accounting

Trying to Cut Costs in Your Business - Don't Cut Out Your Accountant

2008-09-28T05:18:00.003-07:00

When the going gets tough entrepreneurs get going, they become more efficient and they find a way. Right now things are getting a bit tough. Consider if you will the credit markets making it tough to expand a business, the increased costs of fuel and all the regulations that businesses must deal with, and you can see why things are tough these days.

Even more problematic is the fact that the US Economy currently is flat at no growth. The consumers have little confidence and they are not buying. Layoffs have already hit many large corporations and they are trying to save money by paying their bills slower, which is hurting all their small business vendors. These are difficult problems and challenging times, and it is for that reason that this is no time to cut your accounts to save money in your business.

You see, it is essential that you know where you are in the game. Proper accounting gives you a snap shot of where you are in the middle of all the chaos. With delinquent receivables, cutting staff, real depreciation of your assets and little borrowing opportunities, you will need to sharpen your pencil. You need a strong accounting team to get you the information you need to survive in these turbulent times.

Many businesses will cut the very most important things during a recession, but you must not cut your accounting. If you do you could get into trouble with taxes, regulations and put your company behind the eight ball. If you are to get through this challenge and outlast your competition, you will need to be strict in your spending. If you have to cut your accounting staff, be careful, as it is the last cut you should make. Please think on this, do not become another statistic in a downward business cycle.

Equipment Capitalization and Cash Flow Accounting Strategies With Lease Backs

2008-09-28T05:18:00.002-07:00

In several industries companies and individuals can buy equipment such as machinery, boats or even aircraft and then lease them back to rental agencies, marinas or fixed base operators (aviation). This is a great accounting strategy allowing someone or company to own an asset and have it pay for itself through the rental fees. The owner of the asset has the ability to tax full advantage of the tax write off of this asset and depreciate it as a business in itself, a rental business, even if the individual owns the item.

Once the equipment, boat, or aircraft is fully depreciated, paid for the owner of the asset still owns it at its then current book value. Many years back, I had sold aircraft leasebacks for flying schools and aircraft charter companies, and as well as such an accounting strategy looks on paper, it is not always as clean, crisp and consistent as the proforma may have you believe. The accounting of leasebacks is serious business, not to be taken lightly.

For instance, if someone buys a new Cessna and leases it back to the flight school that aircraft will have some hard flying hours on its airframe, this could increase maintenance costs and wear and tear on the aircraft lessening its value prematurely even faster than the allowable tax depreciation schedule. Additionally, after a couple of years and before the aircraft is paid for it might need a new motor when the aircraft hits its TBO.

Further, the flight school may have newer aircraft on the line that are owned by the FBO (fixed base operator) which they will attempt to rent first or the students and instructors may prefer. Thus, there could be a deficit in the monthly maintenance costs, tie-down, insurance, and payment of the aircraft. So, before you use a leaseback accounting strategy for equipment of any type you need to treat it as a business and consider the reality of the inevitable. After all, anyone can make anything look good on paper.

Accounting Problems Case Study - Very Small Furniture Sales and Manufacturing Company

2008-09-28T05:18:00.001-07:00

He finally had to close his doors, not because of the economy, but rather due to the accounting and management issues. Specifically, he had over a long period of time built up his business from scratch. He made furniture as works of art, beautiful stuff and had developed quite a reputation for himself. In fact, he did not even have a showroom, he simply set up on the main road outside of town and folks stopped by to purchase his hand made furniture and told their friends.

Eventually, the city expanded and then disallowed road-side sales, so he went and got a retail space in the old revitalized section of town. Unfortunately, he was selling so much furniture that he could not be in the showroom all the time, rather, he had to be in the workshop, something that only he could do, due to the artistic talent needed.

The center in "old town" was very nice, but expensive and he had to sell more and more to pay for the triple-net lease, and things were moving well, but that meant he was forced to produce more and more inventory, but this meant he could never be one with his customer as before. He hired a sales staff to work the stores mandatory hours; 10AM to 7PM, as per his lease agreement.

He had trouble finding the right people and they often sold the furniture too cheap or failed to give customers cash receipts. He eventually had to close the store, even though it was making money, even though he had so much demand he could hardly keep up. All due to cash flow, management and mostly due to accounting problems, unable to see where he was; he had no snap-shot of his financial situation. Thus, he could not get a loan, move his business to the next step or capitalize on all the goodwill, he had created over the years. Think on this.

What is the Single Most Important Thing to Learn in Business? Accounting

2008-09-28T05:18:00.000-07:00

If you ask a business person, entrepreneur or executive what the most important thing in business is they are likely to tell you; people, sales, capital or a product and service that people desire. Sure, those are important, but they often miss accounting.

A company with a sharp pencil, which knows where it is at, at all times, is more likely to make money, have a better cash flow and grow the business over a long period of time. A company that is weak in its accounting has a greater chance of business failure in the first 5-years and no company; small, medium or large is exempt.

If you are a small business person and you feel as if there is more to know, then why not register and take some accounting classes at the local community college level? If you are an entrepreneur, then you need to understand how to create realistic proformas, how to attain money and how to insure your cash flow is strong so you can start, grow and succeed in your entrepreneurial endeavors.

Flying by the seat of your pants in your own business and juggling all the finances is fun and exhilarating, but as the business grows larger and larger it's time to either hire an accountant or learn how to do that part of it also. Not only will good accounting help you make better business decisions, but it will also keep you from going to jail for making a mistake on your taxes, withholding or misstating your income. I sincerely hope you will consider all this as you seek to increase your knowledge of business accounting.

Accounting - How to Succeed 2

2008-09-28T05:17:00.000-07:00

Accounting Double Entry

Accounting involves the classification, analysis and dissemination of financial information to those parties who require such information in order to make informed judgments and decisions based on the material.

It is the measurement and control of financial transactions which are, in essence, the transfer of legal property rights, between one party and another, made under binding arrangements. However, transactions that are not financial in nature are specifically excluded since they are regarded as not material.

The double-entry bookkeeping system used in accountancy is the linchpin used by businesses and organisations to record all of their financial transactions. The concept was first introduced in 1494 by the Italian mathematician Luca Pacioli.

It is based on the proposition that a measure of a business's financial well being and a record of the results of its operations are best recorded by the use of accounts.

Accordingly, each account records an historical log of the changes in the monetary values relating to different aspects of the business. The method originally enunciated by Pacioli is now called double-entry bookkeeping.

The basis for this system is, quite simply, that each transaction is recorded in at least two accounts. It is established upon the supposition that for each financial transaction, there is at least one account being debited whilst, at the same time, at least one other account is being credited. The result of this process is that the total debits of the transaction are equal to the total credits so that the overall net value is zero.

Consider the following scenario. Suppose Mr A sells an article to Mr B, who then pays Mr A by means of a cheque. The bookkeeper working on behalf of Mr A would credit the account called "Sales" and debit the account called "Bank" (this would result in money flowing into the bank account). On the other hand, the bookkeeper working on behalf of Mr B would debit the account called "Purchases" and credit the account called "Bank"(this would result in money flowing out of the bank account).

It is the accepted principle that debit entries are added to the left hand side and credit entries to the right hand side of the general ledger account.

The general ledger, also known as the nominal ledger, is the main source for the recording of the accounting records of a business that makes use of the double entry process, bearing in mind that there is also a single entry process, which is a much more restrictive version.

It holds numerous accounts for such items as current assets, fixed assets, liabilities, revenue, expenses, gains and losses. The ledger accounts themselves are set up as T accounts, since they resemble the letter T when the account is empty.

It has been suggested that the double entry system dates back even further to the period of ancient Rome or Greece. Some critics of current accounting methods have suggested that the methodology has changed very little since this time, which must surely indicate that the principles set out hundreds of years ago were based on solid foundations.

Particularly pertinent in this respect is the approach engendered in social accounting which argues that business entities should pay more than lip service to the social and environmental impacts brought about by their activities.

It has been argued that accounting should not solely be concerned with the financial evaluation of economic events, but should embrace a wider audience, such as shareholders, and broaden its appeal beyond reporting simply financial profit and
loss.

Accounting - How to Succeed

2008-09-16T08:07:00.004-07:00

Accounting has been defined by the profession as "The art of recording, classifying, and summarizing, in terms of money, transactions and events which are, essentially, financial in nature, and interpreting the results accordingly."

Accounting relates to the dissemination and measurement of financial information by accountancy professionals to establish the level of performance of an organisation. The culmination of such analysis is the preparation and production of a set of financial accounts representing company performance in the previous twelve months.

The accounting function is normally divided into three separate branches:

The Financial Accountant prepares and analyses the financial data necessary for the decision makers within a business organisation. In the case of public companies, such information, in the form of financial accounts, is made available for public scrutiny.

Management accounting, by contrast, is associated with the flow of company information, and is normally confidential in nature and available only to a select group of individuals, such as board members and accounting management.

Further, companies pay corporation tax and individual employees pay income tax and national insurance, and it is necessary to produce this type of financial information for the relevant tax authorities.

Accountants are accounting professionals, representative of these three branches of accountancy. There are a number of professional bodies who represent accountants, the most important being Chartered accountants (ACA), Certified accountants (ACCA), Management accountants (ACMA) and, in the US, Certified Public accountants (CPA).

A completely separate branch of accounting is that of Auditing. An independent auditor who examines the financial statements, in the form of financial accounts, and accounting records of the organisation with whom he is conducting the audit, is called an external auditor. The purpose of such an audit is to provide an independent record of the fairness and accuracy of the accounting statements in accordance with laid down procedures such as, in the US, the Generally Accepted Accounting Principles, also known as GAAP accounting, and elsewhere, in accordance with International Financial Reporting Standards (IFRS).

Some companies believe in auditing themselves, apart of an external audit, in order to provide ongoing financial information specifically for use by management. Such internal auditors are normally employed by the company itself.

The financial reports, especially the annual accounts, are not only used for the benefit of company management, but are also invaluable to external groups, such as shareholders, creditors and the banks. The preparation of the various accounting reports, necessary for any business, relies implicitly on the day-to-day production and dissemination of financial information generated by way of double-entry bookkeeping.

What on Earth is Continuity? The Breakthrough Model For Financial Professionals

2008-09-16T08:07:00.003-07:00

After reading my new report (you can pick it up at my site), some people emailed me with questions about "continuity". So let me break down this phenomenon further.

Do you remember the "book of the month" club? Or think of cable TV even?

These are examples of a continuity program.

Or this can relate even to those companies that auto-ship...you know that Proactiv™ infomercial, don't you?

What happens is that you purchase their products once and for a monthly fee they supply you with a set of products every month and they charge your credit card.

Continuity or a forced continuity program (the latter occurs when you AUTOMATICALLY are included in the monthly program unless you opt-out), is when you make a sale one-time and that one sale results in multiple charges over and over again.

Here are some examples I could think of quickly.

- a bookkeeping service consults with you on how to keep proper records and automatically charges you a monthly retainer to keep your books

- you get a facial and massage at a day spa and you are automatically charged $x per month every month for a selection of premium services at a discount

- a limo company picks you up and you are enrolled into their VIP programme where once a month you are driven to wherever you want to go

- a CPA performs an audit for a company, and then enrolls you for the next year into their monthly accounting service ...

You get the idea?

What's important here for YOU, the financial professional, is that your income is GUARANTEED every month!

Once you provide continuous value to the client or customer, they are assured not to cancel!

I guarantee you that continuity will change your life, your bottom line and indeed your bank balance!

Instead of making a sale once, then attempting to find new customers by advertising and marketing, set up a continuity program and make 3x as much profit or more!

Think about the products and services that you offer.

How can you use this model in your business?

Accountancy Auditing - A Very Lucrative Career

2008-09-16T08:07:00.002-07:00

Accountancy auditing is just another lucrative career in the field of accounting. Businesses depend deeply on auditing and it is an essential key to the success of any business. Auditors are responsible for examining, analyzing, and verifying business finances.

Accounting auditors are in high demand according to the BLC (The Bureau of Labor Claims). Therefore, the auditing career field will continue to be in high demand for many years to come. People who are interested in working as an accountancy auditor should consider starting out with a company before going to the government.

What is an auditor?

Auditors are also considered accountants. The difference is that they mainly work with examining and corroborating financial statements. Auditors make sure that the numbers always adds up and examines statements closely. However, auditors are human and errors can occur. Finding out where inaccuracies or errors exist is the main job of the auditor. Avoiding future errors will also fall in the lap of the accountancy auditor.

You are quite wrong if you think that an auditor's only job is to examine simple financial statements. Looking over company bills and ensuring debit and credit accuracy is also a task for an auditor. To avoid financial problems auditors quickly correct financial problems.

There are government auditors and nongovernment auditors; the difference between them is that government auditors mainly concentrate on the tax side of things. If a business or an individual files a tax return and it looks suspicious, it is then the job of the government auditor to carry out an audit. A perfect example of this is - a business or individual files a tax return and claims massive amounts of deductions or expenses. This will raise all types of red flags.

When these flags go up the (IRS) Internal Revenue Service leap into action to check the accuracy of the deductions and expenses compared to the tax code criteria. If things do not add up the suspected business or individual could face stiff penalties and fines. Many tax auditors are feared and hated. They make sure that people are doing what they are supposed to do, and not cheating the government.

An accountancy career is technology driven. Years ago auditing was done manually on paper, but now auditing is done primarily on computers. Present-day auditors should know how to work with computers and complicated accounting software or programs. This will allow you to stay competitive and always up to date with the many changes in the industry.

If you want to become a company auditor someday, you have to graduate with a bachelor's accounting degree. Most states do not require it but getting certification might be a good idea. More job opportunities are open to those who earned a Master's degree as well as some certification.

When choosing a career, salary is very important. Auditors earn a yearly salary of about fifty-four thousand dollars a year. While more experienced auditors, earn eight-thousand dollars a year. On the other hand, inexperienced auditors can earn about thirty-five thousand dollars a year. As you can see, there is money to be made as an accountancy auditor.

As an accountancy auditor, your income will increase in the end, but at the beginning, salaries are reasonable. Choosing a career in accountancy auditing will be a good move if you have a deep love for accounting. Auditors have been given bad reputations over the years, but if you have a passion for it go for it. The money is great and the rewards are worth it.

Accounting Help - Outsource Accounting Tasks of Your Company

2008-09-16T08:07:00.001-07:00

If you are a big business firm and needs accounting help, opt for outsourcing services. Accounting is one of the indispensable functions of any business organization and is required on the daily basis. You cannot just keep account files and ledgers piling up in one corner of the office for long time. You might be wondering why so much stress on mere accounting work? It's not an ordinary work rather the most essential one. Accounting is the most important activity in an organization since this is the one that decides the future profits and losses of the business. Whatever be the size of company accounting is an essential part of all the business functions and you must be careful about the way it is carried out in your company. The efficient accounting status ensures the bright future prospects for your business and can turn your small business into a large size organization in short time.

Accounting help differs from business to business. If you are running a small firm, you can get the accounting software installed and small staff would suffice the requirement. But, if you are an industry running over a large scale, it would be real difficult and expensive for you to hire large manpower just for the purpose of accounting howsoever essential this function is.

So, it becomes must for you to have a comprehensive understanding of how an accounting system works in an organization. You cannot just hand over such a confidential task in the hands of any newbie chartered accountant who has just qualified his examination. You need an expert set of professional to carry out the accounting work. But, due to expensive labor charges in USA most of the companies have been facing difficulties and backlog of pending accounts, book keeping, and journal entries since long time. And, this is where accounting help from accounting outsourcing companies comes into play.

Accounting includes some of the major tasks involved in business financial transactions that have to be managed and regulated consistently. Some of the most important ones that are required on day to day basis include:

• Keeping record of daily expenses
• Billing and payment records
• Financial planning
• Balance checking
• Tax payments and assessment
• Annual budget planning

All these tasks are assigned to accounting professionals along with book keeping and journal entries. On the face value work doesn't seem to be much and you might be thinking of disseminating it in between few professionals in your company. But, in fact this is an enormous task to carry out all these functions simultaneously by small workforce. And, affording a large manpower is not a feasible idea. This is why hiring accounting help from outsourcing companies of third world nations. These outsourcing companies have huge manpower owing to the fact that labor charges in their nations are comparatively much lower than that in USA. So, accounting outsourcing manages your accounting work with more accuracy and acumen and that too in the most affordable fashion.

Small Business Accounting Software - Determining the Best Choice For Your Business

2008-09-16T08:06:00.000-07:00

All businesses, regardless of size, require some type of an accounting system to manage their finances. Small business accounting software can be a valuable resource for keeping track of financial data and developing reports to determine the next steps of your business; however, with all of the accounting software out there, how do you choose the one that is right for your small business? There are several factors that are worthy of consideration when choosing small business accounting software.

The right components - It is helpful to list the accounting needs of your business when researching small business accounting software. Does the software package have all of the modules you need? For example, does it have budgeting, invoicing, accounts payable, accounts receivable? If the software package includes features you do not need, it does not make sense to pay for these features. On the other hand, keep in mind where you are going with your company and make sure the software offers features needed for growth.

Customer service - Make sure the software company you choose has experts available to offer support when needed. Such support may include internet support, phone support, and training modules.

Cost - Cost is always a consideration when choosing small business accounting software. The least expensive programs are often limited in their capabilities for expandability and may not offer the amount of financial control needed in your business. In contrast, the most expensive programs often have more features than a small business needs. When researching accounting software, consider the one that offers the best fit for your business at the lowest cost.

Compatibility with computer system - It is important to know whether or not the accounting software you are considering will be compatible with your current operating system. Another important consideration is whether or not you will be able to import your data from your old program to your new program. If not, you may need to re-enter large amounts of data.

Industry-specific software - Some software companies offer industry-specific software. Although this can be more expensive, it is designed with the specific needs of your type of business in mind; therefore, the convenience may outweigh the cost. Often, software packages include customizable features which can be activated to meet the specific needs of your business.

User-friendly - Regardless of how great a program is, it must be user-friendly and not exceed the capabilities of the users. Some companies offer free demos before purchase so that you can test the software to determine whether it meets the needs of your business. If your business will require access from more than one user, make sure the accounting software you choose has this feature.

Cost Segregation - Why Every Commercial Property Owner Needs to Know About Cost Segregation

2008-08-20T21:55:00.001-07:00

What is a Cost Segregation Study?

Cost Segregation is an IRS-approved application by which commercial property owners can accelerate depreciation and reduce the amount of any taxes owed. Cost segregation consists of re-classifying components and improvements of a commercial building from real property to commercial property. This process allows the assets to be depreciated on a 5, 7, or 15-year schedule instead of the traditional 27.5 or 39-year depreciation schedule of real property. Thus the commercial property owners taxable income is greatly reduced because a larger depreciation expense deduction is created. Ultimately this improves the building owners cash flow and allows them to reap the benefits of depreciation up front.

How did Cost Segregation come about?

In August 1997 the Hospital Corporation of America owed the IRS $800,000,000 in taxes. This case (Hospital Corporation of America v. Commissioner, 109 TC 21 (1997)) was the ground breaking case for cost segregation. On August 24th, 1997 Judge Tom Wells permitted Hospital Corporation of America to use cost segregation with respect to a multitude of improvements in their commercial building which allowed them to distinguish between components that constitute IRC section 1250 class property (real property) and property items that constitute section 1245 class property (tangible personal property).

Why have I not heard of Cost Segregation?

When Cost segregation first became available as a tax planning strategy it was only performed by the major accounting firms with in-house cost segregation departments on the largest of properties of their most significant clients. One study originally cost upwards of $100,000.

Even today if you are currently using a local accounting firm or smaller CPA firm they probably are not offering cost segregation services as they may not have the resources available to provide a cost segregation study as the IRS does require that an engineered study be performed. More likely than not the smaller CPA firm does not keep an in-house engineer on staff to perform cost segregation studies.

How do I know if my property qualifies for a cost segregation study?

Basically if your property was bought, constructed or remodeled after January 1, 1986 you have the ability to have a cost segregation study applied to your commercial property.

When should a cost segregation study be done?

It is best to have a study completed for the year the building or improvements are placed in service. However, IRS Revenue Procedures allow taxpayers to "catch up" on the depreciation that was not claimed from the first day the property was placed in service without amending prior years' tax returns. Furthermore, the IRS recently allowed for the "catch up" period all in the first year rather than over four years, when the Revenue Procedure 99-49 was first introduced.

How does a cost segregation study work?

Building costs are generally classified for federal income tax purposes into three categories; (1) Tangible Personal Property, (2) Land Improvements, and (3) Real Property. Each has a different recovery period and method under the Modified Accelerated Cost Recovery System (MACRS). The qualified engineers who perform the study will have an in-depth knowledge of construction methods, materials, and building components and will perform a detailed analysis of your commercial property to identify the building components and improvements that will be reclassified to take advantage of accelerated depreciation.

This information will then be communicated to your CPA so that they can book your depreciation accordingly and notify the IRS of a change in your accounting methods.

Will a cost segregation study trigger an audit?

If a cost segregation study adheres to and is done in accordance with the IRS Cost Segregation Audit Technique Guidelines then the IRS will not question your cost segregation study.

If a study is performed outside these guidelines an audit could potentially be triggered and the IRS could dispute your accounting methods and take back any deductions taken in error.

Understanding Double Entry Accounting

2008-08-20T21:54:00.002-07:00

Sir Isaac Newton's third Law of Motion, the law of reciprocal actions, states that for every action there is an equal and opposite reaction. The same can be said for accounting. For every financial transaction, there are two sides. There is a debit side and a credit side. For every transaction, these sides must be equal for your books to balance.

To understand double entry accounting, you must first understand what a debit is and what a credit is. Put simply, a debit is something you own or money that is owed to you and a credit is money that you owe to someone else. Let's look at this in terms of the different types of account that a business has.

Assets - these are debit items as they are items that are owned by the company. An increase in assets is a debit and a decrease in assets is a credit.
Liabilities - these are credit items as they are items that the business owes to someone else. An increase in liabilities is a credit and a decrease in liabilities is a debit.
Owners Equity - this is a credit account because the balance of the owner's equity account is the money that is owed by the business to the owner of the business. An increase in owner's equity is a credit and a decrease in owner's equity is a debit.
Expenses - These are debit items because the purchase of an expense item decreases an asset item (eg. Cash at bank) which is the credit site of the transaction.
Revenue - These are credit items because the receipt of revenue increases an asset item (eg. Cash at bank) which is the debit side of the transaction.

Let's look at a simple example:

Let's say you want to go to the shop to buy a bottle of milk, which costs $3. Your purchase of the milk is a financial transaction. Before you go into the shop, you own $3 so this is a debit item, which is balanced by owner's equity.

When you go into the shop and pick up the bottle of milk, you now have a bottle of milk, which is worth $3, and you owe $3 to the shop owner. Therefore, the bottle of milk is a debit and the $3 you owe is a credit.

When you pay the shop owner for the bottle of milk you are reducing the amount of money that you own (debit item will be credited) as well as reducing the amount of money you owe (credit item will be debited).

Note that in each step of the transaction, the debit and credit side of the transaction are equal and the balance of all accounts has equal debit and credit sides.

So what happens when you drink the bottle of milk? You no longer have a $3 bottle of milk; you have an empty bottle that is worth nothing! This is why we have expense accounts. Assets, which are debit items, are things that the business owns for a long period. Expenses, which are also debit items, are things that the business owns for a short period before they are used up.

This is why we have two separate major reports for a business. The balance sheet is used for those items that are constant in a business. The profit & loss Statement (or Statement of Income & Expenditure) is used for those items that flow in and out of a business on a regular basis. The resulting balance of the profit & loss statement is put into the capital section of the balance sheet to balance things out.

Another report you may have heard of is the trial balance. This is used to make sure you haven't made a mistake before preparing the balance sheet and profit & loss statement. At the end of an accounting period, the closing balance of all your accounts (assets, liabilities, owner's equity, expenses, and revenue) are put into this report to make sure that your debits equal your credits. If they don't, you know you have made a mistake somewhere and you will need to find your mistake before you prepare the major reports. The total of the debit column should equal the total of the debit column.

Get Clients to Pay Your Therapy Fee in a Down Market

2008-08-20T21:54:00.001-07:00

Does Anybody Have the Money to Pay Your Fee? The current financial downturn in the U.S. has a few therapists wondering.

