If everyone is totally honest, we’d admit we don’t know everything. And actually, that’s OK!
American politician, Donald Rumsfield, famously said:
“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”
What we often come across is business owners claiming they fully understand an accountancy issue, when actually they don’t. Again, that’s OK because it’s our job as your accountant to know these things and advise you appropriately.
In the early days of starting a business, a business owner will try to do all they can from a bookkeeping and accountancy perspective until they reach a certain size. They most likely want to ‘keep costs down’ or believe their business finances are relatively straightforward. During that time, should something a bit tricky crop up they will ask a friend for a bit of advice, Google search or even just wing it without fully understanding the implications of what they are doing.
They’ve tried to turn a known unknown into a known known. The problem is the unknown unknowns are still there, and their actions could do more harm than good, particularly in the longer term.
The potential impact could see you financially worse off or penalised for getting things wrong. If you’ve made an error which impacts the level of tax you pay, HMRC are fairly swift at the action they take to recover the amount owed – best not to give them an excuse to come knocking in the first place!
What can you do to mitigate your accountancy unknown unknowns?
Unfortunately, you won’t know what you don’t know, until you know it.
Instead, take a moment to think about what your accountancy known unknowns are. What questions keep you awake at night? What gaps in knowledge do you have about your business which would help you make a strategic decision? What would you like to understand better?
If you already have an accountant, speak to them about those questions you have. Speak to them as soon as new questions arise – closing gaps in knowledge or potentially tackling problems early on will be better than letting them fester.
If you don’t have an accountant yet, consider who you might like to work with and start building that relationship. A common unknown is the right time to engage with an accountant. You probably don’t realise how soon you could benefit from working with one.
The services of an accountant will have a cost, but that shouldn’t be the reason for not working with one. The right accountant will ensure your tax affairs are set up efficiently and will help you avoid unnecessary penalties with HMRC.
If you’d like to talk to a friendly accountant in Fleet, call our team on 01252 612484 or use our contact form.