[Question] What to do - accountant messed up

[JohnSilver]

hello everyone.

I hope someone can advice me on a decent way forward.

I own a CC and use a friend for my books. She last filled my books with SARS in 2007. Shortly after that she employed an assistant, whom I think was the cause of all my problems and had her capture all our books. Then the assistant was fired and she moved house and in the process lost my bank statements. From March 2007 to Feb 2009, for 4 accounts (2 credit cards & 2 business bank accounts) and I now need to literally spend a small fortune (about R6K to date) on getting copies from the banks again.

We also moved about 3 years ago and had to update our CK2 with the new address. I paid her R600 or so to do the updates but the CK2 hasn't been updated yet. So Standard Bank froze my business account in January and only allowed me access to the account again in February after explaining the whole situation to them. My CK2 is still not updated, neither our FICA with the banks. FNB is now on my case about this too.

So now I get a call from her this morning and she tells me our CC has been de-registered with CIPRO and I need to pay another R200 to have it re-opened, and submit the last 5years worth of books to them for review.


I got someone else to start capturing books for me in January but still don't have all the bank statements, since I can't afford half of them right now. Standard bank charges R15 per page, without "volume discount" and refuse to allow me to pay them back once I have the money for it. I haven't drawn any salary since November but still had expenses (insurance, medical aid, rent, phones, food, hospital bills, etc) and my one credit card now stands on about R30,000, and R14000 for the other one. Neither Standard Bank or FNB wanted to give me a business credit card so I use my personal credit cards for business & living for the past few months. The one card (R14K) was only used for business purposed and I always pay it back from the business account as, and when I have the money todo so. The other credit card has also been used for business purposes (about R8K or so).



I have a web hosting company and lost a few larg'ish clients in the last 6 or 6 months which affected cash flow quite drastically. The credit cards are being used to pay for servers, software licenses, and bandwidth usage on the servers. I'm busy cutting down on unused software and servers to see if I can get my monthly expenses down a bit more but there's not much I can sacrifice anymore without compromising quality of service and still offer my clients something worthwhile.







Right now I don't have the money for a lawyer, or a business coach and don't know what todo anymore. I also can't afford a new accountant or accounting officer.


An accountant friend has told me that I could expect a fine of R500, per month of late TAX submissions, which could amount to R70,000 for the past 5 years, for me and my wife.




HELP.....?

[Dave A]

We don't know each other (yet) so what I'm about to say is based entirely off your post. It may be off the mark (in which case I'll apologise later), but somehow I doubt it.

So...

Your accountant certainly isn't helping things, but who is in charge of this little enterprise?

I suggest you need to start holding people accountable, including yourself.

The accountant lost the bank statements? Fine, they lost them - thay can pay for replacing them. Or get fired.

For all the rest... I'm sorry. The loss of some clients in the last 6 months doesn't explain why you are behind on your tax returns, or why the books aren't done, or that the accountant hasn't performed.

So the first step is:

Go to the mirror
take a look at the person who is reponsible
and make a decision to take charge of your business!

You can get back to me about the next step once you've made the first.
And if you can't make that decision, sell the business and get a job.

[Jennajay]

Sobering message from Dave A

We also had previous accountants who messed up pretty bad. We are still in the process of fixing everything up, but at the end of the day our director had to realise that he is the one in charge (in all aspects) the benefits come with all the responsibility. It has been a long journey (11months) and our tax affairs will finally all be sorted by Friday and Paid up.
Nothing better than having a clean bill of health from SARS - although we took a huge dip in our funds to get this all sorted, i assure you the fact that were all able to sleep peacefully at night is alot more rewarding.

you need to take ownership of a problem in order to fix it.

[nkawit]

Hi there JohnSilver,

We're a wholesaler to ISP's for various services, if you want I can see if we can help you out in some way with your hosting. We have a rather large amount of extra capacity and we don't mind helping people back on their feet or startups.

Let me know mate, I'm sure we can do something to at least help you out with expenses.

-N

[Dave A]

So did I scare off John Silver, or do you think he's head down taking charge and fixing his problems?