If you watch the news or read the business section of the newspaper, you can easily scare yourself to death before breakfast. Yes, there are some financial issues plaguing many Americans: Job loss, the increase in the cost of gasoline and groceries, and the fallout of the housing market are creating financial pressures for many people. Today's dollar has to stretch further than a few years ago. Financial pressures are very stressful. However, who is better at helping people cope with stress than therapists?

You get what you focus on. If you spend time each day fretting over the economy and filled with worry that no one will be able to afford your fee, that's exactly what will happen. Instead, get clear on what you want: Clients who value and appreciate you, who are willing to pay for their therapy because they know it is useful, and who have a pain that you can help soothe.

Work through your old money stories. You may have some old stories about money left over from childhood. When you think about your money, do you feel the clenching of fear in the pit of your stomach? If so, you have some money shadows waiting to be processed.

What would you say to one of your clients who has fear about money?

Many people are still able to pay for cable television, buy new cars, and take vacations. They can pay for therapy IF they feel it is essential to solving their problem. Certainly, there are tragic situations where people are destitute and cannot afford the necessities of life, let alone therapy services. Thankfully, there are community agencies with sliding fee scales to serve that population.

Your ideal client is someone with the financial resources to pay for their therapy. Instead of focusing on all the doom and gloom, decide to focus on what is working well.

Examine your marketing plan. Consider these questions:
• Where are you finding your ideal clients?
• Can you speak to more groups to get in front of more ideal prospects?
• Are you following through on your networking?
• Have you made any new professional contacts this week?
• How long has it been since you had lunch with the person who gives you the most referrals to thank him for his support or ask her about her needs?
• Do you choose to see the opportunity in today or be paralyzed by fear and old stories?

If you want to earn more money and become a wealthy therapist, this is the ideal time for you to spring into action. Resolve to do more work on your marketing plan and implement your plan with regular action steps.

People are stressed out and worried. What a great time to be a therapist who can help!

Looking For Basic Bookkeeping Software?

2008-08-20T21:53:00.000-07:00

If you are currently using the 'paper' system, there is basic bookkeeping software available that is easy to use and will save you time by organizing and automating your business. Not only that but they produce reports that help you easily manage customers, suppliers, inventory and accounts receivable and payable.

Systems are available for various business from real estate to nonprofits. You can purchase software for simple business invoicing or just tracking software. There is so much information out there and so much comparison on basic bookkeeping software that you could get a headache or just give up!

When you key in basic bookkeeping software on Google you receive "about 1,670,000" results. How do you make sense of that! I must have found thousands of reviews from the basic package for small businesses to more elaborate systems. Many of the sites have an option on them to help you find out exactly what type of software will suite your specific needs. These are very helpful and can save you a lot of time.

One site I found to be very helpful is the first one that came up on my search, entitled, Peachtree Software. On this page you will find tabs at the top. The first one I checked out was the "Product Reviews" tab. I really liked this area because it was very informational. There is a comparison of the top ten software reviews for 2008.

Twelve softwares were ranked on ease of use, help/documentation, accounts receivable, accounts payable, payroll, inventory, banking, time billing, job costing, general ledger, and fixed assets. Then they were given an overall ranking.

Peachtree Complete 2008 software received the top ranking out of the twelve that were ranked. The others, in order of ranking, are: MYOB Business Essentials, QuickBooks Pro, NetSuite Small Business, Cougar Mountain, Small Business Manager, Simply Accounting, CYMA IV Accounting for Windows, DacEasy, Microsoft Money, Bottom Line Accounting and Quicken Home and Business.

As I am interested in receiving the best, or as close to the best as I can afford, I reviewed the top-ranked software. This article presented Peachtree Complete 2008 as easy to use and a 'snap to learn.'

Also noted in the review, was the Peachtree Navigation Aid. The article says, "...the main toolbar breaks business accounting into main categories illustrated with brief descriptions and visual helps.

Setup and installation were simple. Peachtree's setup guide gives step-by-step instructions for all main sections." Ease of use is especially important when choosing your first software.

This software received the top ranking of four bars in almost every category. The review summary on the Peachtree Complete 2008 reads: "Summary: If you're looking for outstanding accounting software, this is it. Peachtree Accounting has everything you need to manage your small business finances smoothly and successfully." This is the software I want for my business.

Corporate Tax Provison Software - Integrating FIN 48 Into the Tax Provision Process

2008-08-20T21:52:00.000-07:00

FIN 48 is an interpretation that was meant to provide clarity around certain aspects of FAS109, specifically, the computation and disclosure of Uncertain Tax Positions ("UTPs"). As such, FIN 48 is an integral part of FAS 109 and needs to be considered within the tax provision work flow.

Under FIN 48, UTPs formerly computed under FAS 5 must now be reviewed under new standards for identification, probability, computation, and disclosure. Once this has been done, the results need to be fully integrated with the rest of the tax provision.

The integration of UTPs under FIN 48 applies to all of the schedules required to be disclosed in the tax footnote. For example, an increase in a UTP that has a significant impact on the tax rate might have to be seperately disclosed in the effective tax rate reconciliation. Likewise, the breakdown of the tax provision into federal, state, and foreign components need to reflect UTPs in each of those jurisdictions. If there are UTPs set up for temporary differences, this could impact the presentation of deferred tax balances.

Under FIN 48, UTPs formerly computed under FAS 5 must now be re-viewed using new stan-dards for identification, probability, computation, and disclosure.

Integration of UTPs with the current taxes payable account presents special challenges. Before FIN 48, tax reserves computed under FAS 5 were typically recorded in the current payable on the theory that the government could demand payment at any time. This meant that refunds and payments due with the filing of the return were co-mingled in the ending balances. Past FIN 48, these items are still included in the ending balances; however, the movement in the UTPs must be disclosed in a separate rollforward using the following prescribed categories: Beg Balance, PY Increase, PY Decrease, CY Increase, CY Decrease, Settlements Expiration.

In the past, companies often shifted reserves within the payable with little or no disclosure. The rollforward of UTPs now requires companies to clearly breakout increases and decreases due to changes in judgment and the expiration of statute of limitations, both of which are offset by charges to the current tax provision. In practice, this means that the current tax provision related to the tax return needs to be tracked separately from the current provision related to UTPs to allow for separate rollforwards. Likewise, payments and refunds related to the filing of the tax return will have to be separated from payments and refunds related to the settlement of UTPs in order to populate the Settlement column of the UTP rollforward. Where a UTP is relieved with an audit settlement, a "true up" may have to be recorded as a PY Increase or PY Decrease, offset by an adjustment to the current tax provision.

The rollforward of UTPs within the current taxes payable may give rise to a cumulative translation adjustment where activity is recorded in local currency and is translated into a different reporting currency. A cumulative translation adjustment arises because the beginning and ending balances are recorded at the beginning and ending spot rates, and the activity is recorded at the rates used in the income statement for the period. In their presentation of the UTP rollforward, companies will have to decide the best presentation of this item; i.e. should the cumulative translation be combined with the activity columns or should it be separately stated. For calendar year filers, this disclosure is not required until the 4th quarter of 2007.

The rollforward of UTPs now requires companies to clearly breakout increases and decreases due to changes in judgment and the expiration of statute of limitations, both of which are offset by charges to the current tax provision.
Changes in tax rates can also have a signifi-cant impact on the integration of UTPs into the tax provision.

Changes in tax rates can also have a significant impact on the integration of UTPs into the tax provision. UTPs will normally be recorded at the tax rates used to file the tax return for the year in which the issue arose. For example, a potential disallowance of an expense in a prior year must be measured at the tax rates in effect for that year. This could be different from the tax rates used to compute the tax provision in the current year. This means that UTPs must be tax effected and carried forward using a unique rate structure that is not dependent upon the rates used in the tax provision for the current year. As noted above, the UTPs must be integrated into all aspects of the tax footnote disclosure. The different tax rate structures make it difficult to simply add UTPs and tax return activity together on a pretax basis. Instead, it may be advisable to tax effect the UTPs separately and then add them to the standard tax provision computations.
Under FAS 109, de-ferred tax assets and liabilities arising from the return are adjusted for future tax rate changes, normally with an offset to the deferred tax provision.

Where a UTP is expected to increase a state tax liability, the federal benefit of the state deduction must be taken into account. If this computation is made within the FIN 48 exercise, care must be taken not to duplicate the federal benefit of state tax within the rest of the FAS 109 calculation. In practice, this can lead to a state tax procedure that is different for UTPs than it is for items reported on the tax return in the normal course.

If a company records UTPs that are temporary in nature, these items must be included in the deferred tax accounts. Under FAS 109, deferred tax assets and liabilities arising from the return are adjusted for future tax rate changes, normally with an offset to the deferred tax provision. Since temporary UTPs are recorded at the rate used to file the return (which is the rate that will be used by the government to assess the tax) future tax rate changes will also impact the ultimate relief when the disallowed tax deduction is claimed on a future return. In this sense, temporary UTPs operate in the same manner as regular return-driven temporary differences. There is, however, one notable exception.

In the case of an expense caused by a tax rate decrease which reduces the value of an uncertain deferred tax asset, there is general agreement that this expense should be recorded in the deferred tax provision along with similar adjustments to return-driven deferred tax assets. However, some practitioners have taken the view that benefits resulting from an increase in tax rates applied to uncertain deferred tax assets should not be immediately recognized, but rather, companies should wait until either: 1. the expense is in fact disallowed by the government, or 2. the deduction is claimed on a future return. In either case, the uncertain deferred tax asset is not adjusted in the normal course with other return driven temporary differences. Following this view, uncertain deferred tax assets will have to be tracked separately, so that they are not adjusted for future tax rate changes in the current period.

Interest and penalties on UTPs can be reported above the line (gross) or below the line within the tax provision (net of tax benefit). Here, too, tax rates can have a significant impact. If reported above the line, the accured interest which is typically not deductible until paid will give rise to a deferred tax asset, subject to the same impact of tax rates on uncertain UTPs noted above. Non-deductible penalties will create a permanent difference that will impact the tax rate. If reported below the line, interest (net of tax benefit), will not be recorded in the current tax payable account with an offset to deferred tax asset (net of tax benefit). When the interest is actually paid (gross), the deduction is claimed on the return, but not the books, and the deferred tax asset is relieved. In practice a decision to report interest and penalties below the line can lead to bookkeeping problems in matching up the gross cash payment against the net liability recorded in the current taxes payable account. The choice to present interest and penalties above or below the line will also impact the presentation of the effective tax rate reconciliation disclosed in the tax footnote. This is due to the fact that the tax provision is divided into two potentially different figures for pretax book income, one which is reduced by interest and penalties and another which is not. This creates two different starting points for the effective tax rate reconciliation, thereby creating alternate presentations.

Most companies have procedures in place to "true up" their tax provision to the actual results reported on the tax return. FIN 48 can be viewed as a final "true up" which takes into account the final settlement of the return on examination by the government. In order to make this final adjustment, it is necessary to keep records of the return as filed, stated on a FAS 109 basis, so that the final "true up" can be recorded. In practice, this means keeping detailed records of the current and deferred accounts for all open years.

FIN 48 can be viewed as a final "true up" which takes into account the final settlement of the return on examination by the government.

FIN 48 is a clarification of FAS 109 which extends the basic tax provision computations into the area of UTPs. The creation of UTPs under FIN 48 creates some new issues related to additional disclosure such as the UTP rollforward as well as some computational challenges in the area of tax rates and cumulative translation adjustments. Companies need to consider the ways in which FIN 48 will impact their existing tax accounting procedures under FAS 109.

The basic accounting equation

2008-06-27T06:41:00.000-07:00

How Do You Find a Worthy Bookkeeper?

2008-06-27T05:35:00.000-07:00

A new client recently told me of the problems he had trying to find a good bookkeeper and I thought it was a topic that may be worth sharing with you here.

When you get to the point in a new business venture that keeping the books yourself becomes an intolerable extra burden on already stretched time resources, how do you source, test, trial and finally secure someone to do the bookkeeping for you?

Do you - trust to picking the right advert in the yellow pages? listen to another business person about their bookkeeper? jump on the first person you come across that shows an interest in bookkeeping? ask your accountant? (If you have one), look for a bookkeeping institute website for member information? advertise yourself? ask one of you members of staff to deal with it?

I had not really considered it from a business persons view before but now I have, I can see the difficulties you face when tackling such an important decision.

Important decision I hear you ask? Yes.. IMPORTANT!

Your business records are the cornerstone of your business. You are legally obliged to keep them in the first place, keep them up to date in the second place, and have them as the main defense when the Tax Office or VAT Office come calling. Your bank manager will also either be impressed if you keep your books well and support you when you ask, or will run a mile when you look for an overdraft or loan simply because he cannot see any sense or method in your business due to your lack of quality records.

Neat and accurate records represent a good quality business, and untidy, incomplete records show your overall approach to your business - untidy, unreliable and confused.

A good bookkeeper is therefore VITAL to your business - but how do you find such a beast??

My best advice is to search Google and go the the website of the Institute of Certified Bookkeepers.

This is because you cannot take any chances with people dabbling with your records. Each member of this institute has proven themselves in examination that they have a solid knowledge and understanding of bookkeeping and all associated issues. You can trust each member to act in a professional manner and keep your detailed, personal information completely confidential.

You can rest assured that the Tax Office and VAT Office will have no chance of undermining any records kept by a member and your bank manager will be seriously impressed.

Why take a chance on such a important job being left to Auntie Joan, or Fred in sales just because they say they can work a computer bookkeeping package? There is simply no substitute for experience!

Any ICB qualified bookkeeper will be a significant asset to your business and far outweigh their cost with the service they provide.

Bookkeeping Help - Outsource to Retain Your Hard Won Success in the Market

2008-06-27T05:33:00.000-07:00

Financial records are the backbone of any business organization. Speak to the head of any enterprise and you will know the importance of this asset in the growth of any organization. Maintenance of daily records is one of the important facets of any business to keep the track of their financial condition. Different record-keeping systems are used by different organizations for this purpose. Outsourcing bookkeeping help is the best way to engage your business in a purposeful way, so that the profits are doubled from the word go. Seeking to outsource the bookkeeping surely helps you in maintenance of your daily financial records in a systematic method. With a proper bookkeeping system in place, keeping accurate records takes just a few minutes instead of slogging for longer hours with the back-breaking task. Accountants who have got relevant expertise are hired for this purpose, gained due to handling similar cases for other reputed business organizations.

A number of points have to be taken into consideration before setting up of a cash-based or accrual-based accounting system. Mostly, the accrual system proves to be better for the companies because of their flexibility to handle the timely credit transactions. In others, you might need the simpler cash system. Bookkeeping help assists in an organization's redirection of their resources towards other divisions, whereby the said company's growth curve is doubled. Outsourcing thus helps in an accuracy of the financial data and a better quality of their service. A number of bookkeeping guidelines are utilized by the professionals for securing the finances of any company. Notable amongst these are saving the receipts, tracking expenses, non-payment with personal accounts, classifying the employees properly, reconciling the books with a bank statement and backing up your files. Bookkeeping help is sought after by the business organizations today, because they help in deduction of sales tax from the total sales and a proper upkeep of the petty cash records.

Bookkeeping help is sought by any organization for an easy maintenance of their financial records and is quite an effective system. The bookkeeping personnel help a business venture to keep their invoices and checks in numeric order and maintain separate bank accounts for your business and personal funds. Software used in bookkeeping is essential for the upkeep of records even in a small business, whereby it becomes quite easy to track income and expenses, preparing the tax documents and summarizing the financial activities and backup records for safekeeping. A positive reference of firms who have utilized the services of bookkeeping earlier and other references go a long way to hire the personnel from outsourcing firms. The computerization of the financial records makes their compilation process easier. The processed records are sent back periodically to the client company and this reduces the errors in final statements.

A number of transactions often go unnoticed due the non-availability of time. On the part of in-house staff as well, there might occur an error which mars the chances of success of any business organization. A last minute solution to these errors is not an answer then, as the lapses are many and time at a premium. Bookkeeping help is, therefore, sought by the companies to get a balanced transaction and accurate record statements. Your business is thus sure to claim the heights you had always wished for.

Accounting Firm NYC - Your Accounting Tasks Are Made Simpler and Easier to Manage

2008-06-27T05:32:00.000-07:00

The term 'accounting' is described as a process where calculations are done on a timely basis. Combinations of perfect concepts are sought here and business organizations are always in need of professional expertise to carry out these. In the accounting process, one has to take care of a number of details like the preparation of financial statements, balance sheets and the like. It is for the sake of understanding and clarity that professional assistance in these matters is sought by the financial advisors of the companies worldwide. Accounting firm in NYC is apt for these tasks as they design customized solutions for each company as they believe that the needs of each company are unique. Organizations which are yet to gain a foothold in the markets and even the established ones seek the help of the accounting firms in NYC, which help in taking their business to new heights.

Client satisfaction and time management are important aspects, which define the values of accounting firm NYC. The standards of their work are unparalleled, as they utilize latest software for computing and other related tasks. Online services are used for the purpose of sharing valuable data with the customers as this helps them in knowing the progress of their work. The plans are superb where every project detail is taken care of and solutions for various financial problems are sought out. A wider range of advice is provided to the client companies to tackle their major problems and this is done after properly analyzing their objectives. Some of the specific services offered by accounting firm in NYC are strategic planning and cash flow management, reviewing the operational performance for improvement of certain areas which might have been overlooked etc.

Working with every type of business organization has provided a vast expertise to accounting firm in NYC. This has sharpened their resolve to address your specific financial requirements and tax practices. Consultation comes easily to accounting experts in New York firms where these services are provided to the client companies. To meet the challenges of a growing business, consultation is very important as this helps to clear many cobwebs which can prove costly in future. The services of an accountant in New York are unmatchable by any yardstick and the personnel working in the firm are well trained to handle any project with excellence. As the tax season is the most demanding one for the accounting firms, outsourcing is sought out. The professional touch, which is imparted to these tasks helps meet all the requirements and expectations of client companies.

For the growth of an organization it is very important that the accounting department is in perfect shape. A regular check on the statements and reports helps to build the trust levels between the outsourcing firms and the client companies. The reports are repeatedly checked for the presence of errors, if any, so that remedial measures are sought out on a timely basis. The accounting outsourcing firm assists an upcoming organization in filling up of the journal entries, creation of the profit and loss statements and the balance sheet. Accounting firm in NYC is dream come true for most of the financial advisers as they are leaders in the accounting arena. The introduction of specialized software in this accounting firm is the reason behind the success of many an organization.

Denied - Why The Bank Has Refused Your Merchant Account Application

2007-10-12T04:17:00.001-07:00

Having an application for a merchant account rejected by your local bank can be a soul-destroying experience, especially if you have expended a great deal of time and effort on your application, and when your business operations are already in a high-risk sector, such as adult entertainment, travel services, online pharmacy, escort services, dating, telemarketing, high-volume or multilevel marketing.
If this happens to you, your next step depends on a number of independent factors, but whatever the specifics of your situation, it still undoubtedly useful to understand the reasons why your application has been rejected, both so that you can better deal with the set-back, and so that you are better informed and equipped to move on with your business.
Bank rules for accepting or rejecting account applications are numerous and complex, and several minor mistakes or inappropriate answers can easily mount up to rejection. It may be that you have only done a few small and easily righted things wrong, so it pays to examine just what your mistakes may have been. The basic types of mistake are outlined below. Lack of documentation
It may be that you have failed to submit all the necessary documentation for your application to be successfully processed. Banks can require a vast number of documents to accompany any application, as well as complicated application forms requiring a great deal of information about the merchant, including details of the merchant's legal name, their DBA (Doing business as) name, their URL, and their contact details including email, address and telephone number. The most standard requirements for accompanying documentation include driving license, passport, proof of incorporation or business license, monthly processing statements, and monthly bank statements. If your company already has an online presence, then this entails further paperwork, including a BBB (Better Business Bureau) report for your DBA, Legal Name and URL, printed yahoo.com search results for your DBA, Legal Name, and URL, a printed list of your domains from whois.webhosting.info, as well as print-outs from your website showing product descriptions and merchant policy.
Failure to supply any of the above documents may result in your application being denied, although it does depend on your specific situation. For banks, the lack of complete documentation can be taken as a sign of your company's inability to follow straightforward rules. Better business bureau complaint record
For 80 years, the BBB has served as a consumer watchdog, handling disputes between consumers and merchants, and reporting its findings to the public. An independent non-profit organization, the BBB attempts to resolve disputes concerning consumer dissatisfaction with service provision, delayed refunds, non-payment of bills, overdue accounts, and other consumer worries, without recourse to the courts. They count among their members the vast majority of businesses dealing with the general public.
If a consumer complains to the BBB about your company, then you will be notified and informed of the details. At this point you should do whatever you can to rectify the problem, as failure to do so will undoubtedly cause difficulties for your business in the future, and records of unresolved disputes may well provoke banks to refuse your account application. The BBB is a neutral organization, and ensures that both consumer and merchant rights are respected when seeking a resolution to problems. Record of Rip-offs
In this context, the term "rip-off" refers to overcharging for goods or services presented at a lower price. In other words, the customer agrees to purchase and receives the product they have requested, but the provider then charges them at a higher rate than was advertised. Evidence that you have been a victim of rip-offs is likely to damage banks' confidence in your ability to manage your business adequately. It is therefore always worth double checking prices and receipts, particularly for expensive items or services. Misrepresentation
When you submit your application for a merchant account, the bank will thoroughly check that all the information you have provided is true and accurate. This entails contacting the main credit rating agencies (Experian, TransUnion, and Equifax), checking your record with the BBB, and possibly contacting your business partners to ensure you are telling the truth about the location and nature of your business. This may also entail contacting your landlord to check that you really do occupy the space you have claimed. They will also compare your claimed processing volumes with your monthly statements to check that they tally. In other words, banks go to great lengths to verify that the information you have supplied is genuine and accurate. For this reason, you, too, will have to make considerable efforts to ensure that you are telling the whole truth in your application

How To Find Help For New Business?

2007-10-12T04:16:00.002-07:00

Everyday a new business, partnership or company is formed to carry out trading transaction in view to profit from the business activities. By the time any person register the business, partnership or company, documentation is required for every single step. The recording or tracking for these documents is both time and effort consuming. These records are essential and important, so it should not be overlooked.
Many a times, the owner need to plan and action on driving revenue for the business. The last thing the owner wants to bother about is recording every transaction himself. At this stage the owner needs an accounting professional who may keep track of every financial event. Nothing remains same forever thus the business will also expand and demand more efficiency and accuracy. Hiring a full time headcount in the beginning period of the business will burden the business with high manpower cost. A sound option is to outsource the portfolio to a professional on freelance or part time basis, who cost cheaper than an accounting firm.
Freelance accounting professional understands the requirement and importance of accuracy for every business and is committed to offer its clients the best and most cost effective accounting services. Cost of accounting professionals is the biggest thing that may beleaguer any business owner. These highly qualified accounting experts command a high remuneration that often goes out of budget. Excluding this cost you can also avoid expenses like medical fees, insurance, yearend bonus, etc, associate with a full time headcount.
Bookkeeping is that section of any business, which includes the most tedious tasks. Though keeping records of economic events is monotonous job but indispensable for growth of business. A clever financial insight is all about how you make maximum utilization of available resources in a productive direction. Financial records are useful for business growth planning and so as to declaring the correct profit for tax liability.
With the help of a freelance book keeper, business owner get a way to perfectly maintain their important information without banging their head on tallying and correcting the entries. Outsourcing bookkeeping function gives business owner the flexibility to set their own priorities and manage time for what matters the most for the growth of business.

