Basic Accounting

My wonderful friend, Sally Massagee, who is a CPA and I recently began periodic meetings to discuss our businesses and to support each other with business growth. Our first meeting was wonderful and we both came away with some great ideas for moving forward. I am definitely not an accounting person and so our very different viewpoints made for an interesting discussion.

I have a bookkeeper that handles most of the tasks related to financial record keeping for me. She inputs my receipts, expenses and income into QuickBooks. Every coach needs to have a system for logging income and expenses and I believe QuickBooks to be the best. Aside from a bit of complicated setup, the software is so simple I can use it myself if I have to! But CPA Sally was not content with what I already had in place. She wanted - no - she insisted, that I start reviewing my financial statements with her each month. Because I am the coach who works with other coaches to be better business owners, it’s a little embarrassing to admit to her and to you, I had no idea what those financial reports meant.

Sally was not put off by this confession at all. She says, “Your financial statements are trying to talk to you. They have many pleasant things to tell you in their own little voices”. She pledged to teach me to understand their language. The most important financial statements to review each month are the balance sheet and the profit and loss statement. The balance sheet tells you about your assets, liabilities and equity for the designated period of time. The profit and loss statement tells you how you did overall in making money during that period. I had to agree that sounded important.

If you don’t have an accounting system set up yet, you need to get one as soon as you can. You aren’t really a business without one. If you have your system in place, I challenge y Read more

Many people, all over the world in fact, face the problem of trying to start a business. It is a classic dilemma: you have an idea to make money, but you need money in order to start the business. It’s a classic “Catch-22″ scenario. So, that is where a government business grant can come into play. As it happens, the United Kingdom is one of the very best places on Earth to either start or expand a small company.

The good news about business grants from the government is that there are lots of them out there. The bad news: you have to seek them out and apply; they do not come looking for you. There are close to two dozen different business grants in the UK. So, let’s look at just a few of them. First, there’s the direct grant, where a program will give you some funds to pay part of the costs for training, product development etc. Now, that’s a key point: part of the costs. It’s rare for a grant to completely cover the costs of some aspect of your business, but it will at least cover a portion.

Then there are grants that are much like a small business loan. The difference is, if your business fails, you do not have to repay the money. And then there are real business loans; they are called soft loans because the terms and conditions are very generous. The interest rate is usually quite low, some are even interest free. Next, you can get what is known as equity financing. With this type of grant, you don’t pay the grantor back in cash, but in shares in your company. In this case, the grantor looks at your business as an investment; they believe you have the potential to grow your company into something profitable, and that will mean that the shares they own will increase in value.

Sometimes, business grants in the UK aren’t about money at all; they have to do with skills. After all, many new businesses often lack knowledge or skills in Read more

While it may bring you some personal satisfaction to review your financial records from poverty to wealth. It is still probably time to clean out your growing storage of Records.

Anyway, you ‘know’ that as soon as the garbage man pulls away from your curb, the IRS will want exactly those documents you threw out. Let’s look at what are the rules? What information do you have to hold on to and for how long?

Let’s start with your “zone of security”, the IRS statute of limitations. This limits the number of years for which the IRS can audit your tax returns. Once that period has expired, the IRS is legally stopped from even asking you questions about those returns.

The idea behind this is, after a period of years, records are lost or misplaced, and memory is not as accurate as it used to be. There’s a need for closing things out. Once the statute of limitations for a specific year has expired, the IRS can’t go after you for additional taxes. However, you can’t go after the IRS for additional refunds, either.

“Three-Year” Rule

In assessing additional taxes, the statute of limitation runs three years from the date you file your return. If you’re looking for an added refund, the limitation period is generally the later of three years from the date you filed the original return or two years from the date you paid the taxes. There are exceptions:

- If you do not report all your income and the unreported amount is more than 25% of the gross income that shows on your return, the limitation period is six years. - If you’ve claimed losses from a worthless securities, the limitation period is extended to seven years.

- If you file a ‘fraudulent’ return, or don’t file at all, the limitations period never begins to run. The IRS can, in fact, get you at any time.

- If you’re deciding what records you need or desire to k Read more

Often times when ideas and techniques become commonplace in our everyday lives and in our professional lives we lose sight of where these ideas originated. With more and more businesses switching to activity based costing maybe some thought should go into considering how this method came to be and why it has continued to grow. Activity based costing, or more commonly ABC, is a method for determining accurate costs. It assigns resource costs to cost objects based on activities performed for the cost objects. Costs of resources are assigned to activities based on their use of those resources, and costs of activities are assigned to only to cost objects that are actually demanding the activity.