[nkawit]

Hopefully taking charge. I've learnt one thing, as a business owner every single departmental manager needs to be followed up and someone needs to be there to ensure that people do their job, never assume anyone is doing anything correctly.

[JohnSilver]

Thank you for your reply Dave.

About me:

I started this business in 2005 after loosing my job and not being able to get another job due to being a white male with no post Matric qualifications. I learned everything I know today myself but it is obviously not enough to properly run and manage a business. I don't have sales or marketing skills and all my clients signed up through word-of-mouth advertising and finding our website on the internet. I've never actually had to cold call or email anyone to try and sell my services.

If this whole issue with my books, and major loss of clients last year didn't come up I would have been able to employ someone full time to manage the accounting side of things. But I've been very skeptical about employing anyone since I don't know much about the labor law and cannot afford a CCMA case, where I might have done or said something wrong to the other person without knowing it's wrong and he or she takes me to CCMA.

We don't know each other (yet) so what I'm about to say is based entirely off your post. It may be off the mark (in which case I'll apologise later), but somehow I doubt it.

So...

Your accountant certainly isn't helping things, but who is in charge of this little enterprise?

I suggest you need to start holding people accountable, including yourself.

The accountant lost the bank statements? Fine, they lost them - thay can pay for replacing them. Or get fired.

For all the rest... I'm sorry. The loss of some clients in the last 6 months doesn't explain why you are behind on your tax returns, or why the books aren't done, or that the accountant hasn't performed.

So the first step is:

Go to the mirror
take a look at the person who is reponsible
and make a decision to take charge of your business!

You can get back to me about the next step once you've made the first.
And if you can't make that decision, sell the business and get a job.

I should be in charge of "this little enterprise" but when I initially used another accountant and gave them all the bank statements and invoices they captured it all and send me an invoice at the end of the month. They handed in my financials to SARS and it all worked well. Somehow I expected the same would happen with the new accountant but have learned the hard way that it didn't.

A lot has happened in the last few years and I really lost track of time. We moved. We got a baby. My mother went through divorce and put a lot of extra strain on us. The business took a few wrong tuns and had to cut losses along the way and try to recover bad debt as well. basically I tried to manage my life and business........ And I really thought the financial side of it all was taken care off since the accountant said she'll take care of it.

I mentioned the loss of business since I don't have much money for anything right now. And the banks are not very accommodating in giving me a discount on the statements either.

A friend has offered to help me out but I really prefer not to do business with friends. Especially not since the previous accountant was a friend of my wife as well.
But he got my CC up and running with SARS again so now I can at least go back to the bank and ask them for the statements again. I had to borrow some money from my in-laws to cover his expenses and the bank statements.



I guess my question is really this: How can I prevent this from happening again? For some time now I've been thinking of employing someone to sit work for me and do my books where I can have more control over him or her. But I cannot afford much right now. I haven't drawn a salary myself since November. The other accountant did the books for me, as a favor since I did some work for her and every time I asked her how much I owed her for the books she said "nothing, you still have some credit with me". But now I sit with the mess. So I'm very reluctant to go that route again. I simply don't know who I can trust right now.


Where can I obtain some knowledge or skills which will help me run this business better, in the future without spending a fortune on it? I have been thinking about doing some business courses through a college or university but simply don't have the time to sit in a classroom every day of the week. I also can't afford anything right now.

[Dave A]

Thanks for the feedback. It certainly helps.

Where can I obtain some knowledge or skills which will help me run this business better, in the future without spending a fortune on it?

Hanging around here is free

Ok - it just costs a bit of time. But it's got more than enough graduates from the school of hard knocks to give out some coaching. And with any luck some of them will start weighing in with their thoughts shortly because I've got a mission to fly this afternoon.