Invoice Processing Software - Major Business Benefits

2007-10-12T04:16:00.001-07:00

The Age-Old Problem: Cost Control
According to IBM, Gartner and Aberdeen Group, between 75-80% of invoices in any business or organisation, are still processed manually - despite the advent of Electronic Data Interchange (EDI). These days, sophisticated invoice processing systems are available to cut a swathe through the time and costs involved in handling supplier payments and to enhance business workflow.
Invoice Processing: The Real Costs
With a manual system, hundreds – often thousands – of invoices must be reviewed and entered onto an accounting system, at massive cost in terms of labour, time and potential errors.
Byline Group’s research into Accounts Payable processing has shown that 90% of Accounts payable invoice processing involves keying data from paper; that the average time taken to process and Accounts Payable invoice is 12 days, and that 25% of all invoices are paid late.
Also according to Byline’s research an accounts payable clerk handles just 70 invoices per day on average. Thus it is easy to put a labour cost on the front end processing. But the repercussions are felt further down the line too.
Invoice Processing Solutions: Key Benefits
Invoice processing solutions comprise software to allow invoice processing to be speeded up massively. This has a great impact on reducing accounts admin costs associated with invoice processing and also enables companies to make best use of any time critical payment times which may attract supplier discounts.
Invoice Processing Solutions: The Basic Principal
The best invoice processing solutions will automatically scan, extract and validate invoice data and feed directly to an accounting system. Invoices come in a multitude of formats, layouts and styles from a wide variety of different suppliers. They can be machine printed or part handwritten, single or multi-page, coloured or white paper, and come from home or abroad.
However, all of these can be handled simply by scanning in a seed invoice and selecting the items of information that you want to capture. This is done by defining a target zone for each of them; the system will automatically distinguish between the field label e.g. VAT amount and the associated value. If you now select the supplier name as a unique attribute of all such invoices, every invoice from this supplier can automatically be recognised and processed and the captured data sent straight to the accounting system.
Sophisticated Functionality
The challenges of identifying columns and lines of information, knowing where one item description ends and another begins, handwritten information, validation against almost any criteria or data values – all these are the remit of sophisticated invoice processing systems today.
Managing digitised invoices through the entire workflow approval process offers the potential for even greater efficiency and cost savings, and so it pays to check out software providers who can offer an interface with purchase-to-pay (P2P), Enterprise Resource Planning (ERP), Electronic Content management (ECM) and Document Management (DM) to offer integrated workflow solutions.
Invoice Processing: Summary Benefits
Removes the need to handle and store large volumes of paper
Increases staff productivity and reduce processing costs
Faster invoice processing improves supplier relationships
More up-to-date position of the business/organisation’s financial position
Reporting on all financial transactions assists with compliance to appropriate Accounting Standards

Investing In Films For Accredited High Net Worth Investors Can Provide Tax Credits, Shelters, Profit

2007-10-12T04:15:00.001-07:00

In order to attract film production and provide for economic development and incentives, many states and territories including Arizona, Rhode Island, Georgia, Connecticut, Illinois, New Jersey, Iowa, Pennsylvania, Louisiana, Massachusetts, Connecticut, and Puerto Rico have enacted aggressive legislation that provides for tradable Film Production Tax Credits.
Tradable tax credits have historically been part of state and federal programs aimed primary for real estate development, including historic structures rehabilitation, energy, and other activities that stimulate economic growth.
With film projects, Production companies earn a transferable tax credit on the total eligible production costs, and wage expenses. That can translate to 20% – 30 % of the total production cost for a film, in the form of a tax credit issued directly to the production company. It can be used to offset state tax liability, or sold to another taxpayer.
In Illinois, a 20% tax credit based on "Illinois Production Spending" plus an additional 15% tax credit based on Illinois labor expenditures generated by the employment of residents of geographic areas of high poverty or high unemployment is available. New Jersey offers filmmakers a 20% tax credit for productions that film at least 60% in the state, as well as a 30% loan guarantee from the New Jersey Economic Development Authority.
In Connecticut, film makers can earn a tax credit worth 30% of their eligible Connecticut production costs, and in Massachusetts, productions with a minimum expenditure of $250,000 earn 20% and 25% for production expenses and labor expenses, respectively, when at least 50% is shot within the Commonwealth. Note: in MA, pending regulations propose a flat 25% combined tax credit, a minimum spend of $50,000, and removal of per-project cap.
In CT., the 4 new bills are being debated in the legislature, and the expected result in June will be a combination bill. Rhode Island offers a 25% tax credit to productions with a minimum eligible expenditure of $350,000, when 51% of the total budget is spent within the State. For more information about qualifying for each states’ tax credit, contact Tax Credits, LLC.In Pueto Rico, A tax credit is granted to the investors in a Film Project equivalent to 40% of budget items paid to Puerto Rico residents, up to 50% of the cash invested as equity in the project. 50% of the tax credit granted to the investor may be made available to the investor upon investment if a completion bond or a letter of credit is obtained, including the Puerto Rico Secretary of the Treasury as one of the beneficiaries.
Tradable tax credits allow production companies earning credits to sell their credits to companies and/or high net worth investors who have a tax liability within the state, where the credit was earned. The tax credits are sold at a discount for cash, garnering the seller cash to lower their net production expense.
Any company may take advantage of these “Financial Assistance Programs” to reduce their state tax liability. Purchased credits can typically be used for any year in which a tax return has not been filed. In general, credits may be used to offset any, or all, of the following: Individual Income Tax, Corporate Business Tax, Franchise Tax, Premium Tax, and Utility Tax (qualified taxes allowed for offset vary by State).
Large corporations and high net worth investors with a significant state tax liability can benefit from the purchase of film production tax credits, as they are able to purchase a dollar’s worth of tax credit at a discount.
NJ, RI, CT and MA film credits provide the buyer with the right to carry the tax credits forward for at least 3 years, which protects the buyer from investing significant dollars in tax credits that they cannot immediately use. In Illinois, tax credits can be carried forward for 5 years. The tradable, and thus marketable aspect of these state-issued tax credits means that tax credit investors can also retain an equity position in a film or a slate of films.
For example, lets say that a tax credit investor has $3,000,000 in tax credits he needs to purchase. While normally the final tax credit amount is calculated after a film's production, he decides to benefit from the upside in potential profits and receive his tax credits.
So if a film has a budget of $6,000,000, 50% of the budget is equity ($3,000,000) and 25% is tax credits, an investor/tax credit buyer will receive benefits of $1,500,000 and 50% equity in the total international film profits and revenues.
But what happens to the other $1,500,000 he still needs to receive as tax credits?
Well if his or a company's film investment was part of a film package, that amount is rolled over to another film that can be shot in a state or province where there may actually be a higher tax credit incentive which would be transferable back to him and any other investors on a pari pasu basis. For multinational firms and investors, this can also be leveraged and cross-collateralized to a multple country and territory transaction where there is a significant tax credit incentives such as Manitoba, Saskatchewan, Spain, Hungary, UK, South Africa, Australia, New Zealand, and others.
Another option would be to leverage the initial tax credit investment with a direct equity co-investment and set up several additional tranches of debt for a larger film fund.

Benefits Of Small Business Outsourcing Accounts Receivable

2007-10-12T04:14:00.002-07:00

One of the most critical accounting activities for a business is accounts receivable (AR). Ironically for a small business that operates with limited capital, AR becomes very important to remain competitive. In today’s credit linked business environment, it is very relevant & efficiency can be much better harnessed and at a much lower cost. With the offshore service provider taking care of this aspect, the small business has more time and flexibility to attend to other core business areas like procuring orders, improving service delivery and mobilizing resources. Accounts receivable outsourcing is thus a trend among small business today.
Advantages of Accounts Receivable Outsourcing Recovering past due accounts without spending more in staffing and training is one of the greatest challenges for a small business. Most often, companies write off this receivable amount as loss because the cost to train and hire a qualified in-house staff to manage them outweighs the cost of collecting the debt. This predicament for small business is now set to come to an end. By outsourcing accounts receivable, small business can avail a less expensive - and often higher quality solution and achieve significantly higher collection efficiency, thereby improving liquidity and company bottom lines.
By accounts receivable outsourcing, companies gain access to top notch collection agency professionals and advanced collection agency resources even if they don't have full time AR management needs. It doesn't take a long roster of past due clients to make a big dent in a company's bottom line. According to statistics, once an account becomes 90 days overdue, your business is likely to receive only 73 cents for every dollar owed. After 6 months, the amount drops to 50 cents on every dollar and down to 25 cents after one year. Bringing a collection agency on to handle accounts receivable addresses delinquent accounts within the first 90 days, before they get out of hand.
How Accounts Receivables Matter Sales that have not yet been collected as cash reflect Accounts Receivable. In today’s credit based business environment, small businesses sell their merchandise or services in exchange for a customer's promise to pay at a certain time in the future. Timely collection of accounts receivables is an extremely important source of cash inflows. If this management is bad, small business may not have sufficient liquidity to meet its own expenses. Moreover, accounts receivable portfolios can amount to 21 percent to 34 percent of a small business company's assets. Inefficient collection can amount to 25% of the asset base of a small business could put the very existence of the business at stake.
For a small business, like any other enterprise, accounts receivable also represent an investment. The money locked up in accounts receivable is not available for meeting the costs of running or expanding the business. The return from an investment in accounts receivable doesn't occur until the customers clear their invoices.
Day-to-day management of accounts receivables is traditionally paper intensive, time consuming and expensive. Invoices, payments, purchase orders, and statements are often received via mail, fax, or email. It is always not feasible for small business operators to implement Enterprise Resource Planning (ERP) and Line of Business (LOB) applications for data management because of high investment cost. Even if they manage the cost, capturing information from hardcopy documents, routing them to concerned individuals, and providing easy access to the documents in a timely fashion is indeed a very complex task for small business involving deployment of skilled manpower and enabling systems. Ultimately, management and collection costs of accounts receivables far outweigh the collection putting the small businesses in financial jeopardy.
Efficient Accounts Receivable management is thus a key task for a small business enterprise.
AR Outsourcing - Small Business AdvantageSmall business operates with less manpower and do not have the ability to deploy highly expensive credit recovery mechanisms in their own country. Again, no-credit business is absolutely unthinkable in today’s perspective. Just by outsourcing small business accounts receivable to an offshore destination like India where there is an abundance of technically competent and skilled manpower at labor costs in the range of almost one-tenth of the rates in USA, small business can leverage best resources to attend a critical business domain that is very much relevant to its sustainability and viability.
Partnering with an accounts receivable outsourcing firm has many benefits. These benefits include, but are not limited to, increased cash flow; reduced operating costs; better small business accounts receivable control; efficient management of small business balance sheet accounts, increased sales to slow paying accounts; fewer delinquencies resulting in lower collection costs; and improved customer service. According to IDC review, outsourcing business processes from US is expected grow with a compound annual growth rate of 7.1 percent through 2009, when the market is expected to reach $355 billion. Of the total spending on account of outsourcing, small and medium businesses would have a share of 29% by 2009.
The progress of small business accounts receivable outsourcing can be fairly mapped on the company’s Daily Sales Outstanding (DSO) figures and reduction in bad debt. Number of outstanding invoices drops sharply, the impact being felt more in case of very old outstanding invoices as somebody in the offshore destination handling the accounts receivable portfolio is consistently following the invoices on a day-to-day basis. Due to increased fluidity and availability of time for concentrating on more core activities, small business witness significant growth and their overall turnover improve noticeably. On the whole, this better functioning and cash flow consistently improves their bottom lines. Offshore companies deploy cutting-edge technology to carry out their accounts receivable functions without any investment impact on the outsourcing company. This technology integration adds speed and efficiency and improves customer service for the outsourcing small business. Prompt and efficient follow-up reduces delinquency, thereby offshore companies work with many customers on accounts receivable processes and they are an excellent resource on best practices across companies that can be accessed by small business companies to improve their business efficiency and generate higher returns.

Tips For Accounting Outsourcing

2007-10-12T04:14:00.001-07:00

Accounting is the vital part in any size of business. Since accounting is a tedious and time consuming job but it is very important that accounting is outsourced to offshore company. This decision helps the company to concentrate in their area of specialization and not worry about the accounting aspect of the business. Outsourcing has several advantages and these include the following:
• The services of experts are available at a fraction of what would have been paid to hire them on a full time or part-time basis. • An offshore accounting outsourcing service provider provides reliable and competent services that are an asset to the company and simplify its working.• Outsourcing relieves the company of the tedious and yet crucial process of accounting bookkeeping. • When a company considers outsourcing not only does it not bother with recruitment of accounting professionals but also saves on office space and related expenditure.
Certain Tips
1. The total cost is always a factor in the company while off shoring a job. But the lowest bidder need not always be the best bet because accountancy job is a big risky job. So you should be careful while selecting a company.
2. Don’t feel shy to ask query to the vendor if your have any doubts. Also do ask them whether they have done any similar project or not. Its better to ask them for sample example.
3. Milestone should be created for the free flow of the project to completion. This not only save time for both the party but helps to make the payment in installations as and when completed.
4. Accounting is a very tough job. So this must be done from certified public accountants and in case of offshore outsourcing you need to confirm that the accountants are qualified to handle and provide accounting solutions. So check the offshore vendor is dependable or not. Don’t believe them blindly.
5. Start with a small project so that you can give the vendor a chance to prove their caliber.
6. Security issue must be discussed upfront to get clear about it. Accounting information is crucial to the success of every business and any leak of such information can have drastic consequences.
7. Clear your expectation from the vendor otherwise it creat problem. It is really a vital thing to specify your needs and expectation.
8. Communication with the accounting outsourcing firm is of utmost importance and you should be able to interact and communicate freely. Thus the service provider ought to have communication facilities that are satisfactory and should be easily contacted.
9. Reviewing previous projects that the vendor has done will give you a fair idea of the level and quality of accounting that they can deliver. So that you can judge their line of thinking and working. It is also recommended that you initially start with a pilot project that will assure you of the services that you have been promised.
10. A contract must be made before start of any project which clearly deals with your expectations, accuracy of work and deadline to complete the work. This contract must contain all information from major to minor details so that you don’t face any problem.

Can I Really Avoid Income Tax On Social Security?

2007-10-12T04:13:00.000-07:00

There’s no arguing that taxes on social security are incredibly high. As a matter of fact, according to current tax law, up to 85 percent of a person’s Social Security income is taxable when their total threshold income exceeds a set limit. What is threshold income?
Threshold income is the government’s formula for determining how much of a person’s Social Security is taxable. It is calculated by adding half of a person’s Social Security income with any other income they may have. The following threshold limits determine how much of a person’s Social Security is taxable:
• A single person with $25,000 to $34,000 in threshold income: 50 percent of Social Security is taxable.
• A single person with more than $34,000 in threshold income: 85 percent of Social Security is taxable.
• A married couple with $32,000 to $44,000 in threshold income: 50 percent of Social Security is taxable.
• A married couple with more than $44,000 in threshold income: 85 percent of Social Security is taxable.
Although it may seem inevitable that you’ll be forced to pay these steep taxes, there are ways to reduce or even avoid them altogether.
Fixed annuities: The perfect tax reduction solution. If you’re retired, you may be drawing income from interest-producing assets such as CDs and taxable bonds. However, if you don’t need this income for daily living expenses, you should consider transferring the funds to a fixed annuity.
Why? First of all, fixed annuities offer tax-deferred interest. Additionally, fixed annuities are the only interest-producing assets that the government does not include in their threshold income calculations – which means investing your money in a fixed annuity actually helps to lower your threshold income. As a result, you’ll be able to decrease or even eliminate income tax on your Social Security income.
Based on current tax law, the IRS includes the following sources of income when calculating your
threshold income:
• Pension• Mortgage income• US Treasuries• CDs• Money Market Accounts• Passbook savings• Credit Union savings• Dividends from stocks• Dividends from mutual funds• Capital gains• Municipal bonds• Annuity withdrawals
As you can see, fixed annuities are not included in this list of assets, which is a huge advantage over these other investment vehicles.

Business Accounting

2007-09-27T04:49:00.002-07:00

With the start of any new business, the matter of accounting will go hand in hand with success. While there are some small businesses that can get away without having an actual CPA on hand, it is critical to know at least a little about balancing the books before getting into the business arena. Far too many businesses can find themselves in the red without knowing it if they do not have a firm grasp on where the money is going, and how much of it is coming in. This includes making sure the books are balanced, keeping a close eye on accounts receivable and accounts payable, and making sure payroll is where it should be. With that in mind, let’s take a look at what the small businessman needs to know about accounting before venturing forth with his or her business.
One of the first things that can put a stop to any new businessman is the sheer weight of the terminology. Without a degree in accounting, and with little real business knowledge other than that of a great idea and a firm grasp of salesmanship, the prospect of learning the foreign language can be a bit daunting. But it need not be. If you have the skills and intelligence needed to start your own business, you will have the requisite ability to learn the field of accounting terminology. If you find you do not have these skills, your choices are two: find another field of employment, or hire someone to do the books for you. The second choice has its own perils, however. Unless you hire someone you can assuredly trust, handing the books over to a stranger can be a dangerous move. It is advisable to learn all you can about accounting even if you do intend to let someone else handle the day to day grind. That way, you’ll be able to tell if you’re getting ripped off.
It’s also important to understand that accounting doesn’t stop with facts, figures, and cash flow. It extends to every aspect of your business. Accounting is a part of figuring out trends in your customer’s buying activities. Accounting is a part of finding which of your customer’s buy which products and at which times of the years. Without these numbers, you’re going on instinct, which is never a good thing. The best salesman in the world usually makes the poorest purchasing agent. This is because those down in the field, among the people, usually have the worst ideas about long term buying activity. They might sell one widget in February and another in August and be under the mistaken impression that this is a hot selling item. Proper accounting will tell you the truth in cold numbers.
Accounting has always been, and always will be one of the most important components of a successful business. Neglect its importance at your own peril. Accounting helps keep everything afloat and lets the small business owner know where his capital is, where his profits are, and what the trends show for the future. Without this information, the owner is adrift in a sea, lost without a map. And that is not a recipe for success.

Bookkeeping NYC - Your Guide To Hassle Free Finance Management

2007-09-27T04:49:00.001-07:00

In NYC there are several companies and vendors that work towards providing a comprehensive solution to companies that are in need of having their accounting and bookkeeping work handled by a third party. Often it happens that a person sets up a business and then finds out that it is not possible on his part to maintain the financial aspect of the business as he is not well versed with all the nuances connected to that. This becomes all the more difficult if the business that one is operating is mid sized or a large scaled one and you have to make sure that you hire the right people to do your work. Bookkeeping is one of the most important aspects of any business and it is crucial for you to keep a proper track of all the financial dealing of the business to know exactly how you are faring in the business.
Bookkeeping NYC services are provided by several vendors that are operating in New York City. What you have to do for your business is find out one vendor that will do your work efficiently so that you can have all the things arranged in a proper order. Most business organizations know and realize that bookkeeping is one of the most important aspects of their business, but often they end up neglecting this. So if you have not yet thought seriously about arranging your financial records properly, you must do this immediately. A little bit of background study on the accountant and bookkeeper that you hire for your work will ensure that you do not face any problems while handing over the work to the third party. In fact when you outsource the work of bookkeeping NYC you can end up earning profits as well.
You must understand that finance and accounts are something that only a professional can deal with. You may feel that buying one of those accounting and bookkeeping software can help you out in this, but if a person does not have the basic knowledge about accounting there is no way that they can work with the software. It is all together a different scenario if you are running a small scale business you will not have any problems for this. You are running the business and you know exactly what financial transactions are taking place and this is very easy to manage and handle. Every thing in this business is done at a very basic level and that is why it becomes easy to handle all this things efficiently.
The tax paying season is the one time when bookkeeping NYC professionals become very busy as they have to put in proper order all the numbers that is required for calculating the taxes. To avoid last minute rush and delays it is very important for you to have the things in the proper order and calculate your taxes accurately. Bookkeeping NYC officials are highly trained and they know how to calculate the taxes for all industries.

Accounting Systems - Are They Demons In Disguise Managing You?

2007-09-27T04:48:00.002-07:00

Most business owners have a terrific, on-going, love-hate relationship with their accounting system or its software. The reason for this, in my opinion, is that accounting systems actually have a dangerous little betrayal mechanism built into them that is secretly masked as something that is “supposed to help you.”
What is this betrayal? Accounting systems cannot tell you how to manage your money to your best advantage. They only tell you, after the fact, if you did well or made mistakes. This means the agreed-upon financial system that we rely on to help us, only has the ability to tell us what happened in the past - not how to handle our money in the future to fix money management mistakes and get better results.
You might think the subject of accounting seems complicated and mysterious. Accounting is simply recording what occurred after money came into a company or a household. It keeps track of how much money came in and where that money was spent; pure mathematics, no thinking involved.
Any standard accounting system is actually a look back into the past. It tells you how much was made or lost, and how much money is currently owed. While this is important to know, it can put the company or individual in a position of being controlled by the money - always making financial decisions based only on how much money is left in the bank.
On the other hand, financial planning is done by looking toward the future. Planning occurs BEFORE the money comes in and BEFORE it is spent. This puts the company or individual in control of the money. If you can control the money, then you can control your financial future.
Planning how to get in more income and implementing those plans is essential for everyone. Nothing stays stable for very long. It either goes up or goes down. Income is at the mercy of this natural law. An individual or company has to continue to push income up, while cost of living increases, rising prices and taxes eat away at income growth.
To be profitable and create wealth, reducing expenses so you are operating within your income is sometimes necessary. But, be careful to makes sure you don’t cut expenses in areas where it would reduce your ability to produce income. Careful spending on items that bring more money back in than was spent is the goal for responsible financial planning.
Many business owners make the mistake of cutting back on marketing and promotion when that is the only way they will get in a constant flow of new and repeat customers. Using existing cash and resources in a way that prevents waste and generates more income is vital. All of these actions require planning before doing. That is operating in the future. Thinking is definitely required.

Introduction to Merchant Services

2007-09-27T04:48:00.001-07:00

Every business needs to have a method of processing payments. Cash and checks have been the most standard form of payment for centuries, but in the modern world of credit cards and digital transactions, businesses need processing services that comply with the public convenience of credit card transactions. These kinds of transactions are made possible through merchant services. Understanding the concept of merchant services and merchant accounts will affect the sales, revenue, and profit of any business.
Merchant services, or merchant accounts, help a customer’s bank or credit card company route payments to a business account. This account is linked to a specific credit card processor that collects the data from the customer, and the merchant services insure that the payment is processed and deposited into the business account. The merchant account can be linked to an online payment gateway, an actual credit card machine, or even through a telephone system, making transactions immediately and securely.
Merchant service providers are specialized companies or independent sales organizations that make credit card payment processing possible for small businesses. Financial institutions like banks and credit unions also provide merchant services, although the qualifications are often more strict and interest rates slightly higher. Independent merchant service providers can usually be more flexible, and as a result small business owners often choose them over banking institutions. Merchant accounts are not the only way to accept credit cards as a business, though they are usually the fastest, most secure, and economic option.
A business can also contract through a company that provides processing on their behalf. Larger percentages are taken from the payment amount and it appears much less professional if you are planning to collect payments over the Internet. A popular example of a third party processor is Paypal. It is possible to set up a website so that payments route through Paypal processing. However, this means the customer will be prompted to leave the business website while processing their payment on Paypal. They will then be prompted to return to the business site. This appears much less professional, and can sometimes confuse a customer. In the end it will also be much more expensive.
With a merchant account, payments are made immediately through the business website and funds are deposited the same day, or even instantly. If you only intend to process payments over the phone, a third party is less confusing, but again, the transaction charges will be higher. Merchant accounts are also required to process payments through an actual credit card machine. As a business owner, it is important to determine how payments will be processed to choose the best type of processing. In most cases, merchant services will be the fastest most inexpensive processing method, producing the fewest number of headaches.

Do You Want To Pay Less Tax? - Part III

2007-09-27T04:47:00.002-07:00

There are 5 factors in which the accounting professional will take into consideration in determining the fee.
The complexity of the business depends on the nature of the business. It will determine the amount of time and effort to record the business transaction. It will layout the guidelines as:-
- how transactions are to be recorded,
- how to calculate cost and the appropriate allocation
Service based and product based business are two common business nature.
Service based business sell services. It is difficult to associate the cost of providing the services. In general, most small service based business would do away with ascertaining the cost of service provided. They would take the revenues generated from the services and less all deductible expenses to attain their net income. This nature type requires lesser time and effort compare to product based business.
Product based business sell products through various channels. It can be single product or multiple products. Stock inventory management is preferred for this business type. Itemized costing will be tedious and time consuming. More setup works and tracking are required. However, it can capture the cost of sale accurately thereby presenting a fair and true view report of the business.
The support from the business operator themselves can lighten the workload of the book keeper. The operators can help the book keeper to prepare some documents / data for the transaction records. This summarized information will cut down the time and effort on the recording.
The frequency of the report very much depends on the business operators. The book keeper will charge a higher fee if the reporting is more frequent. A yearly reporting will cost much lesser to a monthly reporting requirement.
The detail of the report would be a factor only if the business operators require additional information from the book keeper. The book keeper will furnish the business operators with a standard industry set of reports. If an additional report is requested, it may subject to adjustment in fee charge.
The support from the accounting professional would be the extra services other than the book keeping service. It could be filling out a survey requested by statutory board, assistance to obtain credit line from banker, etc.
The best way to save and pay less tax is to pay the correct tax. It is recommended to properly record the business transaction and report the correct earning. Outsourcing the book keeping function is a definite solution to business with limited or no resources to perform the duties.

