Personal Finance guide

Whether one has an established business that is really taking off or one is aiming to change the hobby into a small firm, office plastic cards are worth looking into. Not only can firm credit cards help to increase the spending power, allowing you to express mail a vital document or buy tickets for a last minute flight for an out of town meeting, but also one must find that you are able to take advantage of another key benefit as well. Regardless of what type of establishment you have or how established it is, office charge cards will enable you to keep track of the office spending.

Making all of the firm related purchases with a dedicated card must let you better identify which purchases are tax deductible later on when you file you taxes. Having this information all in one place can keep you from having to identify which buys one can write off and, whether one does you taxes yourself or have an accountant prepare them, you can find that this simplifies the process. Because one must have easier access to you records, because you can always be able to know which purchases were for establishment and which were personal, firm charge cards will help to give one peace of mind.

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For smaller companies, changes in economic activity are especially unwelcome as SMEs are more susceptible and have less control over their business environment than do bigger enterprises. Every action the company, its customers or suppliers take in an uncertain situation, may create a risk to the very survival of its business.

In an economic climate such as our current one, the pressure on companies to reduce staff costs is overwhelming, especially as more companies face extinction. The first cutback business owners and managers tend to make, will involve reducing payroll as that seems to have a more immediate effect than do other measures. The danger however, is that in desperation, companies will make rash permanent decisions to save costs even when this results in such an unfortunate situation as under-resourcing. The consequence of this is that business opportunities from prospects or existing clients may be missed; administration gets behind, reporting gets delayed- all resulting in further unwelcome pressures on the business.

So why isn’t under-resourcing an option – or, technically not an acceptable option? There are many risks to having insufficient capacity to deal with current orders or potential increase in demand. The business opportunity that may be lost might well have provided the cashflow needed to eradicate the cut back in the first place. Also additional costs often arise through fines, penalties, uncollected debts and other results of not having enough manpower.

With this in mind, most businesses are in favor of an option that has become acceptable in today’s business world. Outsourcing and insourcing – entrusting another company with your finances and other strategic assets has become a viable lifeline, even an essential business model. The advantage is that companies can afford to plug the gap in staffing as and when required, usually on a flexible payment platform, and often at a lower cost than full time employment.

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In Australia over 97% businesses are small to medium businesses. Roughly half go out of business in the first five years!

There is little reason to expect the world wide trends to be any different.

Its easy to start a business. All it takes is an idea, something to annoy you in your existing job, a market downturn, a moment of entrepreneurial valour, a touch of envy when you see someone making a killing at something.

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Author: John Leslie

Article Source: MiNeeds.com, where consumers get competitive bids from Accountants/CPA’s. Read reviews, compare offers & save. It’s free!

Article Link: http://www.mineeds.com/Lakeside/Leslie-and-Associates-Inc/Articles/What-is-Bookkeeping-an-article-everyone-can-understand

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All organizations, whether private, public, or non-profit, need to prepare financial statements on their performance to provide fiscal accountability and accuracy to their stakeholders and people with an interest in the company. Financial statements enable management to make business decisions, enable creditors to evaluate loan applications, and provide individuals with information to make investment decisions.

Financial statements provide information from an organization’s accounting documents about their economic resources and obligations on a specific date, as well as their financial activities over a period of time. Financial statements are usually prepared in accordance with Generally Accepted Accounting Principles (GAAP), which are the standards issued by the American Institute of Certified Public Accountants (AICPA), but they may also be prepared on other comprehensive basis of accounting, such as cash basis or tax basis, depending on the needs of the users of the financial statements.

The lowest level of assurance in regards to financial statements is compiled financial statements. One of the main reasons these are used in lieu of other financial statement presentations is for the timely release of financial information about an organization. Compiled financial statements are presentation of various financial reports and documentation, which is the representation of management or owners of an organization. Compilation standards allow the organization to omit note disclosures as long as there is no intent to mislead the users. This is the only type of financial statement that allows omitted disclosures.

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If you are running your own organisation you have the process of finishing your tax returns, often a new organisation owner will decide to keep costs low by doing his/her own taxes. Whilst it can be nice to do taxes yourself without paying for a chartered accountant a business should be conscious of the various catches and dangers that skulk in tax returns. This is especially true if a business has a lot of tax deductions, as what was a legitimate tax deduction last year may not necessarily be the case this year.