Robert Kaplan and William Bruns, both Harvard Business School professors, first fully explained the subject in a chapter of their 1987 book Accounting and Management: A Field Study Perspective. They presented activity based costing as a way to solve the problems of traditional costing systems, which were unable to determine the actual costs of production accurately. Their original focus was on the manufacturing industry where new technology and improvements had reduced the proportion of direct labor and material costs but increased the proportion of indirect costs (Weiner). They knew a new system needed to be developed.

Most accountants agree that activity based costing came onto the scene in the mid-1980s. Prior to that, the United States had dominated the world’s economy after World War II. During the period from the 1950s to the 1970s, the focus of American companies, in order to achieve growth and profitability, was only on output and not quality or cost control. They only needed to produce the product and get it out on the market quickly to make a profit. That was until the 1980s when Japanese began to produce low cost, high quality go Read more

Maintaining the books of accounts is a crucial aspect in every business. Any business is not only the realization of the vision of an entrepreneur but involves the efforts of many individuals and multiple resources. Accounting is one such resource. In order to ensure a smooth functioning of each segment of the business organization, a business employs various employees. Keeping in-house employees for accounting work can prove to be a costly affair. The employees need to be given huge salaries plus allowances like medical benefits etc. Accounting outsourcing solves this problem by providing cheap working force to maintain the books of accounts.

Maintaining the books of accounts is a monotonous process. Only experts and professionals can do this type of work. However, accounting is an important task in any business. It is essential to maintain the accurate record of each and every transaction on a daily basis. Most of the business houses have realized that if they opt for accounting outsourcing facility, they stand to gain a lot. There are multiple advantages by opting accounting outsourcing services. The biggest advantage is that the business owner can save hundreds of dollars in salary, which have to be given to in-house employees. This is because accounting outsourcing service providers charge less for his services. Accounting outsourcing work is done by qualified accountants who carry out the accounting work using the latest accounting software. The accounting professionals must keep in mind that the records must be maintained accurately. A slight mistake can pave the way to big problems. Deciding the financial position of the business firm can go wrong with a single error in the books of accounts.

By handing over the work to accounting outsourcing professionals, one can be rest assured that that the accounts work will be maintained in Read more

It is often noticed that many small business organizations overlook the requirement of an efficient accounting team. They concentrate on each and every aspect of their organization such as production, marketing and generating new business alliances but neglect the significance of accounts management. This mostly happens because they fail to understand the basic concept that accounting is the fundamental element of any business formulation and hence, it must be executed with sincere efforts and appropriate mechanism. Hence, it would not be incorrect to estimate the fact that small business accounting is equally important as any other sector of the business organization.

The most common reason for accounting mismanagement in small business firms is limited resources of monetary funds. Due to the low profile character, many business oriented companies cannot afford to recruit heavy accounting team of experts that can maintain the entire section of accounting and can resolve their financial issues. Hence, to beat this incompetent behavior of small business houses, the intelligent finance advisor’s has offered the solution of outsourcing. Through small business accounting outsourcing, the business owners can actually have the greater scope of growth and prospects. It not only avails them with an affordable alternative but also gives them the opportunity of getting their accounts managed with the most professional and advanced strategy. For a more reasonable option, the owner can also take the assistance of an individual who has gained expertize in handling small business accounting.

However, selecting a competent small business accounting outsourcing firm is quite a task. It is advisable that the owner should conduct a well planned research before getting associated with any vendor. For the wiser accomplishment of this purpose, you can utiliz Read more

Does the thought of keeping accounts scare you? Does your mind boggle at the mere thought of the records you need to keep? Are you worried the IRS will penalize you for not maintaining your accounts properly? Have no fear! We’ve charted a three step process that will simplify bookkeeping and accounting for your business. Follow these steps and you won’t have to worry about it anymore.

There are two important reasons for maintaining financial records:
o To keep track of the business’ income and expenses
o To collect the financial information necessary for filing tax returns

The activity of keeping books is a three step process. By following them, you can easily manage bookkeeping and accounting for your business:

1. Keeping bills and receipts - You must have a record for each and every business transaction that your company is involved in. These records should contain the amount, the date, and other details about that sale or purchase. While you need to store original cash bills in physical form, pretty much all businesses maintain a computerized system of accounts as well. Choose a system that fits your business needs.