Do You Want To Pay Less Tax?

2007-09-27T04:47:00.001-07:00

It is every company, business and income earning individuals wish to pay lesser tax on the income earned. However, paying lesser tax and tax evasion is separated by a thin border, which can be costly if not dealt with carefully.
Big organization engaged experienced knowledgeable tax professionals to work out the company tax liability. These professionals take into account all deductible expenses, capital allowances, etc, in a legitimate manner to achieve their objective, pay lesser tax. On top of it, the organization employs accounting professional to maintain the transaction records of the business, detailing every sales, purchases and expenses. These records enable the auditors and tax professionals to accomplish their objective.
The cost of hiring accounting professionals, tax professionals will be offset against the saving in tax liability. The saving can be very substantial so big organization can justify the expenditure.
What about small businesses? Most small businesses can afford accounting personnel to track the business record and is willing to spend the money. They will then outsource the tax computing function to a third party tax agent and pay a nominal fee for their services.
Individuals running businesses can opt for the same method to declare their tax liability. But many did not do so, instead, prefer to “estimate” their earning and report it for tax purposes. Some small business operators also choose to report “estimate income”. This is a dangerous move. Among this group of individuals and small businesses are hawkers, coffee shops and food courts operator, generally from the food industry.
These groups of people from the food industry generally remiss in keeping records of their earnings and expenses. Many only estimate their incomes, and do not submit documents to back these claims. The common mindset was to save the cost of hiring and paying lesser tax than actual.
Early in the year, the Inland Revenue Authority of Singapore (IRAS) hauled up a dozen of hawkers and companies running food stalls for trying to evade taxes.
On conviction of tax evasion, tax evaders and those who abet them have to pay a penalty equaling three times the tax lost by IRAS. In more serious cases, they can be slashed with penalty and jail terms.

Web Based Accounting - Walk Shoulder To Shoulder With Time

2007-09-03T02:59:00.001-07:00

With expansion of internet services everything has become easier then before. Today solutions for every problem are readily available just through few mouse clicks so how your accounting problem can left unanswered. To lighten your accounting burden internet has web based accounting that can solve your accounting hassles just through few clicks. This is a clever business trick to gain more profit while investing less amount of money.
Web based accounting is an accounting service that resides on web servers. People from all over the world can access that server and can manage accounting records there. Organizations can manage accounts with web based accounting in a very cost- effective and convenient way. They just need to have a browser on that server and for that a very little amount of money will be charged as monthly rental. Instead of paying heavy amount to other accounting services businesses can get better services through web based accounting. It is an effective way to manage accounting and financial records thus more and more businesses are considering it for accounting.
Web based accounting is beneficial not only for businesses but also for organizations that spend most of their time on internet. As this system is very easy to use any person who is having an internet connection, browser on server and access to that browser, can use it. This makes it accounting management convenient for all employees through out the organization. It is effective and no extra efforts and cost is needed to install it in any organization. Operating a web based accounting easy so business do not need to hire it professionals to handle this. This service itself provide your accounting system 24* 7 monitoring through certified staff and there is no additional cost for that as their cost is included in monthly rental. Once an organization creates account in the server and gets access to browser, employees or any authorize person can open it and can start doing entries.
People who can not give proper time to accounting maintenance due to their hectic schedules can also manage their daily entries from anywhere even from home. Small business that do not have proper accommodation to establish an office can also hire people who are willing to work from home as this system is easily accessible. Many people consider web based accounting as an insecure option because of their short knowledge. They thing that data can lost if the server is down or in a phase of maintenance but the fact is that with web based accounting you don’t need to worry for back-ups also and your data is safe as it can not be somewhere else.
With web-based accounting solutions, entries and back-ups are maintained on a daily basis which protects businesses from data loss. Web based accounting keep on doing enhancements in their services so that businesses get everything updated. Needless to say that is an effective solution to spice up your business as the success saga of web based accounting is self narrative.

Bookkeeping Outsourcing - An Affordable Account Manager

2007-09-03T02:58:00.004-07:00

For business either it is small or big, bookkeeping is such a task which decides that how far the graph of success will rise. Bookkeeping is a droning task and it takes long hours to manage accounts in an effective manner but on the contrary it is the backbone of any business and need to be maintained properly. Though companies hire a huge manpower to perform this task of financial record keeping but it can be very expensive as it involves salary and other expenses of those employees. For a cost cutting, accurate and reliable bookkeeping management bookkeeping outsourcing is the best option, a company can ever have.
Bookkeeping outsourcing not only makes bookkeeping task easy but also contributes highly in the growth of that organization. Bookkeeping is not just a single task it is an integrated form of multiple tasks like daily, weekly and annual record keeping so a slight mistake can crate big crisis. At the time of tax filing when everybody is in hurry to submit details of financial and accounting statements you really need someone to take off that responsibility from your shoulders and make taxation easier. At this point of time bookkeeping outsourcing sets you free from banging your head on annoying taxation process. With the help of bookkeeping outsourcing you can be able to manage your business more effectively.
Many companies and organizations hire efficient and highly qualified accounting professionals but on the other note it comes as an extra burden for company. Hiring proficient bookkeeping professionals may work to some extent but their high cost to company can go out of the budget.
Bookkeeping outsourcing is not an expensive matter and fits within the budget. Bookkeeping outsourcing is the exceptional service that unfolds the equation of success by providing accurate reliable and readily available financial records and data. It is the fact that people who own small businesses try to handle every section on their own but somehow it affects the growth of organization. For sapling business owners, it is must to concentrate on searching new ways of growth rather than spending a big amount of time on tallying financial records. The best way to maximize the efforts is to hire a bookkeeping outsourcing firm that sets them free from account keeping hassles and makes statements available whenever needed. Just think that how a sapling business will grow if it is spending so much on its employees.
In any company Bookkeeping in not the only important task there are many other sections that need attention and time. Only running after maintaining a good bookkeeping system can cause poor performance of other sections so isn’t it a good idea to keep accounting section separate from other departments through bookkeeping outsourcing? Professionals of a bookkeeping outsourcing firm handle the only task of bookkeeping and that is basic the reason behind their excellent performance. So if you think that professional you hired for your company are not handling the task efficiently and the chances of bungle are high then you must try bookkeeping outsourcing.

Accounting Outsourcing in India Helps to Reduce Accounting Risks

2007-09-03T02:58:00.003-07:00

The accounting or bookkeeping aspect of any business can be tiring and at times really time consuming. One needs to understand that maintaining accurate account details of a business is not a mere cakewalk and that one needs to have immense expertise in drafting accurate accounting details of the firm. When one sits to add up all the expenditure that the firm has incurred and then tries to calculate the profit or the loss the firm has gone through, one realizes the amount of time they have spent to get the accurate details.
In fact, this entire thing of drafting the accurate accounting details can actually be an entire day’s work. It is only a qualified chartered accountant who can draw the accurate conclusions and help a firm understand the real accounting details. However, getting hold of an experienced and a qualified chartered accountant might not be a very easy task. In this case, what one can do is simply hire the services of an accounting outsourcing in India firm.
An accounting outsourcing in India firm can be the best firm to opt for when you need to get the accurate accounting details of your firm and you need to understand the profit or loss your firm is incurring. Now accounting or bookkeeping details include n number of things. It includes the maintenance of balance sheets, trial balances, drafting of the profit and loss statements, maintaining the journals, ledger accounts, bank reconciliation statement and various other documents. In fact, accounting work never ends and it is the accounts department of a firm that always remains active and alert. However, when you know that these are the various details that can help your business boost or fall, you will make sure that you get the best person to do this job. In this case, a professional from a renowned accounting outsourcing in India firm can help you get the best accounting services for your firm.
Now, coming across a reliable, renowned and authentic accounting outsourcing in India vendor can be a little time consuming. However, when you come across an accounting outsourcing in India vendor you can be rest assured that you will not need to worry about the accounting aspect of your business. You can look out for the various accounting outsourcing in India vendors in the internet and in newspapers. There are various accounting outsourcing in India vendors who offer their services to large as well as small-scale businesses. One thing you must understand is that each business is some way or the other, different from each other and so are their accounting needs. Therefore, you should hire the services of an accounting outsourcing in India vendor whose services suit your business needs the best, and who can understand the accounting needs of your firm.
There are certain things that you will also need to take care of. You will have to make sure that you give out all the detailed accounting information of your firm. In addition, once you hand over the accounting details of your firm to a professional from an accounting outsourcing in India vendor, you will still have to stick around to see that the person is not misusing your data and that the work he is doing is beneficial for your firm. After all, it is your business, your baby, so you will have to be caring and conscious about it.

Accounting Tips For Those Using A CPA

2007-09-03T02:58:00.001-07:00

Accounting is a complicated and very important part of your business. A business owner should take the time to get their accounts in order. If you are using a certified public accountant there are certain things you need to know. Here are a few important things to do when using a CPA.
One thing you should do is to try to work with your accountant regularly throughout the year. This will allow you to plan out tax strategies that have to be implemented early in the year. These are things you may not be able to implement in December.
Another thing you should do is organize your receipts in an orderly fashion. Do not simply throw all of your receipts in a box and expect your accountant to be able to make heads or tails of them. The more organized you are the more you will save on accounting costs.
One more tip is to save all of your receipts. Even if you are not sure if an expense is deductible or relevant go ahead and save the receipt. It is better to have too much documentation than too little.
My final tip is to use compatible accounting software. Make sure that you and your accountant use the same software. This will prevent any conflict and will save you money because your accountant will be able to easily access your information.
I hope these tips will make using a CPA easier for you. Like I have already said and like you already probably know, accounting is an important issue and one that should be taken seriously. Do everything you can to make the process as easy as possible.

Bookkeeping NYC - Stand Apart From Crowd

2007-09-03T02:57:00.001-07:00

As we can see everyday, n numbers of people register their organization with a dream to be a well known name in the corporate world. Just few of them get success in realizing their dream as they walk while their rivals run. Standing apart in the crowd of mushrooming businesses is the only condition to make that dream true. A business can never grow until its all departments are properly managed. Business owners who cannot give sufficient time to monitor each record thoroughly, always live with a fear of erroneous financial records. At the end of financial year when major tasks like balance sheet preparation, profit and loss calculation and tax assessment take place, things get mess up and unmanageable. At that point of time they realize the importance of proper bookkeeping. Therefore, if you are owner of a sapling business then bookkeeping NYC can help you in avoiding such problems.
Bookkeeping NYC is your true companion that paves your way to success. In such a situation when you are new to the trends of corporate world you need to concentrate on improving revenues. This time is crucial for you and you cannot waste your time on monitoring and tallying financial entries therefore it is essential that you hand over your bookkeeping task to someone whom you can trust. Bookkeeping NYC is your best companion for such time, as it can lighten your bookkeeping burden. It handles every task efficiently either it is day to day bookkeeping or annual report making. Messed up or incorrect entries can restrict the growth of your business, as errors in daybook can lead to an incorrect balance sheet. Daybooks or monthly statements are the only basis to evaluate losses and gains, thus it is important to manage them properly.
Bookkeeping NYC understands the requirement of your business and works accordingly. With this, you will be able to increase your revenues, as this is cost effective and saves a large amount of money. Once you will be free from bookkeeping hassles you can give more time to strategy making, as it is must for expansion. Bookkeeping NYC is dedicated to provide you with best bookkeeping services. Highly qualified accounting professionals of a bookkeeping firm possess expertise in managing bookkeeping tasks that is why most of the budding organizations prefer a Bookkeeping NYC firm.

SOX Complaince - Regulating Accounting Standards

2007-09-03T02:56:00.000-07:00

Organizations rely on top level managers to understand the accounting principles involved in making their company run successfully. The financial performance of the organization is actually the heart of the company, which makes every other department and process flow smoothly. In order for this to be achieve, the organization must follow specific accounting standards, also known as GAAP or generally accepted accounting principles, enforced by the Sarbanes-Oxley Act. This act was developed and put into legislature by the US House of Representatives in 2002, after corporate financial scandals were revealed. The government wanted to put a stop to organizations following the same financial path as Enron and WorldCom.
Organizations are required to be SOX compliant and if found incompliant, they could face very harsh penalties such as fines and prison time. The Sarbanes-Oxley Act requires organizations to report specific data on their financial annual reports. Such information which must be disclosed is internal controls, audit committee structures, and codes of ethics and conduct. Under this act, organizations must keep tract of all financial data and transactions that occurred and it must be saved for at least five years. But, who is responsible for all of this information? The CEO and the CFO are responsible for maintaining accurate records and for keeping the company under compliance. They are responsible for ensuring that all accounting standards are properly being met and that the organization is following correct accounting practices.
An example of how companies must comply with this act is how an organization handles its audit, both internally and externally. CEOs and CFOs are required to sign an attestation, which holds them liable for any financial reporting. This attestation is a formal legal document, which forbids financial officers from being able to testify that they weren’t aware of such financial transactions that occurred. This document state that these officers have reviewed all of the data and that they are responsible for any internal controls that have been taken place. This is all covered in Section 302 of the act.
Another complicated and strict part of the Sarbanes-Oxley Act is Section 404. This section of the act forces organizations to monitor and implement strategic changes that effect how their entire financial processes are ran. This is to protect the organizations from risk. This includes their information systems and how their systems are operating and secured. The PCAOB, Public Company Accounting Oversight Board is a newly created organization that helps external auditors decipher whether or not the organizations they are auditing are up to par with SOX compliance and if they should sign off on the attestation. If internal controls are inadequate, whether any false data has been reported or not, organizations could still be penalized and found incompliant.

Writing Single Column Cash Book, Double Column Cash Book and Triple Column Cash Book

2007-06-07T05:43:00.001-07:00

Single Column Cash Book
It has only one. column on each side for amount In fact, it is written just like cash account in the ledger (being real account what comes in is debited; what goes out is credited). This form of 'cash book has the same ruling as that of a ledger account There is no need of having a cash account in the ledger. The purpose is ably served by cash book itself. Posting from debit (receipt) side of the cash book is done to the credit side of concerned accounts and from the credit side of cash book to the debit side of concerned accounts.
Balancing
The cash book is balanced in the same manner as a ledger account. As more cash cannot be paid then what we have, therefore the cash balance (if any) must always be a debit balance. Therefore, the receipts column will always be bigger than the payments column. The difference will be written on the credit side as "By balance c/d". The totals are then entered in the two columns opposite one another and then on the debit side the balance is written as "To balance b/d". It shows the cash balance in hand in the beginning of the next period. To verify the accuracy of the entries made, the cash book should be balanced frequently (preferably daily). The balance as per cash book must tally with the actual cash in hand.
Double Column Cash Book
As the phenomenon of offering and accepting cash discount is intimately associated with the act of receipt and payment of cash, therefore, the utility of cash book increases if the columns of discount are also provided in it. Cash book having additional columns for discount is known as double column cash book.
Triple Column Cash Book
These days it is difficult to carryon any business without having dealings with the bank. Normally bulk of its funds is kept by the business at a bank in a current account where frequent withdrawals and deposits are permitted. Bank transactions, i.e.. payments into and out of bank are more numerous than cash transactions. Therefore, it is appropriate as well as convenient that cash book should have one additional column on each side to record moneys deposited at bank arid payments out of the hank. The additional advantage to having this type of cash book is that bank account is not required to be maintained in the ledger.
Before we explain the method of writing up the triple column cash book you should be familiar with the concept of 'contra entries'. Also note carefully the treatment of cheques received and issued by the business.
Contra Entries
In the three column cash book there will be some cross or contra entries i.e.. transfer of money from cash to bank (amount deposited) and vice versa (amount withdrawn from bank for office use). In all such cases both entries occur in the cash book and no ledger entry is required. This is indicated by a contra sign (C) in the folio column indicating thereby that the double entry aspect of this transaction is complete and it requires no posting to the ledger. Treatment of cheques in a triple-column cash book is explained below:
1. Cheques received and deposited in the bank on the same day: When the cheques received from the debtors are deposited in the bank on the day of receipt itself the entry is recorded in the bank column on the debit side of the cash book there from debtor's account receives credit.
2. Cheques received but deposited in the bank on a later date: At the time when cheque is received it is recorded in the cash column on the debit side of the cash book and the date on which it is deposited in the bank, Two steps are required:-
(2.1) Enter the same in the cash column on the credit side of the cash book "By Bank A/c" and (2.2) Enter it in the bank column on the debit side of the cash book' 'To Cash A/c". Thus it assumes the form of Contra entry on the day of depositing the cheque into bank received earlier. However, if there is no information as to the date of deposit of the cheque, it should beassumed that the cheque was deposited in the bank on the date of receipt.
3. Cheques received and endorsed in favor of some creditor :- On receipt, cheque is recorded in the cash column on the debit side and at the time of endorsement the same is recorded in cash column on credit side, By Creditors Ale.
4. Bearer cheques may be en cashed at the counter of the bank or it may be deposited in the bank. In case it is en-cashed it should be recorded in the cash column on the debit side, in case it is deposited in the bank the same should be recorded in the bank column on the debit side of the cash book.
Cash book is a Journalized ledger
Often a question is asked whether cash book is a journal or ledger? It is journal in the sense that all cash transactions are primarily recorded in the cash book with narration and therefore, these are posted to the relevant accounts in the ledger. Cash book is also ledger in the sense that it serves the purpose of cash account and bank account (in case of triple column cash book). No separate cash account is opened in the ledger where cash book is in existence. Thus cash book is a unique combination of journal and ledger. It is popularly known as journalized ledger.
Similarities of Cash book with journal
(1) Cash transactions are recorded in the cash book at the time of origin i.e. primary book.
(2) Transactions are recorded date-wise.
(3) Transactions from cash book posted to the relevant accounts (except cash account) in the ledger.
(4) Cash book contains ledger folio as in the journal.
(5) Narration is given for each entry.
Similarities of Cash book with ledger
(1) Form of cash book resembles With ledger. Two sides left hand side is the debit side (receipts) Right hand side is the credit side (payments).
(2) Words "To" and "By" are used as in the ledger.
(3) No separate cash account and bank account are required in the ledger. Thus cash book is the book of final entry for cash and bank transactions.
(4) Cash and bank columns of the cash book are periodically, balanced just like ledger accounts.

Maintaining Cash Book, Posting and Balancing

2007-06-07T05:42:00.002-07:00

In the case of a new business the amount will be written in the cash column if the cash is introduced and in the bank column if it is directly deposited in the bank with the words, "To Capital Account" on the debit-side of the cash book. In the case of a continuing business the opening balances are written as "To Balance b/d" Receipt side of the cash book. (Dr. Side)
It is used to record all receipts both in cash and by cheques as also to record the discount allowed to our debtors while receiving the payment. Cash receipts are entered in the cash column whereas amounts received by cheques are entered in the bank column; (It is always advisable to follow the practice of crossing all cheques received as "Payees A/c only" and to be sent to bank for collection. This provides safeguard against possible embezzlement) and discount allowed in the discount column.
Posting from the debit side of the cash book
It is to the credit of the respective accounts-in case if personal account credit is to be given for cash or cheque received plus discount allowed. At periodical intervals cash and bank columns will be balanced and the balance will be carried down to the next period whereas discount column will be to totaled and posted to the debit side of "Discount Allowed" account to be maintained in the ledger.
Payment side of the cash book (Cr. Side) is used to record all payments both in cash and through cheques as also to record the discount received or availed by us from our creditors while making payment to them. Cash payments are recorded in the cash column, payments through cheques are entered in the bank column and discount received in the discount column.
Posting from the credit side of the cash book
It is to the debit of the respective account-in case of personal accounts debit is to be given for the total of the payments made and discount received. At periodical intervals the discount column will be totaled and posted to the credit of "Discount received account" in the ledger.
Balancing
The cash columns are balanced exactly in the same manner as explained in the case of single column cash book. Discount columns are totaled but not balanced. Bank columns are also balanced just like cash columns.
Since the banks allows overdraft therefore it is possible for, the business to withdraw more than the amount deposited. In such a case the total of the bank column on the credit side will be bigger than the one on the debit side. The difference is written on the debit side as "To Balance c/d".
Bank (Cash Book) A/c
Whenever cash is being handled by the employees there is always danger that employees might embezzle cash. In order to minimize this risk many of the business units follow this policy:
(1) All cash received is deposited in the bank intact i.e.. no part of the cash received is used for meeting day-to- day payments;
(2) All cheques received are also sent to the bank for collection;
(3) All payments are to be made by the issue of cheques.
However small payments like carriage, postage, local conveyance etc., which. by nature, cannot be, paid by cheque should be dealt through another cash book known as "Petty Cash Book". We will discuss it later in this very chapter.
If the above scheme is adopted, then there is hardly any chance that the employee receiving the cash can misappropriate cash either temporarily or permanently. The only care you should exercise is to see whether the daily total of receipts tallies with the amount deposited in the bank (either on the same day or on the next working day) or not.
This can be verified from the counterfoil of the 'pay-in- slip'. If you decide to make use of this type of .cash book for your business then it should have only two columns on each side, Bank &Discount. There is no need to have cash column. It may also be called as "Cash book without cash column" or "Bank cash book".
How to write up? All receipts. whether in cash or by cheque should be entered on the debit side of the book in bank column. All payments to be entered on the credit side of the book in bank column. Treatment of discount allowed and discount received' is the same as discussed earlier. Posting is also similar to as described under triple column cash book.

Analytical Cash Receipts and Cash Payments Books

2007-06-07T05:42:00.001-07:00

The Performa of analytical cash receipts and cash payments books relating to the insurance business appears in this page. Any business can modify suitably the proforma depending upon its own requirements.
Petty Cash Book
Every business has to make payments involving smaller or petty amount, e.g.. carriage, cartage, cooly hire, postage telegrams etc. Such payments, by their very nature cannot be made by cheques. It is usual for the business units to maintain a separate cash book to record small payments only. Such cash book is known as Petty Cash Book. It relieves the main cash book of numerous transactions involving petty sums and also helps in reducing the work-load of chief cashier.
Imprested System
Under this method, petty cashier is provided with a fixed amount of money known as imprested or float which is sufficient to meet the needs of balancing period. Balancing period may be a week or fortnight or month. At the end of balancing period the petty cashier is given fresh cheque of the amount equal to his payments during the same period. Thus, in the beginning, every time, he will start with the amount fixed : i.e. imprested or float.
Usual method of maintaining petty cash book is to rule it for obtaining analysis of expenditure. The book will have one column on the debit side to record receipt of cash (only from the main cashier) and credit side is divided into different columns. Each column is reserved for one particular type of expenditure. Name and number of columns in each case will depend upon the requirements of the business.
Advantages
(1) Reduces the work load of chief cashier.
(2) Effective control can be exercised over small payments because each payment has to be supported by vouchers and vouchers are examined frequently i.e.. at the end of each balancing period.
(3) Saving in labor because each payment is not required to be posted in the ledger separately.
Accounting Treatment
The periodical cheques drawn for petty cash are entered on the credit side of the cash book and debited to Petty Cash A/c in the ledger. Such amount shall also be entered on the debit side of the Petty Cash Book (for memorandum purposes). At the balancing period the Petty Cash Book will be analyzed under the different columns provided in it. For each column provided init (except ledger and miscellaneous columns) one nominal account is opened in the ledger. Each expense account or nominal account will be debited and Petty Cash Ale will be credited. This should be done by means of journal entry. Reason is that here petty cash book is considered to be a memorandum book only.
Analytical or Columnar Petty Cash Book
While recording the transactions in petty cash book if all the expenses are analyzed and entries are recorded in cash book on the basis of this analysis. such petty cash book is called 'analytical petty cashbook'. For recording the expenses in this book, whole of the petty expenses are classified into few 'heads' and a decision is taken as to which of the petty expenditure is to be recorded under which head. All expenses are recorded in the books according to the decision. The description of each expenditure is recorded in particulars column but the head of expenditure recorded in separate columns. At the end of period this petty cash book is balanced in the same manner as in case of simple petty cash book.

