My Bookkeeper Made Errors — What Do I Do?
Bookkeeping errors are more common than most people realise. Some are minor. Some are expensive. Some have been quietly compounding for years before anyone notices.
If you suspect your bookkeeper has made mistakes, or you have just found out they have, here is what you need to know and what to do next.
What Kind of Errors Are We Talking About?
Not all bookkeeping errors are equal. Some are honest mistakes that are easy to fix. Others are signs of something more serious.
Common errors we see when we take over from another bookkeeper:
- GST coded incorrectly on transactions, especially on items that are GST-free or input-taxed
- BAS lodged with wrong figures, sometimes over-claiming GST credits, sometimes under-reporting
- Payroll processed incorrectly, wrong rates, missed allowances, super calculated on the wrong base
- Super not paid on time or not paid at all
- PAYG withholding not remitted to the ATO
- Bank reconciliation not done properly, meaning the books do not reflect reality
- Transactions coded to the wrong accounts, making your P&L and balance sheet meaningless
- TPAR not lodged when it should have been
- Duplicate transactions entered
- Personal expenses mixed in with business expenses
Some of these are simple data entry mistakes. Others, like unpaid super or unremitted PAYG, can create serious ATO liability.
How Do You Know If Something Is Wrong?
Sometimes you notice it yourself. The numbers do not look right. Your profit does not match your bank balance. The ATO sends you a letter about a discrepancy. Your accountant flags something at tax time.
Other times you only find out when you switch bookkeepers and a new set of eyes goes through the records.
Either way, the sooner you find it the better. Errors left uncorrected compound over time, both in terms of financial impact and ATO exposure.
What To Do First
Do not panic. Most bookkeeping errors are fixable. Even serious ones. The ATO has processes for amended returns, voluntary disclosures, and payment arrangements. Getting things corrected proactively is always better than waiting for the ATO to find it.
Get a second opinion. If you suspect something is wrong, have another qualified bookkeeper or your accountant review the records. Do not just ask your current bookkeeper to check their own work.
Do not make changes yourself. If you are not a bookkeeper, do not start editing transactions in Xero trying to fix things. You may make it harder to understand what actually happened and what needs to be corrected.
Gather your records. Bank statements, payroll records, super payment receipts, invoices, whatever you have. The more complete the picture, the easier it is to reconstruct what should have happened.
What We Do When We Take Over
When a new client comes to us after problems with a previous bookkeeper, the first thing we do is a full file review.
We go through your Xero from the beginning, or as far back as we need to, and identify every error we can find. We document what is wrong, what the correct treatment should have been, and what the financial impact is.
We start by sending you a proposal through our client engagement software. Once you accept, you nominate Accounts Advantage as your registered BAS Agent through the ATO’s Online Services for Business at onlineservices.ato.gov.au/business. This gives us direct access to your ATO account so we can immediately see if any BAS lodgements are incorrect, outstanding, or have attracted penalties.
From there we prepare corrected or amended BAS lodgements where needed, fix the underlying data in Xero, and bring everything up to date. If there is an ATO liability as a result of the corrections, we help you understand the options, including voluntary disclosure, which can reduce penalties significantly.
What About the ATO?
If errors in your BAS mean you have underpaid tax, the ATO will want that corrected. But voluntary disclosure, coming to them before they find it, generally results in reduced penalties compared to them discovering it themselves.
If errors mean you have overpaid, you are entitled to a refund or credit. Amended BAS lodgements can recover overpaid amounts going back up to four years in most cases.
At Accounts Advantage, our Managing Director is CPA qualified and all our team members hold a Certificate IV in Bookkeeping. Many of our team members are registered BAS Agents in their own right, in addition to the firm itself being a registered BAS Agent. That means you get qualified, accountable professionals handling your books. Not just someone who learned on the job.
Common Questions
How do I know if my bookkeeper is registered?
Check the Tax Practitioners Board register at tpb.gov.au. Search by name or business name. If they are not listed, they are not registered and cannot legally charge you for BAS lodgement services.
My bookkeeper did not lodge my BAS at all. What happens now?
You need to lodge the outstanding BAS as soon as possible. The longer it goes, the worse the penalties. We can take this on for you, review the records, prepare the overdue lodgements, and submit them to the ATO. We can also request penalty remission where appropriate.
Can the ATO penalise me even though it was my bookkeeper’s fault?
Yes. As the business owner, you are ultimately responsible for your tax obligations. The ATO may accept a reasonable excuse argument in some cases, but this is not guaranteed. Getting things corrected quickly is more important than establishing whose fault it was.
How long does it take to fix a set of books?
It depends on how far back the errors go and how messy the records are. A single quarter with coding errors might take a few hours. Two years of uncategorised transactions, missed payroll, and unlodged BAS could take several weeks. We scope it before we start and give you a clear picture of the work involved.
Should I tell my accountant?
Yes. If your bookkeeping errors have affected your tax return, which they often do, your accountant needs to know. They may need to lodge amended returns. We work alongside accountants and can share what we find in a format they can use directly.
Ready to Get Your Books Sorted?
Call our Loganholme office on 07 3209 8266 or 1300 400 105
We will go through your records, tell you exactly what is wrong, and give you a clear plan to fix it.