Basic Accounting

Dealing with the accounting function of any business can be laborious and time-consuming. Making sure that accounting details are accurate is no walk in the park either. It requires great care and expertise. When business owners review accounting records to check the firm’s financial status, they realize how much time is spent on getting accurate details and chalking them up. In fact, doing accurate accounting can take significant time and effort.

Only qualified accountants can draw accurate conclusions from accounting details and help firms realize the actual financial picture. However, procuring the services of an accountant that is both qualified and experienced is cumbersome. In this instance, one might opt to simply hire the services of an outsourcing firm that specializes in accounting. These days, outsourcing accounting to India has become one of the most preferred options for businesses and accounting firms.

The work of an accountant never ends and it requires vigilance. If one appreciates the details that can possibly make or break a business, he would certainly want to get the most qualified accountant for the job. Outsourcing accounting to India is ideal because it ensures that only a qualified professional from a reputable firm will work on the accounting services for a business.

Now, choosing a reliable, authentic and established accounting outsourcing vendor in India can be difficult. In spite of this, one must give it time and care because once outsourcing accounting to India is accomplished, there would be no more need to worry about accounting again.

When outsourcing accounting, the first step is to skim through the many different firms listed in classifieds over the internet or online. Available vendors offer accounting services to both large and small businesses. Different businesses have different Read more

In January 2008 Inc. Magazine, “Short on Cash?” in the Finance: Cash Flow column, the point was made that a factoring discount was an equivalent annual interest rate of 12 times the factoring discount rate. This hypothetical 12 times interest rate is then compared to a bank loan at a competitive annual rate. For the article this meant that a monthly factoring discount of 2% is equivalent to a 24% annual interest rate. This is really a misleading comparison of apples and oranges. In reality a 2% factoring discount rate is equivalent to a 2% annual interest rate, but to understand it we need to go into some detail.

The Standard 2% Net 10 Supplier Discount

We will start with the scenario with a typical supplier discount to their customers, 2% net 10. This is where the supplier has offered to self-factor the customer with 2% discount of the invoice price if they pay within 10 days. In this first example the customer takes the discount and pays by day 10. So the customer pays the client the $1,000 less the 2%, or $20, for a net payment of $980 on day 10.

Let’s calculate the effective interest rate the way the article did. Using this same mathematical logic, for a ten day term this 2% over ten days is an equivalent rate of 6% over 30 days, and 6% times 12 months, or 72% for a year. Now 72% of $1,000 is $720, so based on this logic, how did the customer pay $980, and not just $280? The answer is simple, the money was only used by the customer for 10 days, not a whole year, and a factoring discount is not an interest rate but a fee for using the money under the stipulated terms of 2% net 10.

Now let’s consider that this happens once every month. So at the end of the year, the client sends twelve invoices for a total of $12,000 to the customer. Each month the customer took the 2% discount and thus kept a total of $240 over the year. No Read more

Establishing a successful business is not as easy as it seems to be. For getting the desired success level, every business owner needs to manage every aspect very carefully. Be it manufacturing unit or higher level management, every section of business is important for earning the desired profit. Since planning and implementation of approved strategies is the key task of every business owner, he or she may need various financial and accounting records to support his or her proposed plans. Unavailability of any accounting and financial record can affect the decision making process and can create obstacles in the way of success of any business.

However, every business keeps a separate accounting section to manage all accounting and financial transactions but, as accounting an incredibly complex task, just few people cannot manage all in house and external accounting tasks. In fact, a sufficient accounting staff can manage every accounting and financial task efficiently. However, every business owner cannot manage to hire so many accounting professionals therefore he or she needs to find out an affordable and effective solution to manage all accounting transactions. Taking accounting help from an outsider firm can solve that problem and can help the business owner in making highly beneficial decisions.

At present, there are a number of financial service provider firms that offer complete accounting solution for every kind of business. These firms provide accounting help that enable a business owner to manage every accounting task without using extra financial resources for hiring extra accounting professionals. Such firms analyze the current condition and cash flow level of the client organization and provide solutions accordingly. Accounting help of such firms also guide their client organization for improving cash flow and reducing tax bur Read more

Property Rental Income for Individuals

UK Rents and licences are regarded as UK land and property. Land and property income is all income deriving from such property as if it were a trade. Therefore this is calculated as all income being assessed in the tax year on an ‘accruals’ basis. This means that income is taxed on an ‘arising’ basis in the year of assessment, i.e. income that is due in the year, and not necessary income that is actually paid by the tenant.

For example if a tenant per the tenancy agreement is obliged to pay 495 a month, the taxable income is 5,940 a year, irrespective of the fact the tenant might say pay late for their rent.