Accounting Verification by Trial Balance, Preparation of Trial Balance

2007-06-07T05:41:00.002-07:00

By now you should have observed that for every debit entry that is given to an account, or for every series of debits given to several accounts, there is a credit or a series of credits of an equal amount given to some other accounts and vice versa. It follows, therefore, that any time the debit balances standing in all the ledger accounts will equal to credit balances.
At the end of the financial year (or at any other time) the balance (or totals) of all the ledger accounts arc extracted, and a schedule is prepared in journal form to test whether in fact, the total debits equal the total credits. This schedule of balances is called a Trial Balance.
If the totals agree-what does it mean? It provides a reasonably reliable check and proves the arithmetical accuracy of the book-keeping entries.
If the totals do not agree-what does it mean? It shows that there is definitely something wrong b (some error) either in thy passing of the double entry or in the extraction of balances.
Definition of Trial Balance
According to Carter, "Trial Balance is the list of debit and credit balances, taken out from ledger, it also includes the balances of cash and bank taken from cash book."
According to Pickles, "The statement prepared with the help of ledger balances, at the end of financial year (or at any other date) to find out whether debit total agrees with credit total is called Trial Balance".
According to Rowlland, "The final statement of balances, joint and mixed, is called Trial Balance".
Ideal definition, "On the basis of different definitions given by different accountants at different times, following ideal definition of trial balance can be adopted :
"According to double entry system, after recording all the transactions into journal and posting them into ledger and ascertaining their balances, the statement prepared to ascertain the arithmetical accuracy of accounts on a certain date is called Trial Balance. It is the statement, on the basis of which Trading, Profit and Loss Account and Balance Sheet is prepared".
On analyzing the above definition we obtain the following characteristics of Trial Balance :-
(1) According to double entry system. after recording all transactions until all Ute business transactions are journalized, and posted, strictly according to double entry system, a trial balance can't be extracted.
(2) After finding out the differences of debit and credit sides of all the ledger accounts :- All the accounts opened in ledger totaled and balances (differences) are ascertained, only then trial balance can be prepared.
(3) Prepared on a particular date : Generally trial balance is prepared at the end of accounting year, but it can also be prepared monthly, half yearly or quarterly.
Preparation of Trial Balance
Trial Balance may be prepared either taking into consideration the total of each side of every ledger account. Thus you may follow either "Total Method" or "Balance Method".
Total Method
If the total of debit sides of all the accounts in the ledger is placed in one column of the list and similarly total of credit sides of all the accounts in the ledger is placed win another column of the list then this list of total (Trial Balance) will be known to have been prepared with the Total Methods.
Balance Method
Second method of preparing Trial Balance is to find out the difference of the ' sides of every account. If debit side of an account is bigger, than insert the difference on the credit side of the account. It is known as 'debit balance'. If credit side of an account is bigger, then insert the difference on the debit side of the account. It is known as 'credit balance'. Now prepare list of balances (Trial Balance) by putting all debits balances in one column and credit balances in another column. Such method is known as Balance Method.

Advantages Objectives of Trial Balance, Trial Balance Limitations - Shortcomings of Trial Balance

2007-06-07T05:41:00.001-07:00

Advantages (Objectives of Trial Balance)
1. It ensures that the transactions recorded in the books of accounts have identical debit and credit amount.
2. Balance of each ledger account has been computed correctly.
3. Balance of each and every ledger account has been transferred accurately and on the correct side of the sheet on which trial balance has been prepared.
4. The debit and the credit columns of trial balance have been added up correctly.
5. Preparation of final accounts is not possible without preparing trial balance first.
6. Agreed trial balance is a prima facie evidence of the arithmetical accuracy of the accounting books maintained.
7. Errors which are revealed by preparing trial balance (listed below) are rectified even before the preparation of final accounts.
Errors revealed by (the preparation of) trial balance
If trial balance does not agree, the disagreement may be due to :
(1) Omission to post an amount into ledger: If an item is not posted from journal or subsidiary book to ledger, two sides of trial balance shall not agree, e.g., if goods sold on credit to A are recorded properly in sales book but not debited to A's account' in ledger, the debit side of trial balance shall fall short.
(2) Omission to post an amount in trial balance: It is natural if balance 'of an account is not recorded in trial balance the two sides of trial balance shall not agree which is an indication of error in accounts.
(3) Wrong totaling or balancing of ledger account: If any account in the ledger is wrongly totaled or balanced, then also the trial balance shall not agree.
(4) Wrong totaling of subsidiary books: If the total of any subsidiary book is wrongly cast, it would cause a disagreement in the trial balance, e.g., if purchase book totaled Rs. 2,500 instead of 2,050, the debit side of the trial balance shall exceed the credit side by Rs. 450.
(5) Posting on the wrong side: When an item is by mistake posted on the wrong side of the ledger account it would cause disagreement in the trial balance, e.g., if Rs. 200 have been allowed as discount and while posting into discount account the amount has been credited to discount account. It will result in a difference of Rs. 400 in two sides of trial balance.
(6) Posting of wrong amount: If wrong amount is posted in one of the two accounts while posting, it would immediately cause disagreement of trial balance e.g. goods worth Rs. 690 have been sold to 'X' but 'X's account has been debited with Rs. 960. It will increase the debit side of trial balance by Rs. 270.
Trial Balance Limitations - Shortcomings of trial balance
An agreed trial balance does not prove by itself that :
1. All transactions have been correctly analyzed and recorded in proper accounts. For example wages paid for installation of fixed asset might have wrongly been debited to wages account.
2. All the transactions have been recorded and nothing has been omitted.
3. Certain types of .errors (listed below) remain undetected even after the preparation - of trial balance.
Thus it is quite well known and said that "agreement of trial balance is not the conclusive proof of the accuracy of the books maintained."
Errors not revealed by (the preparation of) trial balance
Normally four types of errors are not revealed by mal balance. So two sides of trial balance will although agree, even then our accounts may not be free from errors. Such errors are :
(1) Errors of omission
If a transaction is not recorded in books of original entry then both debit and credit effects of the transaction will be omitted and trial balance shall not be effected, e.g. goods sold to John worth Rs. 1,000. The entry is not recorded in the books at all, it means neither John's account is debited nor sales account has been credited. As both sides have been effected by equal amount so the mal balance shall agree.
(2) Errors of commission
These errors are the result of carelessness of accounting staff and in some of the cases such errors do not effect the totals of mal balance, e.g. wrong recording in the books of original entry or posting to wrong account with correct amount and correct side e.g. goods sold for cash worth Rs. 1,000 but Cash Nc debited with Rs. 100 and sales credited with identical amount.
(3) Compensating errors
Such errors neutralize the effect of the errors committed earlier. When one error is committed which affects the total of mal balance but in the mean time another error of opposite effect is committed which neutralizes the effect of earlier error, e.g. forgetting to post Rs. 500 on the debit side of a certain account may be compensated by under posting of Rs. 500 on the credit side of some other account or by over posting of Rs. 500 in debit side of some other account.
(4) Errors of Principle
Whenever any income or expenditure is not properly allocated between capital and revenue, the mistake so made is called a mistake of principle, e.g. if furniture purchased is debited to purchases account, building sold is credited to sales account, wages paid for installation of machinery debited to wages account, then the error of principle is committed; the trial balance shall remain unaffected by such errors.

Location of Errors through Trial Balance

2007-06-07T05:40:00.000-07:00

Whenever a trial balance disagrees the following steps can be taken to discover the errors:
(1) Divide the difference by two and find out if some figure equal to that (half the difference) appears in the trial balance. It is possible that such item might have been recorded on the wrong side of mal balance, causing double the difference.
(2) If the mistake is not located, the difference should be divided by 9 and if difference is evenly divisible by 9 the error be due to transportation of figures, e.g. Rs. 590 wrongly recorded as 950, the difference is (950-590) 360 and it is evenly divisible by 9.
(3) The next step is to recheck the debit and credit totals of trial balance to satisfy that trial balance has been cast correctly.
(4) If mistake remains undetected, make sure that balances or totals of all the ledger accounts have been correctly shown in the trial balance. Special care should be taken to ensure that cash or bank balances have been duly incorporated in the mal balance.
(5) The next step should be to recheck that all the closing balances from preceding year's balance sheet were correctly carried forward and recorded in respective accounts in the ledger.
(6) Further the totaling and balancing of the ledger accounts should be redone so as to be sure that there is no mistake on that account.
(7) Check the totals of schedule of debtors and creditors and find out that the balances have been included in the list.
(8) If difference is round sum, it is advisable to check casting and carry forwards. But if the difference is odd sum the balancing should be checked minutely.
(9) Check all the figures badly written.
(10) Even then if error is not located, all the accounts should be checked thoroughly as follows:
(11) Journal will have to be checked to ascertain that total debits and credits of each entry agree.
(12) Total of subsidiary books i.e. sales book, purchases book to be checked to find that correct posting of the respective accounts has been done.
(13) Checking should be done to ensure that discount column; total of cash book have been correctly posted and entered in trial balance.
(14) If all these efforts fail to locate the errors a full rechecking of additions, posting and balancing will have to be done and it would be advisable that the work of re-checking is done by a staff different from those who had done the initial checking.

India Outsourcing Accounting Can Undertake Accounting Task Proficiently

2007-05-28T21:14:00.000-07:00

Accounting is one of the important aspects of any business. It needs a lot of care as it contains all the finance records of the company. India outsourcing accounting plays an important role for the business to make them work smoothly. Accounting is responsible to maintain the finance records of an organization. Outsourcing Accounting services plays an important role in the world of finance and accounting. Today there is extreme competition in the market and every business is in the rival to prove itself. For this they need to make some good strategies. The businesses undertake all possible measures to cut costs of their finance and accounting department and also to increase the productivity, improving profitability and creating strategic value to business. So, outsourcing accounting has seen a good response and the business owners are eagerly considering it.
India is well known destination for the accounting outsourcing. Today businesses have to face tremendous pressure and they are burdened with extra work. Such business organizations do consider it more keenly as they will get quality work done within their time frame. The companies are undertaking India outsourcing accounting as an effective tool for their business. You can make approach for your company to outsource accounting task at reasonable rates. You can get quality service with best professionalism from these firms. There are numerous companies who have made big money from accounting outsourcing. Infact, many more companies are moving towards this service to make it a strategy for their business growth. It has been seen a huge demand in the software outsourcing services. And so to cater to the huge demand, many firms are upcoming in this field to make outsourcing task more better.
In order to achieve best and profitable results from your business, you can consider India outsourcing accounting services. This technique will save lots of money and you can invest your saved money on the growth prospects of your company. You can trust on the vendor to outsource your accounting department to India or some other destinations that you want. Your business will surely make a good profit margin. This feature will bring down the burden of your work as accounting is such a big job that needs a lot of concentration. We are known with the fact that in order to drive a business, a good effort, time and resources are highly required. You have to look for every department that it runs smoothly right from sales, marketing, customer service and the administration.
You have to keep the accounting department well managed so that you keep up the fast and upward growth. It doesn’t matter how large or small your organization is, you have to keep your accounting department well maintained. Always remember to do some homework before you hire a company to handle your accounts. Accounting task is really a serious job and it needs to be done with utmost care. Even a slight mistake can make your business in loss.So, look for such vendor who is reputed in outsourcing task. In this way, you can relieve of getting a better job done for you. This strategy will save your time and money that you will have to spend on your employees to make them trained.

Surviving an IRS Audit With Minimal Loss

2007-05-28T21:13:00.002-07:00

Small businesses have a myriad of forms, financial reports, payroll, and other necessities that may require a bookkeeping service. If you are the owner of a small business and aren't sure if a bookkeeping service is right for you, the following five reasons may help you decide if investing in one is right for your business:
1. Save your time for what you do best! You are not an accountant; you are an entrepreneur. You have a great idea for your business and have a background in your product or service. You may not be trained to do bookkeeping. Do no waste your precious time on something for which you have no training. Save your time for running your business.
2. A bookkeeping service can save you money, in addition to time. A competent service will know the right forms to file with taxing authorities, so you will decrease the possibility of making an error. You may have to file federal forms, state forms, and/or local forms. You may have to pay income taxes or sales tax. Missing even ONE deadline can be costly for your business. A bookkeeping service will keep track of all of those deadlines for you, which will also cut down on your stress!
3. No more payroll worries, because with a bookkeeping service, payroll is a snap! The paper work involved with employing workers can be cumbersome. There are payroll deductions to calculate and forms to file with tax authorities. Deadlines are often confusing. A bookkeeping service will hand all these tedious tasks for you.
4. You will never have disorganized financial files again! After a bookkeeping service has prepared your returns or statements, you will get copies of everything. These copies will be presented in an orderly manner and will be ready to file when they hit your office. You will not need to dig through your desk to find pieces of paper or copies. Just go to the filed drawer you've dedicated to your bookkeeping files, and all of your information is available. Like magic!
5. Your bookkeeping service can become a financial partner in your business. If you need financial advice from time to time, the perfect person to ask is the one who is keeping your books. Your bookkeeping service will know the financial side of your business, backward and forward, and may be able to provide you with advice on loans, rental agreements, mortgages, or bank fees. Use the financial knowledge of your partner to help you and your business.
Overall, a bookkeeping service can offer your small business many positives. When considering which service to use, ask how long they've been in business, some referrals from current or past clients, and call the Better Business Bureau to be sure there hasn't been any complaints filed against them.
Once you find the right bookkeeping service for your small business, you will be amazed at the time you save, the reduction of stress, and the ease in which all your finances are taken care of.

Operating Cash Flow Revisited

2007-05-28T21:13:00.001-07:00

Continuing our discussion on cash flow 101, I feel that cash flow discussion is not complete without digging further into operating cash flow. To refresh your memory, operating cash flow is the cash flow generated by a firm's business activities. Business exists to produce cash flow. Therefore, we prefer business that spots a positive cash flow.
We do invest in companies that produce negative cash flow in certain ocassions. For example, this is the company that is growing rapidly and in order to create barrier of entry, the company is investing heavily while business hasn't picked up. An example of this scenario is: biotech companies that spend money on Research & Development or retailers giving away free shipping to gain customer loyalty.
There is also a little thin line of classifying expense of between operating cash flow and say investing cash flow. A retailer that is giving away free shipping might experience a positive operating cash flow but negative investing cash flow if it feels that the free shipping is a long term investment to create barriers of entry. However, for the most part, that kind of expense will fall into operating cash flow since it relates to the daily part of the company's business.
Now, what constitutes a positive cash flow from operations? Generally, we work our way back from the income statement. From the net income, we have to add depreciation and amortization, interest expense and taxes. This is because, theoretically, a firm is not required to pay taxes if it reported a net loss. Furthermore, interest expense is deemed to vary depending on a firm's capital structure. A firm may pay more or less interest expense due to the amount of debt it holds, not due to its operating efficiencies. Finally, depreciation and amortization is the subtraction of long term asset purchased outside of the accounting period. Therefore, no cash actually flows out of the coffer during the period.
Let's take a look at a typical cash flow statement for Merck & Co Inc. (MRK). For the fiscal year ending on December 2006, Merck reported net income of $ 4.34 Billion. Operating cash flow meanwhile, was reported at $ 6.77 Billion, mainly due to $ 2.27 Billion addition of depreciation. There is also adjustments due to change in liabilities and/or inventories as well as account receivables. That is a given. When you do X amount of sales but you did not get cash back (a.k.a bulging account receivables), your operating cash flow would be affected. There is also a line called 'Adjustments to Net Income', which is not clear from the example above. For the most cases, however, cash flow generated from operation is a higher figure than the net income figure.
Now, how would cash flow from operations help us in investing in stocks? In the absent of dependable cash flow from operations, we prefer to invest in companies that have positive net cash on their balance sheet. This means more cash on hand than it has debt. If a firm has dependable huge cash flow from operations, it can compensate for the lack of strength in its balance sheet (i.e: less cash than long term debt).

Why Follow the Accounting Rules

2007-05-28T21:12:00.001-07:00

Most people find financial statements identical to a foreign language. To ensure that financial statements are easier to understand, there is a set of rules and practices known as the generally accepted accounting principles (GAAP). Development of these rules provides a basic guideline accounting because I think it’s fair to say that it can get obtuse at times. There are a lot of variations to the meaning so here is the best answer. It’s the generally accepted accounting rules and procedures that are necessary to define accounting practice. Basically it’s a set of theories that accountants come to accept, and controversies are lively with some methods between accountants.
Accounting is a discipline that is always growing and changing so that better measures of performance can be reported. As always, it’s a good idea to keep up to date with all of the trends that are going on. A company’s management prepares the financial statements of a company. They create a financial statement designed to present their results in the best light possible. Obviously, material alterations can give a company a financial boost. So, that’s why companies selling their stock to the public need to get their financial statements audited by a public certified accountant.
A certified public accountant (CPA) is licensed through the state for the same exact reason lawyers and doctors are, so they can protect the public by providing the highest quality of professional service possible. CPAs are used because they have no connection with the company and are independent. They have no financial ties with the company. Whenever large companies influence the process disastrous and illegal transactions are created to cheat investors. An independent accountant commonly performs an audit, which is evaluating a companies financial statements, product, accounting systems, and records. The main purpose of an audit is to make sure that the financial statements have been properly prepared according to the accepted accounting rules. Accounting is not a precise science it has room for interpretation according to the GAPP. However, that doesn’t mean that the accountants report should contain substantial errors in the financial report.
The financial report must be reliable. Creditors and shareholders’ rely on accurate reports in order to analyze their investment or risk. An accountant can make a decision only when the financial statements conform to the guidelines of GAAP. Creditors, banks, and investors rely on auditors when they are deciding to invest in a company or give loans, because of their credibility. The independent audit is an extremely crucial factor in the growth of financial markets internationally. Also, many organizations can directly or indirectly influence a GAAP. The Financial Accounting Standards Board (FASB) is the most critical body for the development and issuing of rules on accounting practice. This independent body issues the Statements of Financial Accounting Standards. Next, the American Institute of Certified Public Accountants (AICPA) is the official professional association for certified accountants. It’s the largest CPA organization that exists in America and heavily influence accounting practices through its senior committees.
The Securities and Exchange Commission is the agency of the federal government that legally has the power to set and execute accounting practices for companies that sell security to the public, and it has a large impact on accounting practice. Next, the governmental accounting standard (GASB) is critical for accounting because its main job is to issue the standards for accounting to the local and state governments in the United States. However, a lot of these organizations are focused on the rules in regulations in the United States. There are a lot of businesses and accountants internationally so that’s why the International Accounting Standard Board (IASB) was formed. It was approved by more then 25 international agencies. The U.S laws that analyze the revenues for the cost of operating a business can also affect accounting practice. It’s no question that the major provider for income for the government comes from income tax. The income tax rules are applied by the Internal Revenue Service (IRS). Many times these rules actually cause a conflict with the accepted rules of accounting. A lot of businesses use accounting practices because it’s a requirement by tax law. Also, companies can use the rules of tax law to their advantage financially. Accounting also has laws of conduct for professionalism, and one extremely important one is ethics.
It touches bases on questions that help determine if something is either right or wrong, and is based on moral decisions. Most people are faced with several ethical issues each day and, and some ethical activities could be on the range of illegal. For example, if a business decides to use false or misleading advertising, or to bribe customers into giving them testimonials for a specific product, then they could be acting in an unethical manner. The ethics of a company could also be a result of the employees so that’s why it’s always a good idea to run a background check of who you are hiring, whether it’s online or offline. Professional ethics is the guidelines that apply to the conduct of individuals of a certain profession. Similar to the ethical actions of a company, the ethical actions of an individual is a decision. Accountants have to take the responsibility not only for their customers and employers, but also to the general public to act in the greatest ethical way possible.
Accountants are very good at following professional ethics. It is important for individuals who decide to become an accountant to have the highest levels of professionalism possible. To enforce its prestigious membership’s conduct, the AICPA along with each state have adopted some codes of professional conduct that certified public accountants have to follow. These simple rules enable people, such as creditors and investors, to rely on and trust accountants. When working with people the accountant must act with integrity, which means that they are honest, and the individuals benefit from their visit with the accountant. The accountant must display objectivity meaning that they are intellectually honest, and they must remain independent which means that they must avoid any relationship with the business or individual because it will violate the accountant’s principles.

I Run A Small Business - What Information Should I Get From My Bookkeeping Or Accounting System?

2007-05-28T21:11:00.000-07:00

How can I protect myself from fraud?
Unfortunately, fraud does sometimes happen in small businesses. It tends to happen when a busy business owner puts complete trust in someone, and completely 'leaves them to it'. The employee comes to realize that no one is really checking or overseeing what they are doing, and when a grievance occurs or money problems arise at home, they succumb to temptation.
Firstly, keep the means of payment under your own control whilst your business is small enough. Keep your cheque books locked in a drawer. If someone else writes the cheques, check they are all accounted for, instruct that any defaced cheques should have 'cancelled' written on them and stapled at the back of the book, rather than thrown away. For electronic payments, keep the password private. Ask for original documentation to be presented (invoices, delivery notes, statements as appropriate) at the time you make payment.
When your business reaches a size that you cannot personally control the payments, make sure there is segregation of duties. For example one person enters the purchase invoices and prepares the payment run/cheques, a different person signs the cheques and reconciles the bank account.
What reports should I be looking at?
The profit and loss account shows how well (or badly) things are going. However, looking at a profit figure in isolation isn't really very useful. If you were to be told you were on a journey and you were currently in Darlington....would that be good or bad? It's much the same with profit and loss. A figure doesn't mean very much unless you add the context of where you are coming from and where you are hoping to get to. So you really want to see a profit & loss account for the month compared to profit & loss for the same month last year. Or look at year to date profit & loss compared to year to date for the same period last year.
If you really want to get serious - plan what you want to achieve. You are much much more likely to achieve it if you plan for it and commit it to writing. The plan in the form of numbers is what is known as a budget.
If you are serious about your business, and have a budget, look at a report showing year to date profit and loss against the budget.
Other reports you definitely should look at each month are the aged debtors report (how much your customers owe you and how old the debts are) and a sales by customer report (the Pareto principle usually applies where most of your sales will come from a small number of customers).
Should I have stock control?
This is a difficult question to answer...........it depends.
Maintaining proper stock control is not easy, it requires a system and it requires discipline. Computer system costs are now at a level where even the smallest shop can afford to implement a full stock control system. However do they have the technical ability to operate it and the motivation and discipline to stick with it?
For a business that is prepared to go through the 'pain barrier' the benefits are
Advise customers at time of ordering on stock situation
Reorder stock at the right time
Have the stock figure available each month for the accounts
Be aware of margins, and therefore get early warning on potential problems
Increase potential for bank borrowing, with security over stockDo I need a separate bank account for the business?The short answer is YES.
HM Customs and Revenue would expect to see a separate account for your business. In the event of an inquiry they would probably ask to see your business bank statements. If everything is in order it would be unusual to have to provide them with your private bank statements.
From your own point of view, it is much easier to separate things and make sure all business expenses are included in the accounts if you run a separate business bank account.
How do I handle quotes/estimates?
If you are preparing quotes on a word processor, a proper system should make your business much more efficient. Your estimates should be easily converted into invoices (or part invoices). No more time wasted checking on the original quote.
How do I handle credit control?
If your business gives credit to customers, then credit control is an important issue. Indeed, if you fail to address this, it could well lead to the failure of your business. You need to think about the following points:
How do we decide whether to give a customer credit?
How much credit to give each customer?
How do we deal with customers who exceed their credit limit?
Should we charge interest on overdue payments?
Who deals with overdue accounts? Look at an aged debtors report each month, so you can see any problems arising.
Implement a credit control policy which addresses the questions above. This will ensure you handle your credit account customers effectively and consistently.

How To Keep Receivables To A Decent Level

2007-05-25T03:24:00.001-07:00

Receivables is something very common in most firms. Many businesses could not work without receivables, but they must be kept to a decent level. That's why most accountants are always pressing their clients to monitor their receivables and to avoid a situation where too much money is due. Problematic situations generally occur because most small business owners do not want to spend their time on phone calls, arguing with their clients. They do not even want to spend time writing e-mails thinking that they get more productive forgetting their receivables.
Accounting software comes to the place to provide efficient and effective invoicing tools. Just in a matter of clicks, some of them will allow you to send your invoice to a professional mailing service that prints and sends your invoice in typically just a business day.
The second step where accounting software can help is easing your clients' possibilities to pay, which can reduce work and resources wasted on collections. Some of them allow you to provide your customers with a web page, password protected, where they can review their invoices, billing history and even submit inquiries. The most complete accounting software can also allow you to enable your clients to pay their invoices right in your website.
To assure the maximum efficiency, it is also recommended to make clear payment terms in contract before work begins. Do make your client know that you're putting these new procedures in place and ensure with a lawyer that your contract reflect this.
This should work with most of people, but you will still find some clients that will take their time paying and then, the phone call becomes necessary. In that case, it's very important to document all collection calls and be equipped with another of software, typically a CRM. But that will be the matter of another subject...