[BusFact]

1. Focus on getting new clients and business. Without them the rest is pointless.
2. I'm also nervous of employing people, so stick with paying an outside book keeper / accountant. You can get rid of them anytime.
3. Make sure you start learning and understanding what the accountant is doing for you. Not so that you can eventually do it yourself, but rather so that you can quickly check if everything is in order. It'll be a long process but start asking questions now.
4. You must file and store or you accounting information, not your accountant. They can put it in a file for you, but you must keep the files. Its a pain, but its your but on the line, not theirs.
5. Search this forum for specific questions you might have (then move on to Google). All the information required to run a business can't be provided in one thread, but you will over time accumulate the necessary knowledge.
6. Make sure you current accounts are being recorded properly. The help files in most accounting packages will explain what you should be doing. Then deal with your back log bit by bit, every day.
7. Take each day one at a time, and deal with each issue bit by bit, otherwise you will be overwhelmed. SARS have been known to be accomodating and helpful when they see you are trying to come right. Sitting down with one of their consultants might help you understand exactly what they want from you based on your specific scenario.
8. Find more clients.

[Dave A]

I'll add - keep track that the work you delegate is actually being done. This is best achieved by insisting on written reports and written replies to specific questions (even if it's just by email).

Don't accept excuses.
When you're outsourcing, don't cut the cheque until the job is confirmed as done.
Don't accept excuses from yourself either - the buck stops here.

Less specifically - reading your posts I get a sense that you've lost your focus. Well, now that you've been hit in the face because you took your eye off the ball, hopefully that will be less of a problem in future.

Being your own boss means your future is in your own hands - which is a blessing and a curse

[JohnSilver]

Thank you for the pointers BusFast. it helps a lot.

Dave what you said it true but it's really getting difficult for me to get around to everything on my own. and right now I don't know who to trust either.

I finally got my CK2 active with SARS again but it cost a small fortune for a new accountant to re-activate the CK2.
My books are also almost up to date but I'm still waiting for Standard Bank to give me the outstanding bank statements. they always have excuses so to why the process is being delayed. but I'm going to close my account with them as soon as this is sorted out. it would be easier to keep track of everything with just 1 bank account instead of 2.

and I'm going to post more specific questions on their own posts in the forum

[Dave A]

Great to hear you're making progress

Yep - driving a business can be a struggle at times, but if it was easy all the time everyone would do it

[BusNavig8]

Good advice regarding the business side of things. I understand what happended to you fully because we fix businesses in this category all the time. It is hard to swim in the sea of choas and the financial strain saps all your inner resources.

You can start a new by fixing the mistakes from hereon out...most definately. But for the past.. I would first approach SARS, explain the situation and get "nil returns" issued for the past years so that you do not have to do your books. I would get clearance from CIPC (legal Dept) and get all the FICA issues resolved so that your bank accounts can be unfrozen. That way the additional expenses will not be incurred on all fronts. The chances of suing and recovering money from the previous Bookkeeper is unlikely even though you may well have grounds. The problem with friends doing this function is that no proper mandates are in place so the claim is difficult to prove due to he said she said and who was to do what.

[JohnSilver]

Good advice regarding the business side of things. I understand what happended to you fully because we fix businesses in this category all the time. It is hard to swim in the sea of choas and the financial strain saps all your inner resources.

You can start a new by fixing the mistakes from hereon out...most definately. But for the past.. I would first approach SARS, explain the situation and get "nil returns" issued for the past years so that you do not have to do your books. I would get clearance from CIPC (legal Dept) and get all the FICA issues resolved so that your bank accounts can be unfrozen. That way the additional expenses will not be incurred on all fronts. The chances of suing and recovering money from the previous Bookkeeper is unlikely even though you may well have grounds. The problem with friends doing this function is that no proper mandates are in place so the claim is difficult to prove due to he said she said and who was to do what.

Thank you. Your post is very inspiring but leads to some questions:

- I was under the impression that I still need to get the books up to date, have financials drawn up and submitted to SARS. Your comment about the "nil returns" excites me, a bit, but how do I do that? What exactly do I tell SARS?
- What is CIPC?
- I can't sue my previous bookkeeping purely since I don't have the money or the time to pursue it. The whole deal was done verbally. i.e. there's no contract between her and me and I just don't feel like wasting time with lawyers and courts if it won't even help me at this stage. So that's a no-go.

[Dave A]

- What is CIPC?

It used to be called CIPRO - the registration authority for cc's, companies and various forms of intellectual property.