2. Summarizing income and expenditure records - Maintain a summary of revenue and expenditure, organized by category and date. Enter it in a ledger, preferably on a computer. The more sales you make, the more often you should post to your ledger. For example, a busy retail store may need to do this on a daily basis. A slower business with just a few large transactions per month, such as a day care center or dog-sitting service can do this weekly or even monthly. To simplify this process, you can use an accounting software program that will generate ledgers and other necessary financial reports from the basic information that you have entered. Whatever you choose, remember that the cornerstone of bookk Read more

The entire procedure of bookkeeping is not only limited to the maintenance of records and lodging data entries, it is in fact a way to estimate the economic growth of any business organization. Hence it would not be wrong to state the fact that the development of every business oriented organization is directly proportional to the efficiency of the bookkeeping department. And for this reason, it is completely obligatory for the companies to hire the bookkeepers who are not only well qualified but are also blessed with the attributes of efficiency and sincerity. As this task is extremely grueling yet significant for the progress of the firm, it is important for the accountants to show sincere commitment towards each and every aspect of their work. Therefore, if you are also looking for such competent accountants with quality performance level then the option of bookkeepers New York can provide you with a decent solution.

Bookkeepers New York is considered as one of the most efficient accounts with superb sense of dedication and sincerity toward their work. They completely understand the fact that the development of any company is basically dependent on the finance management and thus make all possible efforts to present a quality level of their services. Moreover, the bookkeepers from New York are always ready with intelligent ideas and other business strategies for introducing better business prospects for the company. Many small companies and recently established business firms can draw serious profits through the utilization of such added facilities and services. These professional make extensive use of accounting softwares and techniques, so that greater amount of work can be sorted in short durations. Those business firms, who take assistance from bookkeepers in New York, stay assured of getting remarkable services with perfect sense of tim Read more

Most entrepreneurs use their personal savings, borrow from relatives and patch together enough funding to establish business credit while starting a new business. Although they have the characteristics of successful entrepreneurs, but what they lack in is excellent business credit. Many entrepreneurs do not have great credit, some start business when they are laid off, some start when opportunity strikes and some go through divorces and bankruptcies that may have ruined their credit.

If you are new to business or have a bad credit history, here are some useful steps for you that may help you establish good business credit.

• First and foremost, get your occupational licence.
• The next step would be to get your Tax ID Number or if you are an independent contractor with no workers, then you may also use your Social Security Number.
• Next open a checking account in the name of your company with you as the only signer and get some paper checks.
• Next, inform all the three credit bureaus about your business and ask them to open a record.
• Then contact places like Staples and open a business/revolving type credit card under the business name with only you being the signer.
• Once approved, buy some items related to your business like accounting supplies, stationary, etc. Buy anything small that you can repay easily.

This procedure will surely help you establishing a good business credit. There are other things that are associated with setting up credit for your business, however, these are the initial steps to get you running and once your business is setup, you will find new challenges.

This article is by Andrew A. Miller from http://www.QualityBusinessLinks.com

One of the most tedious, monotonous and time consuming work, which is an important aspect of any business is maintaining the books of accounts. It’s true that a business can never get desired success until its accounting section is not well managed. Whether the business is big or small, it has to maintain accounts for efficient and smooth working of the organization. Accounting is not an easy task and requires expertise and proficiency to handle all its aspects. Only a professional can do the task properly. Employing in-house staff can be a costly affair as higher salaries and allowances have to be paid for. Accounting firm NYC provides the best solution as provides the same services at low cost. By hiring its services, one can achieve excellence through minimal cost.

It requires a lot of management and expertise to run a business. It is not a child’s play. As one has to take care of all aspects of the business, from production to marketing, he really finds no time for maintaining books of accounts. He can resort to take the help of accounting firm NYC. By maintaining records, one can easily understand the profit or loss which the organization is generating. One needs to maintain a daily record of all financial transactions of the business as this helps to draw conclusions about the financial status of the business. Accounting firm NYC helps in performing such task.

One can be rest assured that when the work is given to accounting firm NYC, it would be done with excellence. One can be sure that one will get the best results by hiring the services of accounting firm NYC. Professionals working in this field work towards profits of the clients whom they are serving. Since they are highly professional and have tremendous expertise in their work, it can be assured that the work done would simply be the best. Billing statements, invoice generat Read more