Starting a New Business? Here are the Accounting Decisions You Need to Make

2007-05-25T03:23:00.000-07:00

Starting a new business is exciting, but in that excitement are a lot of decisions to be made. Out of all them all, the financial backbone of your business needs to be seriously taken into consideration. A large part of that are the accounting decisions you will need to make. When starting a new business, you will want to spend some time on the following areas:
The type of organization your business is . Are you a sole proprietor or are you in business with someone else? Will you organize as a partnership or as a corporation? Limited liability companies are the newest form of entity – is this form right for your business? Choosing an organizational type will determine what federal and state income forms to file. For example, a corporation may need to file annual reports in the state of the incorporation.
The fiscal year of your business . Most businesses use the calendar year, but that may not be the proper choice for your business. For tax purposes, many businesses choose a different beginning and ending date than the January through December calendar year.
The accounting method for your business . Are you going to use a cash or accrual method of accounting? The cash method is easier for startup companies, however, if you have inventory – the IRS may force you to use accrual.
You will have to decide if your business will follow GAAP (generally accepted accounting principles) or Tax Basis for financial statement disclosures . Your banker may prefer one over the other.
The method of valuing inventory for your business . Accounting principles allow many methods, like LIFO (last in first out), FIFO (first in first out), and Lower of Cost or Market. You will need to choose the right method for your business.
Financial records for your business . You have a lot of choices here! Are you going to use paper ledger sheets to record sales and purchases? Are you going to keep track of income and expense using a computer program? Some bookkeeping software has the ability to integrate your data with an accounting professional, thus saving you money. You will need to decide the best method for your business.
Feeling a little overwhelmed? All of the above can be much easier if you have an accounting professional to guide you. This is another decision you will need to make. Will you hire an in-house accounting clerk or will you out-source your accounting needs?
Unfortunately, too many new businesses skimp on setting their accounting backbone up correctly at the start of their business. The financial backbone needs to be strong, as it is the support of your entire venture. You can get expert help in these initial stages, and decisions, in setting up a new business, so that your business starts off right.

India Outsourcing Accounting Can Undertake Accounting Task Proficiently

2007-05-25T03:22:00.002-07:00

Advantages of Online Purchasing

2007-05-25T03:22:00.001-07:00

The business world is busy. The streets are filled with people with their coat and ties on and carrying their suitcases, rushing to get to daily work – imagine the view of Wall Street in New York.
You find it quite difficult to schedule and to accomplish multiple tasks simultaneously. Good thing, the online technology makes our stressful lives somehow lighter. Businesses, suppliers, and other services offer their goods online. Because of this, you need not visit stores to buy your supplies or to order your office needs.
Take for example purchasing business cards. Before, you’d look for printing and publishing services on yellow pages or ask through referrals. After so, you’d call them on phone and later visit their office to see the sample prints. If you were convinced with their price and service, it is only then you’ll order for your business cards. After a week or two, you’ll come back to get your orders, or easier, delivered to your office. The whole process of ordering new business cards to refill your nearly empty card container became an added hassle to your seemingly stressful life already.
It’s good that the world is evolving and better ways are being implemented to ease our stressful living. Solutions are changing for the better. If in the latter, ordering a simple business card needs more time and effort, now, with the help of computer and internet.

Surviving an IRS Audit With Minimal Loss

2007-05-25T03:21:00.002-07:00

Operating Cash Flow Revisited

2007-05-25T03:21:00.001-07:00

Fresh Approach to Accountancy

2007-05-23T02:17:00.001-07:00

Traditionally Accountants have been seen as something to be feared and a necessary evil, but things are changing. Accountants need to look at their attitude to their clients and perhaps rethink the approach they use. Many people feel daunted and intimidated by a visit to the Accountant and this need not be the case. Adopting a new approach will ensure that Accountants keep their clients longer and are able to better understand the needs of the individual.
Applied Accountancy is a vibrant forward looking Accountancy Practice based in Maidstone, Kent. Owned and led by Paul Baker, a young, energetic and successful Accountant who came from a family of Accountants. Paul has eradicated the myth that Accountants are severe and unfriendly and it is this approach which has led to his success. Clients of Applied Accountancy are given a personal yet professional service and made to feel completely at ease when they visit the practice.
There is no stuffy atmosphere here, instead clients are treated on a one to one basis and are always guaranteed to speak directly to Paul who will help them with whatever problem or question they may have. Paul says that "I wanted to get away from the image of a grey suited accountant who is unapproachable, and enjoy the fact that I can build long term relationships with my clients"
Accountancy does not need to be a cold, daunting prospect and Applied Accountancy are breaking the mould in Kent and offering their clients a unique service which is tailored to the individual needs of every client. Business's have enough to concern themselves with and dealing with an Accountant should not be an unpleasant experience, Applied Accountancy are moving forward and taking their clients with them. Paul says "I like to get involved with our clients business and not be someone who our clients see perhaps once a year, we want our clients to succeed and offer all assistance to them in order to reach this goal." Applied Accountancy, the future of Accounting
Accountants should be looking at this approach and replicating it as it can only be a good thing for both clients and Accountants.
Saffiere Dunstan-Saffrey is an innovative and passionate Interior Designer who has spent long periods working with clients in France, she is now based in Maidstone and looking forward to taking up the Design challenge in her new surroundings. She is a outgoing, passionate individual with an effervescent personality that rubs off on people. Saffiere is committed to bringing Interior Design into the realms of everyone. Interior Design is her daily passion and her attitude toward it is unique.

Accounting - Three Major Areas

2007-05-23T02:16:00.002-07:00

There are three major functional areas in accounting, which need to be considered in modern day accounting for any business. The three are financial, cost and management accounting.
The first area, namely financial accounting, is primarily useful for ascertaining the results of the business on a periodical basis; for example, one year. This will help to determine the future course of action in the long term. In economical terms, financial accounting treats money as a factor of production.
Cost and management accounting are tools to enable management to take decisions on a day-to-day basis. Cost and management accounting are not useful for their own sake. These two functions assist management in the conduct of the business along with other key factors involved in running of the business. Key factors could be demand, supply, competition, availability of raw material, logistics etc.
The second area, namely cost accounting, seeks to ascertain the value of direct costs and indirect costs involved in production . From this value, management can make an informed decision regarding the improvement of production performance. In economic terms, cost accounting is a measure of economic performance. This information gives management a clear indication of economic performance of the production resources of the business.
Costing also helps the sales manager in setting prices. But since costing is a measure of economic performance, it cannot be considered as an absolutely accurate basis for setting prices. This is because selling prices are more of an economic decision. It would not be amiss to mention here that prices depend basically on market factors. Prices depend more on demand, supply and competition and less on costs. For example, high demand coupled with lack of competition would mean that business could charge higher prices for its products, well above the costs.
The third area, namely management accounting, is closely interrelated with costing accounting. Although it has evolved from cost accounting, management accounting has a broader role to play in management decisions. It measures economic performance of the business enterprise as a whole, vis-a-vis the economic environment in which the business operates. This function of accounting seeks to combine the financial and cost information in a broader aspect.
Finally, management accounting is instrumental in assisting and advising management in making important business decisions. It makes management aware of the economic implications and consequences of their decisions. In economic terms, it implies a close study of money as an economic resource, while simultaneously treating it as a measure of economic performance. This enables management to measure it as an economic factor of production, e.g. the rate of return on capital employed.
It is thus seen that accounting has a distinct role to play in three different areas, which are equally vital. With the advent of computerised accounting, it has become very easy for management to monitor the accounting information on the tips of its fingers. Financial accounting programs enable financial statements and various cost and MIS statements to be produced almost instantly at push of a button. Now, only the laborious part of accounting is data entry. Financial managers must ensure that meaningful data is input into the system to produce meaningful information. Proper categorisation must be done and keying errors avoided at all costs, ensuring providing accurate financial information to management.

India Outsourcing SEO Is Extensively Popular In These Services

2007-05-23T02:16:00.001-07:00

Search engine optimization is an advertising tool that helps online business to get success by adopting certain unique strategies. The e-business world is rapidly changing with some latest and new advance techniques that is making the businesses boom. A business can adopt any means that helps it to get popularity. India outsourcing SEO services is one such way that makes businesses in the proper running. Outsourcing SEO services and other businesses has become a trend and many business owners follow it to get more return from their investment. India is an ideal and preferred destination for the purpose of outsourcing work. It has become a leading centre for outsourcing services among the outsourcing destinations globally. This is due to the availability of massive expertise with innovative ideas and cost effective software solution that has helped businesses grow rapidly.
India outsourcing SEO services can fetch a lot of revenue for both the clients as well the service provider who outsourcers their entire work. India is a reputed and desired destination for outsourcing the information technology enabled services. The companies can get business solutions at a nominal rate from India compared to the other destinations of the world. The professionals are trained in handling the client’s task efficiently and cautiously. The quality of the work is taken highest care as clients do hire them for providing the best services. For a company to get a high rank in the search engine list, it needs a lot of continues, sincere hard work and effort to bring perfection in the business. A user searches the web for some relevant information and so a website must be having the information to meet the demands of the users.
Outsourcing SEO services takes utmost care to maintain the website with uniqueness to makes this website different from others. If the business works keeping pace with the latest demands and by the use of new technologies then it can see a good response from the online users. A search engine optimization technique brings more traffic to your website and so your business gets popularity on a huge massive scale. Moving your work to a third party vendor is a risk in itself but you have no other alternative left than to trust the outsourcing company. It requires huge efforts and finance along with business approach to run a business profitably. A business owner has to look for outsourcing SEO services from the business aspect considering pros and cons. If you want your business to turn into a fast growing organization then you need to look for such companies that provide outsourcing services at your demand.
Outsourcing SEO services will help you to lessen your workload and you can make some business plans that will help your business in expanding and earning a huge income. The outsourcing task is done by those who are skilled and qualified to undertake your task. Actually, the labor cost is very low in the outsourcing countries and so this is the reason that lots of companies are looking to outsource their work. Outsourcing the services can be done in two different ways. There are a variety of firms that provide customized outsourcing services to its client. Another way is to hire a freelance professional.

Accounting With the Lights Out

2007-05-23T02:15:00.002-07:00

Accounts Payable would be easy if it wasn’t for all the paper, as anyone who works in the area will tell you. Paper-based, manual accounting systems have been the bugbear of corporate AP departments for decades.
Even the most rigorously organised AP system has plenty of opportunities for problems, including lost or misplaced invoices; incorrect manual data entry; time lost sorting and filing paper, or trying to locate matching purchase orders. All of which leads to slow processing, which can impact directly on the organisation’s financial reputation with partners and suppliers. What’s more, manual AP systems make it almost impossible to meet the regulatory and compliance demands of Sarbanes Oxley, IFRS and others for complete document traceability and auditability.
All in all, it’s a recipe for a fruitless paper chase. Throwing manpower at the problem isn’t a viable solution. More people means more invoices processed – but employment and labour costs are significant for such skilled staff, which limits expansion in the AP function. On average, a full time AP employee can process around 8500 invoices per year using manual processes. Yet world-class companies can process upward of 80,000 invoices per person per year – a quantum leap in efficiency.
Flicking the switch
So how is a ten-fold boost in productivity possible? It’s simply a question of automating as many aspects of the AP function as possible. The real costs involved in AP are the man-hours involved in manual tasks, including: finding purchase orders and good received notes; checking and matching these; manual data entry into core business systems such as ERP; manual validation; processing complex invoices which may involve checking against service level agreements, and more.
Even more costs are incurred in tasks such as long-term filing and storage of documents, staff turnover and teaching systems to new staff. If these tasks can be automated, then accounting staff can be redeployed in more strategic roles such as data analysis, and not be involved in time-consuming paper trails.And although it’s not yet possible to flick off the light switch all the time, the latest-generation invoice data capture and processing solutions really do deliver gains in productivity of up to 1000%, helping to turn AP into a profit centre, not a cost centre.
Let’s take a close look at exactly how this can be achieved. We will use a real-life example of the AP department of a large business in the licensed trade, which undertook a phased migration from paper-based manual processing to fully automated invoice processing.
Raising a glass to automation
DrinkCo is a UK-based business that owns several well-known pub chains. As one of the largest pub operators in the UK, the company processes 600,000 invoices per year. As a Peoplesoft (now Oracle) Accounts user.

How To Keep Receivables To A Decent Level

2007-05-23T02:15:00.001-07:00

Starting a New Business? Here are the Accounting Decisions You Need to Make

2007-05-23T02:14:00.000-07:00

Tips on Picking the Best Accounting Software - Top 2 Picks

2007-05-21T21:06:00.001-07:00

The doors are finally open. The flashy sign proclaiming, Come On In,... is brightly lit on the front door, and your new business is booming. Life is beautiful, and you can’t help but think to yourself. My, this would be a good day to manage my liabilities and redeemable assets!
Well, maybe not. Face it. Most accounting is boring, slow, confusing and, sadly, very necessary. There are terms to learn and facts to know, and for most small business owners, you simply couldn’t afford to hire your own accountant. Fortunately there are lots of great accounting software programs available, but to in order to use them they way they should be used; you need to have a basic understanding of accounting. Take a deep breath, close your eyes and dive in.
But…where?
The best first step is to learn as much as you can about accounting. Find simple books on accounting at your library, and work your way up to the meatier topics. Study general terms (profit, overhead, depreciation, revenue, etc.) The more you learn, the easier handling problems will be down the road.
Learn about which type of accounting method you will be using. There are two kinds—cash accounting and accrual accounting. As the owner of a small business, it is usually recommended to use cash accounting, which records transactions as you receive payment for them, instead of when the transaction takes place. You will have to choose which one you will use when you are filling out your taxes.
Get familiar with accounting tools—account ledgers, balance sheets, journals and other items. Explore the options on the computer program you choose to use, and read the manual. The computer program will be a great tool, but you need to be in control of it.
Learn the basics of accounting principles—liabilities have to be subtracted from the asset value to find the equity, etc. Set up a procedure for following your accounts. For example, save every receipt throughout the week, and go through and settle your accounts every Saturday.

Asset Misappropriation - Skimming Schemes

2007-05-21T21:05:00.003-07:00

Skimming is the removal of cash for a victim company before the transaction is entered into the accounting system. Since skimming is an off the books type of fraud (it is never recorded) there is no direct audit trail therefore making the fraud difficult to detect. The employees with an opportunity to commit skimming schemes are those who deal directly with customers or those that handle their payments. This article will cover the four main categories of skimming schemes and discuss some of the red flags for detection of the fraud.
Unrecorded Sales The most common form of skimming is not recording the sale of goods but collecting the money from the customer. Despite controls such as register tape, managers, and surveillance equipment, employees may be able to manipulate the system in order to prevent fraud detection. In some examples of unrecorded sales, the fraudster manipulates the register tape so that it does not print on the tape when transactions are keyed into the system. A means of detection would be pre-numbering the system records so that if skimming were perpetrated when the fraudster turn the register tape back on there would be a break in the pre-numbered transactions. Companies should be specifically careful of unrecorded sales schemes with revenue streams that are difficult to monitor and generally unpredictable in value.
Understated Sales and Receivables In these skimming schemes the customer receives a receipt that is for the total amount of the transaction but when the employee enters it into the system they record either a discount or a sale of lesser value. In order to cover their tracks they can manipulate carbon copies of the receipt by writing in their own amounts or generating false discount documentation. Fraud prevention is possible by requiring approval for sales discounts, checking receipts for alterations and tracking the history of cashiers' sales discounts.
Theft of Checks Through the Mail In this particular scheme the sale has been recorded into the company's system but the payment on the receivable has not been received. The person in charge of receiving payment in the company physically steals the check and cashes it at the bank. If the employee is able to overcome the issues with cashing the checks such as endorsement and convincing the bank that the transaction is legitimate then they must deal with how to conceal the fraud when the customers balance becomes delinquent. If the employee is not careful the company will send late notices to customers that will likely result in complaints from customers with a copy of the canceled check. Fraudsters have gone around this by intercepting the notices or manipulating the address of the customer in order to reroute the mail. A major red flag for the opportunity to commit this scheme is when the employee that receives the mail is also the same person that has the job of recording the receipt. By properly segregating duties and marking all checks for deposit only, a company can easily reduce the potential of this skimming scheme.
Short-Term Skimming The final category of short-term skimming is less about stealing the money than borrowing it in order to accumulate earnings from the time value of money. By delaying the receipt of payment the employee is able to use the funds for short term investments generating interest for the perpetrator. The means of obtaining access of the money could be any of the forms above but there is a clear distinction that in this case the money is eventually returned to the company and the only loss is the time value of that receipt. Red flags in this area would include a higher days sales outstanding ratio or unusual payment timing when compared to historical customer payment especially when looking at specific customers.
Fraud Prevention Regardless of the method of skimming the most important means of prevention is establishing proper internal controls. Segregating duties and employee awareness of the company's policy on theft can eliminate the opportunity and rationalization of committing these frauds. When early detection fails skimming can lead to very costly losses and a corporate culture that ignores the signals of fraud.

Discover The Best Accounting Software

2007-05-21T21:05:00.001-07:00

One of the most important decisions that you will have to make while starting or operating your small business is that of which accounting software to use. It could certainly be a nightmare if you make the wrong choice.
During the past 20 years accounting software has advanced far beyond the old fashioned basic lined accounting books with 'in' and 'out' columns. Nowadays it is certainly possible to find accounting software that will assist you in all of your personal and business accounting tasks, from accounts receivable to online banking. With such a wide array of accounting software packages available, It can be difficult to decide which accounting software program will best fit your needs.
Before choosing an accounting software program it is worth while that you give some thought to exactly why you desire the program in the first place. There is really or no point in buying a software program that enables you to keep track of accounts receivable and issued invoices if you just need the software to do your home budgeting. On the other hand, if you are a small to medium business, then it's quite likely that the ability to manage your issued and outstanding invoices is essential.
Many people will probably want to consider the tools or resources available for the software to help them get started. Any good accounting package should come with a setup guide and preparation check list to ensure that everything goes smoothly. Most will also offer a guided tour and instructional demos to help you learn about key tasks. Extensive product support should also be available.
The form in which the accounting software package is going to interact with your other software is another factor that you need to consider. For example, if you make use of online banking, then a very useful feature would be the ability of the software package to update with your online bank statements. Furthermore, if you possess a number of different income streams, and you find it necessary to be sure that all of them are being included in your budget, then software that allows you to take advantage of this facility may be beneficial. However, if all you have is one or two income streams and all you want to do is keep a track on what your household outgoing expenditures are, then you might just need a simple Excel accounting software package.
Finally, before making a choice on any particular accounting software package, it would be best to make sure your computer has the correct system requirements for the application. For example, you should make sure you have enough room on your hard-drive to download the program and that you don't already have the applicable software on your system. Bear in mind that there is nothing more frustrating than acquiring a new software package only to find out that it's not compatible with your computer setup.

Fresh Approach to Accountancy

2007-05-21T21:04:00.002-07:00

Accounting - Three Major Areas

2007-05-21T21:04:00.001-07:00

India Outsourcing SEO Is Extensively Popular In These Services

2007-05-21T21:03:00.004-07:00

Accounting With the Lights Out

2007-05-21T21:03:00.003-07:00

How To Keep Receivables To A Decent Level

2007-05-21T21:03:00.001-07:00

Forensic Accounting - Be a Financial Detective

2007-05-16T05:37:00.001-07:00

Forensic accounting is one of the newly identified types of accounting jobs available. A forensic accountant is either an internal or external auditor who is brought in to investigate a case of fraud, bankruptcy or other legal conflict. He or she audits the situation and comes to a conclusion regarding the wrong doings and amount of loss involved. The auditor composes a report, which is often used as evidence in a court case. The forensic accountant may even testify personally.
Forensic accounting has arisen from the vast amount of scandals wreaking havoc in the business world the last few years. Enron and WorldCom caused severe loss for many owners and employees. The accounting profession heard the call and has made several mid-course adjustments to help assure these crimes won’t happen as easily ever again.
COMMON PROJECTS
Forensic accounting is a specialized form of auditing. Regular audits are required by the SEC or the company itself to assure compliance with accounting standards or company policy and procedures.
Forensic audits, on the other hand, are done because something happened that needs further investigation. It is not a matter of routine. Here are some examples of projects that may rely on forensic audit procedures:
Agent fraud – A descriptive and frequent example is with insurance agents. An insurance agent has a lot of access to personal information of his customers. A common fraud scheme is for an insurance agent to fake the application for his customer to take out a loan on the insurance policy. The agent keeps the proceeds from the loan and the customer can remain unaware of it for months or even years.
Insurance and personal injury claims – Many people falsify claims they make to insurance companies. This is another big area needing forensic accounting techniques.
Construction audits – Here, forensic accounting is used to make sure construction is done using the quality of components that was called for.
Royalty audits – In any situation where a worker, usually a performer, is owed royalties for the showing or airing of his work, a forensic accountant is often brought in to make sure he is being paid everything that is owed.
SEC inspections – Wall Street scandals abound these days and forensic accountants assist in following the financial information to find the wrongdoers.

Don't Let Tax Strategies Ruin Your Business Growth Prospects, Tips From a Banker

2007-05-16T05:36:00.002-07:00

What is a business owner to do? You have had a successful year and have profits to report. There are some tax strategies that are standard and beneficial and that do not create problems for your bank. There are others that do create problems and I will describe for you in a simple way what the effect is.
Banks operate in a highly regulated system where they must conform to the standards of the regulatory bodies. These standards require them to assess risk in a pretty standard way, relying on financial statements prepared by the borrower or an accountant. So a bank will create a Loan Grading System or Policy which conforms to those requirements.
The three major factors in assessing loan risk are: Cash Flow, Liquidity and Leverage. Trends in these factors are important as well.
Cash Flow is calculated in a simple way and then there are more complex ways to calculate cash flow. We will only discuss the simple way. A bank will determine "Cash Flow Available for Debt Service" according to this formula. Pretax Net Income, plus Depreciation Expense, Plus Interest Expense, less Federal Income Taxes or in the case of different business types, Owner Withdrawals (required to pay income taxes personally on the business income).
This Cash Flow will then be compared to the Annual Debt Service of the business to calculate a Debt Service Coverage ratio. Normally a bank will want a minimum of 1.2:1. If this is the case and the balance sheet is healthy the loan will be considered a "Pass" and the bank will not be required to set aside additional Capital or Loan Loss Reserves against that loan. If the Debt Service Coverage is less than 1:1 the loan will often be "Classified" and will become a problem for the bank.
In more sophisticated grading systems the better the financial ratios, the better the risk grade even within "Pass" categories. The bank will be able to set aside less capital against these loans and will therefore be able to price them lower and earn the same Return on Equity.
There is no problem when a business owner uses accelerated depreciation to reduce Net Income and lower the tax burden. The problems for the bank crop up when the owner decides to:
1. Pay high salaries or bonuses at year end to reduce net income2. Write off inventory or accounts receivable that are still collectable in order to reduce net income3. Not report revenues at year and and carry them over into the following year by not depositing checks that have come in.4 Prepaying expenses for the following year without accruing them as an asset (Prepaids)5. Otherwise make accounting entries to reduce Net Income to a level that is not reflective of the true economic performance of the business.
Some of these strategies may create problems with the IRS at some future date as well.
The impact on the bank is that the Cash Flow Available For Debt Service number will drop suddenly (compared to interim statements), the Debt Service Coverage Ratio may go negative, and the Trends will be negative. The borrower may lose access to credit or have to borrow on more restrictive or more expensive terms. This may restrict the growth prospects of the business and create an Opportunity Cost that is greater than the tax savings. It will also impact the relationship with the bank and banker.
These same strategies can have a negative impact on the Balance Sheet and create similar issues. Liquidity can be understated if assets are no reported. Leverage will increase. Collateral values can be under reported and can create problems with a Borrowing Base or a Loan to Value ratio.
Once again these balance sheet impacts may cause a bank to assess higher risk to the credit and reduce the availability of loan funds or increase borrowing costs or restrictions.

Business Software, A Good Solution for Flourishing Business!

