who needs lights when we have sunlight?" Jack stated. Unfortunately, his customers were not as enthusiastic about shopping in the dark, and sales began to plummet.

Eventually, the day came when Jack had to face the consequences of his regulatory non-compliance. The Australian Securities and Investments Commission (ASIC) came knocking, ready to impose fines and take legal action. Jack's once-thriving business was now on the brink of collapse, all because he didn't want to pay an accountant for financial advice and expertise.

As Jack sat in his dimly lit store, sipping a cold cup of coffee from his underutilized espresso machine, he couldn't help but remember his ill-fated words, "What could possibly go wrong if I don't hire an accountant?" Well, Jack learned the hard way that sometimes, saving a penny can cost a pound.

Jack is, as we said at the start, a work of fiction, but still paints an important picture of what happens if a business owner tries to cut costs and 'wing it' in important areas of their business.

Now take the sensible step. Contact Kathy Hills at Hills Accounting in Hobart on 03 6273 7800 and you'll find someone with over with 25 years of experience and know-how. Alternatively, you can email us at kathy@hillsaccounting.com.au.