Money

How to understand your accountant

Allan Johnson of Johnson & Tennent Chartered Accountants
Allan Johnson of Johnson & Tennent Chartered Accountants Janie Kayes

IF YOU don't know how to understand your accountant, now is a good time to start thinking about it!

We're almost halfway through July, so if you haven't already booked an appointment with your accountant, chances are it's going to happen.

I'm not talking about touchy-feely understanding, but understanding the numbers that accountants love to produce.

These numbers tell a story about your income position and possibly your wealth creation process - and you need to know how to understand your accountant to make sure you get maximum value from the money you invest in their services every year.

I often hear people say, "I don't need to understand my accountant - that's why I employ them!", but unfortunately, this has caused many problems, particularly for business owners.

You should know your financial affairs, even at a broad level, so you don't need to know the nitty-gritty to get value from the reports your accountant produces. It's okay to delegate the accounting function, but you can't delegate responsibility for your financial decisions - and accounting reports will help you make better decisions.

Accountants have previously done a great job of convincing people that finances are complex - but I've got a surprise for you. It doesn't have to be that hard! If you can keep track of your household finances, you can understand more complex accounting reports.

Like most things, it will take some initial effort to learn the basics, but once you have mastered that, you will be able to have an intelligent conversation with your accountant. Won't that be fun?

So, how do you understand your accountant?

1. You need to overcome negative feelings regarding accountants and their reports.
Most accountants are nice people (just misunderstood!), and can be very helpful. You need to set a goal to develop a positive relationship with your accountant. This has to be your decision, and you will find that it's a win-win situation at the end of the day.

2. Do your homework.
As I said above, you do need some basic understanding, but it is basic and definitely achievable by nearly anyone.

You do not need a detailed understanding of the processes of turning raw financial data into accounting reports.

All you really need is to understand the end result, which normally will be a tax return or a profit and loss statement and balance sheet. Once you have mastered these, you can graduate to budgets and cash flow reports.

So where do you go to get this knowledge? If you've passed Step 1 and already have a good relationship with your accountant, the obvious answer is to ask them. If not, the Internet provides a wealth of information at your fingertips - just make sure it's an Australian-specific site.

The important thing is to do something, and work towards understanding your accountant.

Topics:  allan johnson, opinion



Mooball plans on the moo-ve

BIG PLANS: The village of Mooball from above.

Big plans for he quaint village of Mooball have the green light

Tweed United gunning for a top-four, finals’ finish

Tweed United captain and top goal scorer Michael Kolovos and his side are hell-bent on a top-four finish in season 2016.

"Our Destiny is in our own hands."

Charges against accused Lone Wolf bikie dismissed

Mark Clinton Atta-Singh leaving Tweed Heads Local Court, cleared of all charges.

Charges against accused Lone Wolf bikie dismissed

Latest deals and offers

Superheroes of the big screen enjoy sounds of Splendour

CHRIS Hemsworth and his Avengers mates drop by Byron festival.

Dynamic pics from Splendour Day 1

The Strokes perform at Splendour in the Grass 2016. Photo Marc Stapelberg / The Northern Star

Check out the latest pictures from Splendour in the Grass.

Bindi Irwin: 18 magic photos to mark her 18th birthday

Bindi Irwin with a python.

Photos: Bindi Irwin from babyhood to 18

Aussie director makes his mark on new Roots mini-series

Malachi Kirby as Kunta Kinte in a scene from the TV series Roots.

BRUCE Beresford behind final episode of remake of iconic series.

The Avalanches pull plug on live broadcast of Splendour set

The Avalanches are an Australian electronic music group.

RADIO listeners won't be able to tune in to the band's show tonight.

Who's got Richie's heart all aflutter?

Richie Strahan stars in season four of The Bachelor.

THE Bachelor has found his dream woman second time around.

You can own this Queensland town for just $1

Yelarbon

Unprecedented auction of town's business centre with no reserve

Work starts on $15M Caloundra apartment building

Turning the first sod at the Aqua View Apartments site in Kings Beach are (from left) husband-and-wife developers Alex Yuan and Stella Sun with construction company Tomkins director Mike Tomkins and Councillor Tim Dwyer.

Developers excited about addition to Kings Beach skyline

Plans revealed for 1500-lot 'master-planned community'

Precinct will be bounded by Boundary St and Shoesmith Rd

Ecco Ripley sales run sparks prime release

MOVING IN: Sekisui House has announced the release of more residential blocks at Ecco Ripley.

Sekisui House is preparing to unveil more land at Ecco Ripley

Massive residential 9-storey high-rise hit by delays

An artist’s impression of the eight-storey-high apartment complex that Bernoth Holdings wants to build in South Toowoomba, next to the City Golf Club.

Developer struggles to get approved high-rise development started