2007-05-16T05:36:00.001-07:00

You now have your own business and it is flourishing! What a wonderful time in your life! Maybe you started your business using the pencil and paper accounting that you learned in high school or even college. Maybe you have really moved into the computer age and you have an Excel spreadsheet that you have created. When your business is really flourishing is the time that you need to realize that it is also the prime opportunity to rethink how you are controlling your finances?
Now is the perfect time that to look into accounting software; but more appropriate it is time to find the right software package to meet your businesses growing fiscal demands. This is the prime opportunity to evaluate whether your business is one that requires more records than just income and expenses. If you are required to track more than income and expenses then it is time to invest in a software package.
Here are some other considerations that you must take into account:
• Do you have more than fifty transactions in a month?
• Do you have customers that you extend credit?
• Are you incorporated?
• Are you computer literate or is one of your family members computer literate?
• Are you spending a lot of money on a bookkeeper that is still using the old pencil and paper method or an antiquated computer program?
• Do you need to:o Show that you are making a profit or not making a profit?o Write checks or write checks to the same people or companies month after month?o Download financial information from your bank?o Print invoices?o Track receivables?o Prepare your annual financial statements?o Prepare taxes?If you have answered yes to one or all of these questions, then it is time to look at accounting software. Good accounting software can help you with all of the considerations that were listed above.
At this point you may want to talk with your accountant. Your accountant may be able to suggest accounting software or may suggest that it would be less expensive for you to use the same software that they use. This in turn will make tax preparation as well as tracking expenditures and income with fewer errors.
You may also want to do further research into software and software products as you may find that you are able to download a demonstration disc at a less expensive price. Remember that when you are able to afford an accounting package, it will more than pay for itself.

How To Resign From Your Current Accountancy Job

2007-05-16T05:35:00.002-07:00

If you have found a new Accountancy Job and you need to resign from your current role, then these few words of advice should help you. Resigning is daunting and there are right and wrong ways of going about this. So, what is the best way of resigning and what should you do?
Firstly, you need to submit a written resignation to your manager. This removes any confusion and the company then has something on record. Within the statement you must say that you have decided to resign, show your thanks for working with them, state the final date of your employment and that you would be happy to work up until the day you leave.
When you take your written resignation to your manager, you need to orally resign to them. Be prepared for any kind of reaction, surprise, anger etc and be prepared for a counter offer to make you try to stay. You are not doing something wrong by resigning, so remain confident and positive at all times.
Why are you leaving your current accountancy job? Ensure you tell your colleagues and your boss the same reason, as you do not want this coming back to haunt you. If you tell your boss one reason and they find out the ‘real’ reason, you will seen to be a liar and it could affect your reference. Even if you really detest your current boss or your current accountancy role, try to remain professional with your reasons for leaving, as references can be invaluable for the future. You do not want to leave any negative feelings behind.
Finally, it is important that you are motivated and keen to work right up until the day you leave your current role. This will again ensure you do not upset your boss and means your references will be good when applying for other Accountancy Jobs.
Sample resignation letter
Dear (employers name),
I am writing to give (notice period on your contract) notice on my employment with (company name). Thank you very much for the opportunity to work with you all at (company name) which I have thoroughly enjoyed. I will ensure that I assist you to the best of my ability right up until my last day of employment. I would like to wish you all the best for the future.

EXCEL Tutorial - How to Construct a Compounding Interest Financial Calculator

2007-05-16T05:35:00.001-07:00

You can construct an almost infinite variety of calculators right within your MS EXCEL spreadsheet application.
Here is how you can construct your own 10-year compounding interest financial calculator that would help you to see, for example, how much your $100 will grow at x percent of interest a year, on a year by year basis.
1) Launch a clean worksheet in Excel.
2) Reserve the cell A1 for your principal dollar amount. Think of this as your “deposit” in the bank.
3) Reserve the cell B1 for your annual interest rate (entered as a decimal number like 5.6 or 34.8, etc).
4) In cell C1, enter the following formula into the text input bar just above the spreadsheet and then click the green check-box icon to save the formula into cell C1:
=A1 + ((A1/100) * B1)
This formula will take the amount you enter into cell A1, divide it into 100, and then multiply it by the annual interest rate B1, and then add it to the original A1 amount to give you the total COMPOUNDED amount at the end of year one. For example, for $100 of deposit (A1) at 5% a year (B1), the C1 value should be should be $105.
Now here comes the exciting part.
5) Click and select cell C1 so that Excel should display a black rectangle around the cell. When you bring your cursor to the lower right corner of the cell, your cursor should turn into a dark and slim plus sign (“+”).
6) Click and drag the cell C1 down as many cells as you want along the C column. This automatically copies the formula in C1 to all the other cells – but not perfectly. Now you need to adjust each formula slightly.
If you click on the unadjusted cell C2, you will see the following formula:
=A2+((A2/100)*B2)
7) Change this by replacing all “A2”s with “C1” because you would like to have the C1 amount get compounded, not the amount in A2 (which is empty).
So the correct formula for C2 becomes:
=C1+((C1/100)*B1)
Similarly, the correct formula for C10 becomes:
=C9+((C9/100)*B1)
Now your calculator is ready for testing.
Plug in 100 for A1 and 5 for B1 and you’ll have $162.8 dollars at the end of 10 years.
What if the interest rate went up by one percent to 6%? Change B1 to 6 and you will have $179 dollars at the end of 10 years.
You can easily stretch this calculator to 20 or 30 years by adding the necessary additional rows to column C and adjusting the formula for each cell accordingly, as explained above.

Best Budgeting and Forecasting Tools for CPAs

2007-05-16T05:34:00.004-07:00

It is not new news that majority of people in and around America and rest of world has major issues managing their finances. Do you know: there are number of good and valuable tools that can be used to not only to manage your budget but also helps you to stick to them? Another fact that will open your eyes is about the highest credit card debt ever reported in America has touched $8500. With lots of surveys being conducted around America, figures have revealed that most people spend more than 10% of what they earn. Reason for this is the inability of an average person to manage their budget.
Do you know how important budgeting is in your life? Consider these valuable benefits: budgeting allows you to secure your finance in a proper manner securing your current and future and gives you peace of mind, not having to worry about “how to repay the money”. With the inclusion of the forecasting features, the budgeting software can show you an estimate of your finances in future. If your future is important to you then you should get used to budgeting before the time passes quickly and leaving you under debt.
Almost all good budgeting software’s are available on the internet which can be purchased and downloaded instantly. However, if you don’t want to spend your money into any such budgeting software’s then search the internet for those which are available FREE of cost. Remember, budgeting software’s are not the ones like excel spreadsheets that you might be using on daily basis. Almost all the major budgeting software’s have a forecasting feature which revels the figures for any “What happens if” type questions. You can create various types/styles of reports and can analyze different situations and scenarios. Using such powerful tools can give great power in the hands of the CPAs as they could understand and build an immediate breakthrough reports on the information supplied by the clients.
If you are only looking for good forecasting software which could help you predict the future, then better go for a DecisionPro Forecasting Software and Qucikbooks Pro software which gives numerous great forecasting tools to help you do a feasibility check on your budgeting estimations. This tools helps you narrow down the report you would like to analyze instantly on your computer/laptop.
Major CPA agrees on the fact that developing a forecast or budget is very complex and time consuming job. There are new and improved technology based tools that can be used to make this process a real simple with the inclusion of traditional budgeting/forecasting concepts. You will not believe, there are still organizations around the world which are solely dependent upon Excel spreadsheets.
The best thing that has happened over years of economic change is the method of calculating the budget and forecasting. Allowing the accountants with such tools and techniques is now-a-days treated as meaningful yet demanding standards.

Best Budgeting and Forecasting Software for Small Businesses

2007-05-16T05:34:00.003-07:00

No matter what happens in future, to secure present, small business will have to mend their ways with lot of care regarding their financial condition, as one small error could lead to a total disaster taking them towards bankruptcy. That’s why budgeting software’s with excellent forecasting tips to foresee their future are readily available to assist. This also helps them in taking decisions for the company as they can now know how much money has to be spent to fund existing or new project. Having good budgeting software is one thing and making full use of it is another thing. One has to make sure the software that they have selected can be installed and configured in easy steps which are understood by everyone who is going to use it immediately. We have listed down 5 strong and easy to use budgeting and forecasting software’s a company must consider working with.
1. “QuickBooks PRO” Accounting Software by Intuit is becoming very popular these days specifically for justifying the payroll system. As an accountant you can configure the QuickBooks to adjust to the current small business needs. You can purchase the QuickBooks from any online store in Basic, Online, Pro and Premier Editions making it really vey simple to budget and forecast your future with its cash flow projector and other useful stuff.
2. “Simply Accounting” Accounting Software comes with a full featured payroll, accounting, budgeting and forecasting system that a small business needs. The software also has features which can leverage the use of internet and e-commerce as well. The software program is easy to use and gives a known feeling of traditional old paper accounting style on the computer with an easy to use drag and drop features. Available in two versions where the PRO comes along with a real time and billing module that support multiple users as well.
3. “MYOB Plus” Accounting Software which is double entry software specifically for the small business that supports multi-user interface with as far as 100 management and financial reports. This forecasting software gives graphical reviews of your future financial calculations. With the inclusion of time and billing module, the software can integrate with any current reporting system software like the OfficeLink connect to MS Excel and Word.
4. “Peachtree” Complete Accounting Software which has no PRO or PRE versions and comes in one full featured pack making a real heaven for all your accounting, budgeting and forecasting needs and wants. The software is very easy to use and has made a good reputation in less time. With multi-user support and central database, reports can be picked and viewed from any workstation.
5. Microsoft Office “Small Business” Accounting software has been the new release and big selling due to fact that more and more excel savvy people can now make full use of this software and will not have to learn anything new. The software provides a good and decent way of budgeting and forecasting your current financial situation. With the inclusion of payroll, business contact management and invoicing through Outlook, this software piece is becoming more and more popular.

Tax Return Preparation Needs To Done Properly

2007-05-16T05:34:00.001-07:00

Preparing tax returns is a tough job and just anybody cannot do the work. For tax return preparation work you need to have the assistance of a certified professional CPA. So be it the tax return preparation of an individual or a business it is important to get professional help for this. In United Sates the tax season witnesses a heavy rush of customers to the office of CPAs who work towards helping out in the tax return preparation calculations. It is understood that one may find it difficult to hire the services of a CPA during this time due to the heavy workload, so the smart thing for you to do will be to hire the services beforehand. Surely you do not want to face any hassles at the last minute and would like to pay your taxes well in advance.
There are several firms that specialize in providing tax return preparation and other services related to filing of tax returns to customers. Managing all the accounts about the monetary transactions that have taken place during a year is very important to get the tax calculations done properly. When you embark on an accounting firm to help you in the tax return you must do your homework properly and find out the ability of the firm in handling the work. Whether you hate this or you love this, you have no choice but to file tax returns to the government very year. So the best way to deal with this is to seek professional help rather then to sit and complain about it.
Take steps to avoid certain common mistakes that are committed by many people while they are filing their taxes or working to get the tax calculations done. Cross checking all the information that you give is important. See if any typo errors have been done or not, it is best to run a spell check on your own before you submit the final documents for paying taxes. Putting an incorrect digit on the document can result in your losing certain amount of your hard earned money. Sometimes it may happen that certain calculation errors can come up. You must be careful about this and take care of all the addition, subtraction and other calculation that needs to be done for filing tax returns. You just have to make sure that everything is put correctly in the tax return document and you do not have to face any problems in future due to this.
If your tax calculations documents are maintained properly and are not messy, you have all the records in place and have knowledge about the process you can do the tax return preparation on your own. There is software available in the market that can actually make this whole process easy if you want to do the tax calculation work on your own. There is nothing better then doing your own tax return calculation work. Just make sure that you are ware about all the different things that needs to be taken care of for the purpose of tax return preparation.

Accounting Outsourcing Services Can Increase Your Profit Margin

2007-05-16T05:32:00.001-07:00

Accounting outsourcing services plays an important role in the world of finance and accounting. Today there is intense competition in the market and so to survive in the business you need some good strategies. Business owners are under tremendous pressure to cut costs of their finance and accounting department and so to increase the productivity, improving profitability and creating strategic value to it. Today there is enough demand in the market for the accounting outsourcing services.
Companies are considering outsourcing as an effective tool for their business. You can make strategy for your company to outsource accounting works at best prices. You will also get the quality in your work and good output from your work. There are many companies who have made huge money from this feature. In fact more and more companies are moving towards this service to make it a strategy for their company’s growth.
In the drive to achieve best results from your business, you can consider accounting services. This technique will save lots of money and you can also focus more on the growth prospects for your company. You can trust on the vendor and then outsource your accounting department to other destinations to make a good profit margin. This will bring down the burden of your work.
As we all know that in order to drive a business, a good effort, time and resources is required. You need to run each and everything smoothly right from sales, marketing, customer service and the administration as well. Every department has to be managed well by you to keep an upward growth. It doesn’t matter how large or small your organization is. All you need to do is to keep the resources wisely, so that you can gain maximum positive response and your business can run with a good speed.

Business Checks and Computer Checks

2007-05-16T05:31:00.001-07:00

Business checks and computer checks help to manage and maintain business accounts and avoid chances of fraud and embezzlements. Business checks are used to pay for a full range of things, from bills to payroll and everything in between. Computer checks on the other hand are blank checks used with many accounting software programs such as Quicken, QuickBooks, Peachtree, Microsoft Money, MYOB, CheckMark, and many others. They are printed using an inkjet, laser, or dot-matrix printer or by hiring a professional printing company. Business checks and computer checks add efficiency to your business and provide privacy and flexibility in financial transactions. Today business checks and computer checks are widely used by all types of organizations due to their enormous benefits.
There is a wide variety of business checks and computer checks available in the market with various customization options. They can be customized depending upon the requirement of the company. You can either go for traditional styles or designer style checks. The layout or the format of the check and color combinations of the checks can be selected according to the budget and needs of the company. Business checks and computer checks are signed by authorized person of the business and have company name and logo emblazoned on the check which mark the authenticity of the check. You can also create business checks and computer checks on your own by purchasing a professional check printer that will help you design the checks that reflect the image of your company and leave a professional impact.
Advantages of Professional Business Checks and Computer Checks
Help in smooth functioning of the business
Help in maintaining the financial statement of the business
Reflect the image and goodwill of the company to a great extent
Used for various payments like bills, salary, inventory, etc.
Provide security and overall convenience for financial transactions
Look more professional and sophisticated than personal checks
Wide range of formats are available for customization
Why Purchase Professional Business Checks and Computer Checks
Affordable: Business checks and computer checks are an affordable and secure means of payment. They are very beneficial for small and medium companies as they provide them a cost-effective branding solution that conveys the message that the company is legitimate and successful. It also saves their banking expenses.
Branding solution: Good designing style and quality of professional business checks and computer checks leave a professional impact of the organization on consumers. Customization of checks gives businesses the flexibility to print checks that help to create a brand name for the company and promote goodwill in a big way.

Accounting Outsourcing is a Profitable Business Strategy

2007-05-08T04:24:00.001-07:00

Outsourcing is a business process through which one can handle their excess workload without too much of a hassle. Each business has specific requirements and that is why specific work must be done in the direction of achieving those results and goals. Setting deadlines is not only a necessity, but priority for all business undertakings and business owners must take special care of this aspect. Accounting outsourcing is a simple method through which business owners can take care of all their business needs. Mostly business owners are not people who can take care of the accounting and financial aspect of their business. So in such a scenario the best thing which one can do is opt for accounting outsourcing, a business process which will benefit them.
Undertaking any method that is new will not be a difficult task, if you gather all the knowledge regarding the process. So this means that you must do proper homework and research on accounting outsourcing as a business process. The web is the best source for gathering information of any kind and accounting outsourcing is no different from the other methods. Read about the news reports that you can find about the whole process of accounting outsourcing and you can find a clear picture of the going ons in the market. Find out all the statistics that you can about the whole process of accounting outsourcing and see what the success rate of success is.
So now that you have all the knowledge about the process and also know how well the process is doing, undoubtedly you will want to adopt the process for your business. Your next task is to find out an accounting outsourcing company that will handle your work and help you get the best business results. There are many companies that are working towards providing accounting outsourcing and finding out the best company among the lot can be a tough task. Find out the testimonials of the company given by customers who had used the services before. You can know the kind of work which they have done and then decide if the company is worthy of being handled over your accounting outsourcing work or not.
This is your business and you have to take this crucial decision. One more thing which you can do is talk to anyone that you know personally who have undertaken the work. You can talk to them about the entire process and the kind of work which have been done for their business. Accounting outsourcing is a sensitive work and this is the reason why you must make sure that you hire the services of the best companies that are operating. Accounting outsourcing will be beneficial for your business in more then one way. First you will get to save huge amounts of money; in fact this can be an unbelievable amount as your work will be accomplished at a much lower cost then what you pay to get the same work done by professionals in house. That is not all you can free up the workload of your employees and use this resource to focus on other core sectors of your business.

Do You Hate Bookkeeping?

2007-05-08T04:23:00.002-07:00

If you hate bookkeeping, you are not on your own. For most small business owners 'bookkeeping' is a major pain; a real chore. If you have to choose between selling your products and services or keeping your books in order - the books lose every time?
But it would be good to :
know your cash position
and know the bank balance before the statement arrives
Have reports and guidance on your profitability?
You want to be able to explain where your figures come from to the tax man if he should ask. Would you play football, cricket or golf and not bother to keep the score? Of course not, we all want to be in control of our businesses, but for the small business owner this has never been easy.
Give serious thought to 'outsourcing' your bookkeeping to an expert, either an online bookkeeping service or a traditional bookkeeper.
Isn't it best if my spouse does the bookkeeping?
In many small businesses the owners spouse will keep the books. Of course, they want to help each other, and to keep costs to a minimum. However, this can sometimes be a bad move.
If they are competent and enjoy doing it - then good. But remember your business is your livelihood, it is important that the books are written up on a timely and accurate basis.
If the job is done by someone competent
A Accounting costs should be minimised, good books = an easier job
B You should be provided with useful information throughout the year. Such as:
The balance on your current account, taking into account cheques you have written which the bank don't yet know about.
Your profit for the month, compared to the same month last year.
or Profit for the year to date, compared to the same period last year.
An aged debtors list.
The cost of paying someone competent to provide this information, perhaps just a few hours each month, can be a very rewarding investment.
Will buying Sage or Quickbooks or similar solve my bookkeeping problems?
Firstly, these and the other similar packages are marvelous tools for small business owners. However the purchase of the tool does not implement the system. If you are going to use the system 'in house' make sure you set off on the right track. Get someone experienced to help set up the 'chart of accounts' and the opening balances. Make sure you are confident on making entries and reconciling the bank account.
Be aware of the saying "rubbish in, rubbish out", bad books means more work at the year end. At the extreme, your accountant may have to cast the books aside, and re-write the whole years figures - expensive.
We don't really need to reconcile the bank?
"Reconciling the bank" just means making sure that the books are in agreement with the bank statements. The bank rarely make mistakes, so it usually means making sure you haven't missed anything in the bookkeeping.
And YES it absolutely has to be done. If you don't do it, your figures won't be reliable, and your accountant will have to do it, and he/she will charge for it.
What 'accounts' do we need in our 'chart of accounts'?
The software normally sets up the essential balance sheet accounts, such as a bank current account, a VAT account and debtors and creditors. Often it is necessary to add a bank savings or second account. Also a cash account might need to be set up. If it isn't clear how to do this, just set up a new bank account, and call it 'cash'.
The profit and loss accounts can be tailored to your business. Don't have too many accounts, 20 to 30 is usually enough, 50 or more is probably too many.

Accounting Business Outsource Process is a Good Approach

2007-05-08T04:23:00.001-07:00

In every business organization, accouting business outsource process plays an important role. Accounting is one such department which every company has to maintain. This area keeps changing year after year and so every company has to keep up with the changes in it. For this, you have to manage your book records till you finish up paying taxes for a financial year and again keep it safely for future reference. Every company dreams to prosper well in its business and for this they have to struggle hard to survive longer by bringing perfection in their every work. Today, there is intense competition in the business world and every company is looking for the unique strategies that can make them successful. For this, they make cost cut plans and invest the saved money in the growth plans of the company.
It is evident that accounting is a critical module of every business and so it needs special care for its maintainence.A highly qualified and skilled accounts professional with depth knowledge can handle the work very efficiently of accounts business outsource process. The accounting task includes treasury back-office services, bookkeeping, general ledger, tax computation and filing, data entry, spreadsheet and many others. These tasks have to be done very carefully and you also have to yourself updated with every change in the tax code. A survey reveals that the accounting business outsource process is expected to have a yearly growth rate more than 8% by 2008 and all financial and accounting services companies are leading the way. Before finalizing a company that will outsource your work, you need to check some measures. You must look for the track record of the company that will outsource your work before transferring your work to them.
More over, if a company has in-house employees for its accounting task, then it can prove costly for them. In such a case, the most successful strategy can be to outsource the complete accounting process. It will save a big range of your revenue along with the best quality work in less time. The increasing amount of work pressure on account businesses has recognized a special place for its work and that is outsourcing. Be it accounting or any kind of business or work, outsourcing is becoming successful in solving various kinds of problems by giving your entire work to a company who can efficiently handle your work on your behalf. Accounting business outsource process is meant to transfer your entire workload regarding the maintenance of accounts. By this, you will not have to hire professionals and establish a separate department.
Accounting business outsource process will save a lot of precious time of your company. The saved money can be utilized properly by investing for the growth plans. When you are outsourcing your accounting work, then there is enough time left with you to take care of your marketing division, sales, production and any other that you deal with. India is one of the most desired company where the outsourcing work is done very efficiently. The work done by them are filled with quality, accuracy along with complete professionalism. The global market for finance and accounting business outsource process is likely to grow at 9.6% annually and will exceed $47.6 billion by the year end 2008.This figure shows that accounting outsourcing business is booming. Many more companies are looking for this strategy as it will certainly save lots of their revenue.

Bookkeeping New York Outsourcing Can Boom Your Business

2007-05-08T04:22:00.000-07:00

Bookkeeping is the process to maintain the financial records of a company. It is the systematic method of keeping the fiscal and economic records of a business organization. The entire procedure of this service consists of the usage of great deal of effort, time and resources. Bookkeeping outsourcing New York is growing at a vast scale and many companies are keenly looking for this. Today bookkeeping outsourcing has seen a huge surge in demand. For this huge demand, many companies are available in the market to fulfill your requirements. This special service unfurls the practice of handling various business related activities in less money and in less time as well. For an organization whether it is small or big in size, bookkeeping outsourcing services will prove profitable from business point of view. It relieves the business persons the from the work load pressure.
A company can save lots of revenues by hiring the bookkeeping outsourcing services. It will put a big cost on the business if the owners are keeping a separate department for their own needs. It can definitely save dollars for them if they hire this service and then they can also use the saved money for the expansion plan of their company. Basically small organization tries to handle their bookkeeping department themselves. This is false notion in their mind. It will cost them much because for this they will have to hire trained professionals and precisely the trained person will demand big money for the work. So, from the growth and economy point, the small companies must hire the services from a bookkeeping service provider. This service aspires at maximizing the profits of your firm.
Bookkeeping outsourcing can be handed over to a third party who will do your work in the given period of time. The vendor will complete the work on time, consideration the quality needed for your work. The entire process of bookkeeping has become simple and cost-effective since the outsourcing services came into being. Traditionally bookkeeping has been done by accountants and accounting companies and today it has came a long way in providing the quality of the work. Accounts are very important part of a business and it has to be kept properly maintained in the database for their use in future. If you want your business to survive, you must keep the accounts records safely and accurately. The fundamental aspects of bookkeeping outsourcing is the production of balance sheet, maintenance and transactions of ledger, data entry bookkeeping, single entry bookkeeping, double entry bookkeeping, commercial bookkeeping, one-write systems, Computerized systems etc.
In today’s rapid and vast world of technology, bookkeeping services are also available online. You can get the online services for the bookkeeping of your company. You will not have to worry for the quality of your service and the time is also considered. It is for the benefit of both the firm along with the service provider. Bookkeeping is an important business tool that helps your business in running smoothly and successfully. It gives you a clear view of the income and the expenses along with the performance of your own company. These information are very important for you for filling the tax returns. The business owner must keep in mind that the services he is going to hire must be taken from a reputed firm so that you can relieve of the quality of the service and the security of your data.