Since rental income is assessment like trade, all income from the different rental properties are pooled together, creating one income stream. Hence profits and losses of the same UK properties are amalgamated together to create the net profit or loss. In essence losses from one property is netted off against profits of the other.

If they are losses overall after pooling all the properties together, then these losses can be carried forward against future profits of property income. These losses cannot be set off against other income, e.g. employment income or self employed income. However, if losses arise due to ‘capital allowances’ this may then be relieved against other general income.

Capital allowances is the allowable decrease in value of the assets each year that are used in the properties. For e.g. fridges and ovens. Capital allowance rates will be 20% or 25% a year depending on current capital allowance rates.

Expenses are allowed to be deducted if they are incurred ‘wholly and exclusively’ for the purposes of the property.

The treatment for limited companies broadly follows the same rules as for UK individuals.

Income from Over Read more

Establishing a business and running it successful are two different sides of a coin. Running a business has always been tricky, risky, complicating and a grueling job. Every business firm is a house to numerous departments dealing with several expectations. We all know that development and advancement is growing with an unmatchable pace. And to sync with this, you definitely need something more than just the basics. Here the introduction of bookkeeping outsourcing makes valid sense. Many firms which approach bookkeeping service providers gain considerable popularity due to the excellent management of all the tasks and time. It is different from the traditional method applied for bookkeeping records. One such service provider is bookkeepers NY whose capability has been proved by the improved performance of their clients.

Accounting or bookkeeping is a crucial department of any business organization as it is responsible for estimating the capability of a company that whether it is a profit making business or a loss-making venture. Therefore, it is naturally employs only expert accountants. Bookkeepers of NY have increased their rate of efficiency with the use softwares that are specifically programmed to manage all details related to accounts and bookkeeping. These softwares are used to store data along with the easy convenience of sharing and transferring the data. There are numerous softwares present in the market of bookkeeping to help all small, medium and large business houses to lodge their routine financial transactions. And this is not all; they even save on your time and energy as they help you in more accurate performance with an easy way of making entries in those of cash payments, banks, sales reports and other reports.

The wide category of accountancy or bookkeeping holds numerous other factors that demand equal attention. A Read more

Case Example: The Accountant

Kemmie worked for a large national consulting firm. He liked being an accountant. He liked the organized way in which debits and credits fit together. To Kemmie, it was almost like an art form the way one change in the numbers here, had an effect on another number there. When asked to describe the results, Kemmie would write out a complete and thorough explanation of what was happening. He was good at explaining the cause and effect of changes in the financial picture.

Early in his career, one of his reports was published by a major trade publication, and suddenly found himself becoming the firm’s expert analyst. Kemmie began to write more and more case studies, and getting more and more articles published.

The exposure and increased stature the articles gave him made it easy for senior management to market him for more and larger projects. When they needed an expert to analyze the trends in the insurance industry, or explain the benefits of plant expansion, the exposure his articles gave him allowed Kemmie to be called in.

Frequently, while presenting his analysis, Kemmie also got the opportunity to sell as well. He began to leverage his report writing by modifying the same report to fit alternate situations so that it could be presented to more than one publication. Soon he began to use his articles as the basis for speeches. Kemmie soon rose to become head of the regional office for his firm, and a major player in his firm.

When clients hire a practitioner, they want to feel comfortable with that individual. The most common method of satisfying their need for comfort is for them to select a practitioner who is a recognized expert in their field. In the example, Kemmie satisfied that condition. By being a published speaker, and recognized by others in his field, Kemmie achieve Read more

Bookkeeping is quite a task, when it comes to perform it with absolute determination. And there is no way that you can afford to bend a little and settle for anything less than perfection. Bookkeeping is a vital factor for any company’s on which the growth and planned development depend. Everybody who is involved in the challenging field of business must know the fact that the treasure of success lies in proper functioning of all departments and especially in accounting or bookkeeping, as it has the ultimate responsibility for estimating the prospects of the company. The bookkeeping department finally declares if the company is running in loss or profit. However, it is superbly troublesome to appoint an efficient staff for maintaining accounts. Even if you find good people, the problem sustains with economic expenses, time management and degree of perfection. But to your surprise, this situation looks somewhat resolved with the name of Bookkeeping NYC.

Numerous bookkeeping accountants in NYC are found to be present in NYC. But not all have the intelligence and sincerity to meet your demands in the most perfect way. To find out the provider who promises the good work efficiently and a meticulous way to manage everything in a proper order is certainly very valuable attribute for the company.

