There is a client I'm working on and this client uses excel as its
What could be a risk to a client that only uses a simple cah book, with no analysis nor a charter of accounts, as an accounting system?
Answers
Refiloe,
There are a long list of problems;
-There are statutory filings, depending on the locale, but generally think "1099". If you don't have a way of tracking, you can't file and can get penalized.
-Again, depending on the locale, there are a variety of bases for business taxation. If you cannot properly account for your assets and liabilities (eg; cost and amortized value of equipment, etc), you could need to rebuild everything from the ground up *and* get penalized.
-If there are payments to individuals, you could run afoul of the "reimbursement" vs "compensation" problems, and end up owing money to a variety of agencies unless you can demonstrate the reasoning for your reporting (and penalties, of course).
-If they are a schedule C filer, how are they going to segregate (which is mandatory)?
That's just a few.
KP
Thank you
It depends on the materiality. If this is a one person shop and, there is little expense activity, and none of the activity relates to payments to others for labor, this could work.
i.e. I'm an artist. I sell my work. I buy supplies during the year. Maybe 100 transactions in the cash book. This isn't the end of the world.
But, you did mention staff. Right there an issue arises. Now you're talking payroll and payroll reporting along with worker's comp, etc.
Filed Under:
Accounting