Control Your Accounting and Bookkeeping Costs

2007-05-08T04:21:00.002-07:00

WHY HIRE AN ACCOUNT ASSISTANT?
When you first started your business, you probably did your own accounting; and that worked out fine. You were short on spendable capital and doing most of the necessary chores yourself was the only way to get started. But eventually, you got to a point where you really needed to concentrate on the income-producing aspects of your business and hire others to tend to the details.
Recognizing when this point occurs is the first major challenge for the entrepreneur. Many will pass it right by, believing the only way to keep track of their company is by doing all the accounting for it themselves. This is an easy trap to which almost everyone is susceptible. Don’t feel bad if it happened to you, just rectify it!
Think about what your time is worth. For example, as a lawyer, you could command in excess of $300 per hour. Does it really make sense for you to do your own accounting, when it could be done just as well, maybe even better, by someone you could pay $25 per hour? Of course not! You can still keep a close eye on your business accounting without doing it yourself. It just takes discipline and a good idea of what reports you need to see and how often. Then assign the detail work to someone else!
ACCOUNTING ASSISTANT’S DUTIES
So once you’ve come to this decision, you need to decide between hiring an employee to keep the books or outsourcing the job to an accounting or bookkeeping firm. Let’s look first at what you expect the accounting assistant to do. This may include some or all of the following:
1. Keep up-to-date and accurate record of all the company’s financial transactions into physical journals and ledgers or a computer-based system.
2. Periodically, usually monthly, they balance the books and create financial statements and other management reports.
3. Receive record, deposit cash and pay the company’s bills. They balance bank statements regularly, investigating and correcting any discrepancies.
4. Calculate payroll and issue payroll checks. They may oversee this function with an outsource payroll company.
5. Keep inventory records and calculate product costs.
6. Purchase supplies
7. Prepare purchase orders
You may also want someone who will make schedules, file bills, sort documents, fill in at the switchboard and other duties that would require someone in-house. You need to take this into consideration.
HIRE AN EMPLOYEE
The kind of job described above can be called different things in different companies. Some typical titles are bookkeeper, accounts payable or receivable clerk or billing clerk. To maintain consistency, we’ll call it an accounting assistant.
To hire a competent accounting assistant for your firm you can expect to pay between $15 and $25 per hour, depending on experience. Add to this the additional costs of employees – paid vacations, sick leave, insurance, bonuses, retirement, profit sharing plans, etc. You’ll probably find someone who wants to work 40 hours per week more easily than a part-timer, but that’s not impossible. At any rate, you’ll be locked in to paying for a certain minimum amount of hours no matter how much work there actually is.
The advantages, though, are also quite convincing. An employee will be more loyal to your company. He will also be more likely to take a permanent interest and perhaps make a career with you. He will learn more about your business and therefore be better able to make profitable recommendations for your company.
OUTSOURCE
On the other hand, you can outsource your daily accounting duties. There are several cost savings advantages to taking this route.
You won’t be paying for employer payroll tax expense, employee benefits and liability insurance. These costs will, of course, be built into the consultant’s fee, so it’s a wash at best. But you still save money, because you have no recruiting and interviewing costs and no training costs. And should you be unsatisfied with the service, there will be no additional recruiting, interviewing and training costs to replace your accounting assistant.
You will not have to worry about employee lawsuits. You can release an outsourced accounting assistant without raising your unemployment rates.
Most professional accounting assistants will have their own office space and will not need their own office or cubicle at your office, saving you the space and cost of desk, computer, software, office supplies, etc. If you require the convenience of having your computerized accounting records onsite for your review, a small cost can connect your system to theirs.
And one of the best parts is that you completely control the amount of money you spend on your bookkeeping. The amount you are charged by the outsourcing firm will be for the amount of time they worked on your accounting records. It will not include answering the phone, dealing with drop-ins, chatting with other employees, etc. You can adjust the amount of hours they work for you month by month. Some months you may wish to give them additional work, some months let them work bare bones hours. You can’t do this with an employee. You’re tied in.

Forensic Accounting - Be a Financial Detective

2007-05-08T04:21:00.001-07:00

Don't Let Tax Strategies Ruin Your Business Growth Prospects, Tips From a Banker

2007-05-08T04:20:00.002-07:00

Business Software, A Good Solution for Flourishing Business!

2007-05-08T04:20:00.001-07:00

How To Resign From Your Current Accountancy Job

2007-05-08T04:19:00.002-07:00

EXCEL Tutorial - How to Construct a Compounding Interest Financial Calculator

2007-05-08T04:19:00.001-07:00

Best Budgeting and Forecasting Tools for CPAs

2007-05-08T04:18:00.000-07:00

The Powerful Profit and Loss Statement

2007-04-27T03:36:00.003-07:00

The Profit and Loss Statement, also called the Income Statement for accounting, has five important parts: 1) Incomes, 2) Other Incomes, 3) Expenses, 4) Other Expenses and 5) Net Income or loss. It conveys how the business received and spent monies during the period of the statement. The statement can cover any time period but it typically covers monthly, quarterly, or yearly periods. Each of the statement parts shows a distinct piece of the net income puzzle, starting with income.
The Incomes portion of the statement, in accounting, will summarize all of the incomes received from operating the business. If it sells a product, it will be product sales. If it is a service company, it will be service income. Many companies have both types of income. The major difference between the two types of income relates to the cost of goods sold. For product sales, the cost of the product must be subtracted from the income. If you offer services, there isn't a cost to the product. Importantly, this income is from doing the entity's main business.
On the other hand, Other Income in accounting - will summarize all income that doesn't come from the entity's main business. For instance, if it had extra cash and invested the money, the interest received would be an Other Income because investing money is not the main business. In each company, what constitutes monies received from the main business and those received as other income varies with the line of business. The important attribute is not just the company making money, but how it is being made. Preferably, it is from doing the main business.
Next, entities spend money as a cost of doing business. They must pay utilities, buy machines, hire people and do many other activities. Just like income, all costs related to the main line of business are expenses. They will be summarized in the Expenses section of the Profit and Loss, in your accounting. Hopefully, these expenses won't exceed the income they produce.
Also, there could be some expenses related to making other income. For instance, if the company bought shares of stock with the extra money, there could be expenses related to buying and selling commissions. The Other Expenses are then summarized in the other expense section of the statement.
Finally, we come to the last section of the statement, often referred to as the 'bottom line.' If we take both income pieces, Income and Other Income and subtract both expense pieces, Expenses and Other Expenses, we have the Net Income. This is an essential number to both the owners and operators of the business. It is the reward the entity received for being in business. If there is more income than expenses, we have a Net Profit. If the expenses exceed the income, we have a Net Loss.
The Profit and Loss Statement then, in accounting, gives us a view of how the business did during the period of the statement. It doesn't say anything about what has happened prior to or after the dates on the statement. Too, it doesn't help us predict what will happen or how robust the entity is today. Therefore, the statement has a very narrow, but important, perspective--One that is used by investors, owners, managers and others analyzing the state of the business.

Small Business Accounting Systems

2007-04-27T03:36:00.001-07:00

You're beyond the paper and list-keeping stage. Thankfully, your business has grown to a point where you know you will have at least weekly income and expenses. Soon it will be daily. It's already starting to get hard to do your accounting manually and it will only get worse. What do you want to spend the majority of your business day on - accounting for your business, or running it? That's a no-brainer! You need to be making an income for you and your family!
Now it's time to buy that accounting system you've been thinking about. Make it something that doesn't take a CPA to understand, is easy to operate and doesn't take up all your valuable time to set up. Think about these things before you buy:
* If you have employees, you may need a payroll function
* Do you need to track inventory? What method do you use?
* Will the software exchange files with your bank?
* Do you have, or will you need, a tax prep package?
* Are there any unusual accounting requirements for your company or industry?
A HEARTY SOLUTION
There are several good packages out there for the new businessperson who is not an accountant. It is important to note that these packages don't replace the need for a business to seek the assistance of an accountant! In fact many businesses require an outside audit. These software packages will NOT replace that cost, but may help alleviate it by providing the accountant with easy-to-follow record keeping!
These are some good software packages that are readily available. Look them up, compare price and features and see which one best fits your needs on paper. These all have a free trial period, but try to make as good a choice as possible before embarking on that free trial. After all, it takes a while to set up any accounting system and you’d much rather do it only once! That said, the free trials are a valuable way to assure yourself that the accounting software will meet your needs before spending your hard-earned cash. Definitely take advantage. And if the package falls short, try another with your newly adjusted requirements in mind.
Here are the best-rated packages available:
* Peachtree Software is a full-featured accounting system that comes in various "flavors" for specific industries.
* Quickbooks is made by the same people as Quicken and has some of the same look and feel. It's a good beginning accounting software.
* Simply Accounting is another good beginners' choice.
* MYOB Plus is a full-featured accounting software that has a Mac version with an especially good reputation.
* Microsoft Small Business Accounting integrates with your current Office products and gives you a similar look and feel, which could shorten the learning curve.

What Is A Good Bookkeeper Worth?

2007-04-27T03:35:00.002-07:00

I am often asked what is a reasonable fee to charge my clients. And on the opposite side of the coin – what should I expect to pay for a bookkeeper? A bookkeeper who is honest, trustworthy, reliable and knowledgeable is worth their weight in gold. You might find a good honest hard working person, but if they don’t have the knowledge and experience that you need then you only have part of the solution you are looking for.
For bookkeepers check with your local CPA’s for a reality check of your worth. They often have a good idea of what the market will bear for your area. Consider your experience and education when setting your fees. If you are just starting out, you might want to consider the lower end of the scale. However if you are experienced in all phases of bookkeeping (generally called a full charge bookkeeper) you are worth more and should charge more. Specializing in niche business types such as construction, retail, artists and art galleries, medical, etc can add even more value to your services.
As for those business owners looking for a bookkeeper, first determine what your needs are. Are you looking for someone to do data entry of receivables and payables and perhaps write checks? You might consider someone with less experience. However, remember your company is probably growing and you should seriously consider your future needs. Will you need someone to process payroll? Make general journal entries? Prepare internal financial statements? Do you need someone who can guide you through your financial record keeping needs as your company expands? Better to hire someone who is more experienced now as they will be a great asset to your growing company.
A good bookkeeper is more than just a data entry person. They are an integral part of your company and as such you should take care to find the right employee or service for your company. Remember the old adage – you get what you pay for!

The Benefits of Outsourcing Your Company's Financial Asset Management

2007-04-27T03:35:00.001-07:00

Financial asset management is a great tool, that is used to manage a companies, investments, available cash flow, and its liabilities. This type of asset management is very complex, and requires the assistance of highly qualified professionals to obtain the best results.
Most companies tend to outsource this task to qualified professionals who specialize in the field of financial asset management. Companies that specialize in managing the assets of other companies are better equipped to manage a companies assets. The effort that it would take a small or medium sized company to put together a highly specialized team to manage their assets would be cost prohibitive, and counter-productive.
Financial asset management services, covers everything that falls under the blanket of a companies financial assets. However the main emphasis is placed on the capacity of the companies investments, and the returns of these investment. Although more often than not, the use and mobilization of these finances will be a service that is provided by the financial asset management company.
Companies that specialize in financial asset management will do all of the research that is needed to find the best possible options concerning the investment of the company they are working with. They will work directly with the company to find the best way to utilize its available finances. This is know as complete funds management. Initially funds management might appear to be simple and straight forward, but in reality it is a highly complex processes.
There are a number of benefits to having of a good financial asset management team on your companies side. When most people talk about finances, banks tend to come to mind. When a company has a good financial asset management system established, their relationship with the bankers improves. Banks respect professionally managed companies, and they are more inclined to accept a risky proposals from a company that has a good financial asset management system in place, than from one that dose not.
This is due to the fact that when your finances are organized it is easier to have a contingency plan in place for the risks that are being taken, and this allows bankers and potential investor to focus on the opportunity at hand when the risks have been minimized. Its a win, win situation for everyone that is involved.
Outsourcing your companies financial asset management is profitable for two main reasons. First of all you will be given expert advice, and professional services for a fraction of what it would cost a company to hire experts in this field to work in house. Secondly, it will improve the credibility of the company.

Free Sales Tax Classes in San Marcos, California

2007-04-27T03:34:00.002-07:00

Confused about sales and use taxes? Did you know that the Board of Equalization offers free classes in San Marcos, California, to help you learn about sales and use tax return preparation?
Live, Instructor Led Courses in San Marcos, California
Two courses are offered. One is called the Basic Sales and Use Tax Seminar. This is a live, instructor led course, and it's designed to cover the following topics:
Preparation of a sales and use tax return
Supporting and reporting sales exempt from sales and use tax
Using a resale certificate
Determining the difference between taxable labor, and non-taxable labor
How to maintain adaquate records
Courses are offered once a month and are in English. About two hours long, they are usually on Wednesday evenings at 6pm.
The second course offered is called the Sales and Use Tax Return Preparation Class. This is also a live, instructor led course. In this class, the instructor assists the participants in preparing a sales and use tax return. In fact, participants are encouraged to bring their own sales and use tax return, along with any supporting documentation. This course is offered several times per quarter. It lasts about one hour, is in English, and is usually on a weekday at either 10am or 2pm.

Does Your Accounting System Measure KPIs?

2007-04-27T03:34:00.001-07:00

Every accounting system measures cash, deferrals and accruals according to Generally Accepted Accounting Standards. Every accounting system outputs various statements and reports that show the financial health of the company at a point in time. Law, investors and common sense usually require this. But does your accounting system give you the kind of Key Performance Indicators (KPIs) that you need to insure your business is one to take pride in?
KPIs – A BEGINNER’S LIST
Do you have a KPI list? Every business is different and therefore, different KPIs are important to each. In choosing the KPIs you want to monitor, cast a wide net. Choose all that you think may be appropriate. Eventually, as you gain experience monitoring them and seeing how each relates to your overall business picture, you may weed some out as not relevant.
Here are some monthly KPIs every small business should consider monitoring:
• Count and approximate amount of leads • Count and amount of sales • Profitability per product • Number of telephone sales made • Marketing expenses • Count and amount of outstanding opportunities • Referrals gained • Testimonials received • Number of sales calls per sales rep • Customer complaints • Standard cash flow report • Debtors’ report • Creditors’ report
These items are then distributed to key personnel for evaluation. Management gets together monthly to discuss them and brainstorm on ways to improve their numbers. They note any standard symptoms that lead to lack of business success and take measures to correct them and avoid them in the future. The following are some common symptoms ones to watch out for through the use of your KPIs.
PROBLEMS TO BE AVOIDED WITH GOOD KPIs
Less than 10% of opportunities are converted to sales. Do you have leads that are not followed up on, or worse yet, not followed up on adequately? Depending on the source, a lead can be one of your best opportunities for a sale. Study your leads before they are contacted. What are they looking for? Let that guide your initial discussions with them.
You have a product that has been loosing money consistently. Surprisingly, this is a common problem. When companies don’t look at products individually in terms of their costs vs. their revenues, they are doing themselves a big disservice. In fact, you can have a product that makes you more revenue than any other product, but if you’re spending more to make and market it than your receive in sales, it’s still best to ditch it, or at least find a way to reduce costs. You can’t make these determinations without good product profitability reports.
The sale team is not following your defined sales processes. This could have a number of consequences, not the least of which is that you can’t count on your accounting and management reports to accurately reflect what is actually happening in the company. You must always know what your sales team is doing and how they are doing it. Remember that they represent you. For legal and financial purposes, they ARE you!
Communications failures between individuals and departments are frequent. This can result in lost income and/or increased costs; neither of which should be tolerated. Don’t let your business fail because one hand doesn’t know what the other is doing.
There is no consistent pricing being used. This must be standardized, usually as a legal requirement. It is illegal to discriminate by giving one customer a better price than another for substantially the same product or service.
Customer complaints are on the rise, always a significant indicator that something in your organization has gone awry. Do the complaints indicate a problem in a pinpointed area of the sales or receivables cycle? Pin it down, analyze it and correct the process to prevent future recurrences.
There is no process to evaluate customer satisfaction. If you don’t know what your customers think of you, find out! There are many ways to do this. You should have some type of regular communication with them. Try a newsletter which encourages customer comments. Or perhaps you could send out a survey periodically to gauge their satisfaction.
There is no process to gather customer referrals. If your customers are very happy, encourage them to spread the word. Your best customers’ recommendations are another excellent source for new leads. Ask them to recommend you. It couldn’t hurt!

How to Start Your Accounting Career

2007-04-27T03:33:00.002-07:00

You want to be an accountant. You love numbers, maths and money. So, how do you get started? Where do you go to get certified so that your services will be in demand? If you do not have any recognised qualifications, your clients will not be able to know if your standards meet their requirements. People hire Chartered Certified Accountants with a full practicing certificate because they know that they can trust in their expertise.
Any old accountancy certification will not do. You need an internationally recognised global qualification to compete in today’s industry, and the ACCA qualification fits this demand perfectly. The Association of Chartered Certified Accountants (ACCA) is the world’s largest international accountancy body, with over 300,000 members and students in more than 160 countries. Founded in 1904, ACCA has over 100 years of history as a leader in the development of the global accountancy profession. The United Nations has chosen the ACCA syllabus as the basis of its global accountancy curriculum and the ACCA qualification is well recognised in an ever-growing list of countries including the USA, Canada, the United Kingdom, the European Union, Australia, New Zealand, South Africa, China, Singapore, Malaysia and Pakistan. Many ACCA graduates work in premier companies such as British Airways and Price Waterhouse Coopers.
The syllabus spans 16 topics each with its own examination to test your competency in that subject. It usually takes 2 years for a student to obtain the ACCA qualification. This is broken up into the "Fundamentals" stage that consists of 9 papers and the "Professional" stage that consists of 3 papers and a choice of 4 options. With so many examinations to pass, self-study can be difficult. The good news is that there are many professional accounting and finance schools such as FTMS Global that offer ACCA courses. The better ones have a cast of highly qualified and experienced lecturers who are ACCA-certified. These teachers know what the ACCA syllabus requires and can dramatically increase your chances of passing the examinations. Definitely, it is highly recommended to enlist the aid of a mentor who can show you the ropes.
After qualifying as a Chartered Certified Accountant by passing the examinations, to obtain the practising certificate you must have had sufficient experience in a practising accountant’s office. On top of all that, you must continue to keep yourself updated by attending courses on a regular basis. The ACCA is the only accountancy body that provides a disciplinary system which offers remedy if any ACCA member breaches its high standards.
Once you obtain the ACCA certification, your clients know with certainty that they can depend on:- Your integrity - Your absolute respect for the confidentiality of your client’s affairs- Your knowledge and expertise- The fact that there is a regulatory body who will ensure that standards are maintained- The fact that you must operate within a strict framework of rules and ethics
The entry requirements of the ACCA qualification are 2 A-Level passes or a bachelor's degree from a recognised university. If you do not meet this requirement, you may opt to go for the open-entry route by taking the Certified Accounting Technician (CAT) qualification first. Upon completion of the CAT course, you may progress to take the ACCA qualification.
As an ACCA graduate, you can look forward to rewarding accounting career in a variety of fields such as accountancy, auditing, financial management, taxation, business development and management. Numerous opportunities will be available to you, whether you choose to work in a small practice, run your own company or lead a large multinational organisation. Indeed, ACCA graduates are in high demand worldwide.

Why Accountants Make Good Clients

2007-04-27T03:33:00.001-07:00

If you’ve read any of my other marketing articles you’ll know that I believe that one of the key foundations of a strong business is to have “good clients”. From a small business perspective Accountants come high on my list of the type of companies who make good clients.
So, what it it about accountants that tends to make them good clients? Before I get in to the positives, let me just mention the two great weakness that accountants have as business people. They tend to look back rather than forwards. This is probably because of the way they’re trained. They deal with accounts which are always in the past. They look at the patterns of the past to work out what went wrong and then try to correct errors to create a more profitable future.
The other negative point about accountants is that they tend to be “risk averse.” Yet many small businesses need to take risks in order to move forwards. Sometimes we need to stretch our finances beyond reasonable limits, and accountants don’t like taking such risks.
Having said all that I still believe that on the whole accountants make good clients. The reasons are that they tend to operate very stable businesses. They are logical and can see the benefits in practical business techniques. They are intelligent and often reasonably creative and open to ideas.
Above all they are interested in business, in growth and in profit. It is their interest in growth and profit that makes them open to good ideas for growing their businesses.
When you’re selling to accountants you need a good idea the benefits of which are clear for all to see. Then you must have some really strong logic or evidence that what you’re recommending is likely to work. Accountants are practical people who believe in concrete “evidence” and not in “airy-fairy” ideas.
Present your case well, with good projections of the likely benefits when it’s implemented and you will find an accountant is paying close attention to what you say. They will ask you intelligent questions. And, once they decide that you’re proposal has merit they will adopt it and support it with a level of resources that it likely to achieve ultimate success.

Generally Accepted Accounting Principals - A Primer

2007-04-27T03:32:00.002-07:00

Accountants are the keepers of the standards. They are the ones who make sure that when we look at a financial statement, we can be reasonably that it was built using sound accounting practices and that it is comparable to other audited financial statements for other companies.
That sounds like a daunting task, but never fear. The accounting professional is in business to help you through all this.
The accounting profession is self-regulated. They decide the most appropriate way to record company activity on the financial books of record. They do this through an august board of seasoned professionals, the Accounting Practices Board of the American Institute of Certified Public Accountants (AICPA). This group defines what is known as “Generally Accepted Accounting Principals” or GAAP, which all public accountants must adhere to on behalf of all their clients.
The process used to introduce new GAAP or change old GAAP is beyond the scope of this paper, but it is a lengthy process with plenty of review opportunities for all CPAs and business people.
THE PURPOSE OF GAAP
The main purpose of having GAAP is to assure consistency in accounting practices, not only within a company, but across all regulated companies. The SEC requires all publicly held companies to be audited at least annually by a Certified Public Accountant (CPA). The CPA assures the stockholders that they can count on the financial information from the company, because it is in compliance with GAAP.
By preparing all financial information according to GAAP,
• Management can depend on the records and make course corrections for their individual departments or the company as a whole for the betterment of the company.
• Investors and lenders can make sound decisions based on the financial records of the company.
• Stockholders and prospective stockholders get an accurate picture of the company’s financial health.
• Stock can be valued fairly on the market
• Deceptive, unfair and even criminal practices are minimized.
PRIMARY PRINCIPLES
The following are some of the primary principles upon which GAAP is built. This is, by no means, a complete description of GAAP, which is very detailed and takes much study to become expert at, but it shows the abiding purpose behind all that detail.
1. Historical Cost Principle: In general, the value of a company’s assets is the original cost of those assets less suitable depreciation or amortization. This keeps companies from stating their assets at market value, which is not only difficult to ascertain, but very subjective in nature. Historical cost provides the actual cost which is very objective.
2. Revenue Recognition Principal: This simply states that revenue is recognized when it is earned, which may be a different time than it is received. For example, if your company provides a service at the end of December, but you customer doesn’t pay you until January of the following year, your December revenue total will include that amount. January will not, even though that is the month in which you deposited the payment.
3. Full Disclosure Principle: Any information, whether or not strictly financial, that is relevant to the business and may have a future impact, must be disclosed. All transactions must be posted, of course. But even further, this principle provides for disclosure of contingencies. For example, if your company is being sued, the lawsuit must be analyzed for expected chance of loss. This contingency must be disclosed in a footnote of the financial statements. This is to prevent a loan officer or investor from not knowing this possibly impacting information when making decisions regarding investments in or loans to the company.
4. Matching Principle: Put simply, revenue must be matched to the expenses that helped to create it. This is why you have accruals and deferrals. The expenses associated with earning revenue for this period must also appear in this period.
GAAP ASSUMPTIONS
GAAP assumes the following:
1. Going Concern Assumption: The company or entity is a “going concern” and is not likely to end operations in the current year. It is expected to remain in business for the foreseeable future. Any exceptions to this assumption must be disclosed.
2. Economic Entity Assumption: The company is an independent entity and is separate from it’s owners.
3. Monetary Unit Assumption: The currency used to measure the entity’s financial performance is stable.
4. Periodic Reporting Assumption: Business operations are reported on a regular basis, usually annually. The fiscal year doesn’t have to be the same as the calendar year. This is usually set according to the business cycle for the particular company.

Accounting Outsourcing is a Profitable Business Strategy

2007-04-27T03:32:00.001-07:00