All business organizations are well aware with the importance of bookkeeping in company, but many try to overlook its proper execution due to their lethargic approach. Make sure you never fall into this category because any sort of negligence is the first step towards failure. It is highly recommended to arrange all your financial records properly. Bookkeeping NYC is a good solution for making your business grow and flourish.

Accountancy which is also referred to as bookkeeping in many places is not at all an easy task, and can certainly not be ha Read more

I’ve heard it many times from accounting grads: I remember when my biggest concern was over the big final at the end of the semester; well, now as a graduate, my biggest head-scratcher is trying to navigate through the CPA process!

There are many components to this process (some of them very time-sensitive) that I wish I had known about from the get-go. When should I start thinking about the CPA exam? How do I schedule my first exam? What do I do to prepare? These questions, and many more, will be answered in this short tutorial. Let’s get started!

–> Step 1: Submit Your Application

First-time applicants must submit their transcripts to their state board along with the mandatory application fee and examination fee(s). An examination fee is the charge for each section of the CPA exam; for example, in Minnesota, the examination fees are as follows:

Auditing and Attestation (AUD) $209.33

Business Environment and Concepts (BEC) $161.63

Financial Accounting and Reporting (FAR) $197.40

Regulation (REG) $173.55

–> Step 2: Receive your Notice-to-Schedule (NTS)

After submitting your application with the necessary payments, expect anywhere from four to ten weeks before receiving what’s called a Notice-to-Schedule (NTS). This NTS will allow you to go online and register for a testing location as well as testing date (for more information, go to www.nasba.com or www.prometric.com).

**Note: Be aware that your NTS will expire within 6 months. Take this scenario for example: I submit my application, application fee, and payment for all four sections of the CPA exam in March. I then receive my NTS in April. This means that I have six months from April to sit for all four sections of the exam. If I don’t, I will have to appl Read more

“Get the fact, or the fact will get you.” This Thomas Fuller’s motto is true in business. That’s why many small business may need some extra funds at the wrong time. Factoring can be a possible answer to their needs.

What is factoring? What are pros and cons of this financial instrument?
Factoring is one of the oldest forms of commercial finance. The term factor comes from the Latin verb “facio”, which means “he who does things.” Some scholars trace factoring origin to the Roman Empire. Others go further back to the Hammurabi, four thousand years ago.

What is factoring today?
Factoring (also known as Accounts Receivable Financing) is the practice of selling your accounts receivable (invoices) at a discount to another company. In other words, you get the cash from the company that you sold your accounts receivable. At that point, they become responsible for collecting on the invoices.

There are usually three parties involved in this operation:
1) the seller of the product or service who originates the invoice;
2) the debtor is the recipient of the invoice for services rendered who promises to pay the balance within the agreed payment terms;
3)the factor.

Why should I use factoring?
Small businesses most of times have no choice: slowing their growth or using external funds beyond the banks. In choosing to use external funds beyond the banks, the rapidly growing firms choice is between seeking angel investors (i.e., equity) or the lower cost of selling invoices to finance their growth.The latter is also easier to access and can be obtained in a matter of a week or two, versus the six months plus that securing funds from angel investment typically occurs. Factoring is also used as bridge financing while the firm pursues angel investors and in conjunction with angel financing to provide a lower avera Read more

Bookkeeping is a time consuming and tedious but essential task for businesses. Moreover, it can be quite expensive as it entails accountants’ salaries - very likely substantial - and benefits over and above the cost of training them. Though hiring a proper staff for bookkeeping may fit the budget of many small business ventures, often, after the expense on training accountants in bookkeeping, in due course, companies find that they can not afford to hire these accountants permanently.

To conserve the budget for in-house bookkeeping, a company may opt for outsourcing bookkeeping work - a portion of it or its entirety. Savings on the cost of training and retaining an in-house bookkeeping staff translates into lower capital expenditure. Additionally, shifting some of your workload to others saves you time and allows you to perform efficiently in other areas of your business. Therefore, outsourcing bookkeeping saves time and money. Time and money saved can be utilized for strengthening core sectors of the business and expansion, both of which increase profit.

Yet another benefit of outsourcing bookkeeping is enhanced efficiency. Usually, because of the multitasking nature of work in businesses, a person or a company is unable to give its best just when it is needed most. In this instance, it makes perfect business sense to outsource bookkeeping work to accounting firms. The professionals at outsourcing bookkeeping firms lay great emphasis on expertise and proficiency. Because professionals at specialized outsourcing bookkeeping firms have the advantage of being able to concentrate on maintaining your accounts, they do the work in much less time than in-house accountants. Plus, they can take each and every step of bookkeeping very carefully thus producing meticulous work.

Many outsourcing bookkeeping firms hav Read more