The undeniable answer is to hire a proffesional accountant to look after your company’s books. A chartered accountant will be up to date with the alterations and refreshments to the tax code leaving you to focus on managing your day to day business. Perhaps the most inspiring thing about working with a proffesional accountant is the observation that you won’t be alone should the tax office spring an audit on you. More importantly it is human nature to be cautious when sending tax returns but being too cautious means you’re paying too much in tax and leaving money on the table. A professional accountant will guide you through the process, sailing close to the lines at all times making sure that they get as much back for your company as they possibly can within the boundries, in fact it is often said that a goo tax accountant will save you more than you pay them in fees.

If you decided to complete your tax return yourself and wrongly complete a document then, at best, it’ll be sent back to you to do again, at worst, it will be sent back to you in the hands of a tax inspector who wants to examine every single piece of paper you have.

If you’re employed and don’t run a side business, you obviously have less to discuss than a small business owner. Still, getting expert input on the tax impact of major purchases, retirement planning, stock trades and other important decisions is invaluable.

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The Flaw of Accounts Receivable in Financial Accounting to Non-accountants

In my previous publication, The Unresolved Flaws in Financial Accounting I addressed some of the complex flaws in financial accounting that add to the confusion and frustration non-accountants face in trying to decipher financial reports. This time, I look at accounts receivable.

Accounts receivable is an asset account in a balance sheet. It allows a company to hold revenues and expenses within the period they occur which is a generally accepted accounting principle. This recognizes transactions irrespective of when actual payments take place. What this means is that when a firm sells on account, it considers future payments for its goods and/or services as assets thus increasing revenue.

To a non-accountant investor or stockholder, this recording appears easy to understand on a newly released balance sheet. The truth is that there are other entries that derive from the accounts receivable recording. The net realizable value of this account is the actually amount that the firm expects it will actually receive in payments. Off the back, that means that the amount recorded in accounts receivable though making assets look good will not be actualized. This amount is however an estimate based on previous experiences, trends, and ratios.

The net realizable value creates another account, the allowance for bad debt expense. This account holds the difference between what that actual accounts receivable and the net realizable value. Most firms use an aging method, usually in 30-day blocks to make adjustments to the value of their assets on the balance sheet. These uncollectible payments are described as “contra assets” because they reduce the vale of previously declared assets.

Most non-accountants do not understand the forward and backward entries and adjustments to pages and pages of detail reporting regardless of how many pages of accompanying notes there are. The question becomes, why not subtract the estimated bad debt from the account receivable entry? The problem is that though the firm knows or rightfully estimates that some payments will not be received, it cannot write-off an account unless it specifically knows which accounts will be in default.

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Anyone who’s worked in an office at some point or another has had to go to accounting. They’re the people who pay and send out the bills that keep the business running. They do a lot more than that, though. Sometimes referred to as “bean counters” they also keep their eye on profits, costs and losses. Unless you’re running your own business and acting as your own accountant, you’d have no way of knowing just how profitable – or not – your business is without some form of accounting.

No matter what business you’re in, even if all you do is balance a checkbook, that’s still accounting. It’s part of even a kid’s life. Saving an allowance, spending it all at once – these are accounting principles.

What are some other businesses where accounting is critical? Well, farmers need to follow careful accounting procedures. Many of them run their farms year to year by taking loans to plant the crops. If it’s a good year, a profitable one, then they can pay off their loan; if not, they might have to carry the loan over, and accrue more interest charges.

Every business and every individual needs to have some kind of accounting system in their lives. Otherwise, the finances can get away from them, they don’t know what they’ve spent, or whether they can expect a profit or a loss from their business. Staying on top of accounting, whether it’s for a multi-billion dollar business or for a personal checking account is a necessary activity on a daily basis if you’re smart. Not doing so can mean anything from a bounced check or posting a loss to a company’s shareholders. Both scenarios can be equally devastating.

Continue reading ‘What Is Accounting Anyway ?’ »

Accounting has been defined as, by Professor of Accounting at the University of Michigan William A Paton as having one basic function: “facilitating the administration of economic activity. This function has two closely related phases: 1) measuring and arraying economic data; and 2) communicating the results of this process to interested parties.”

As an example, a company’s accountants periodically measure the profit and loss for a month, a quarter or a fiscal year and publish these results in a statement of profit and loss that’s called an income statement. These statements include elements such as accounts receivable (what’s owed to the company) and accounts payable (what the company owes). It can also get pretty complicated with subjects like retained earnings and accelerated depreciation. This at the higher levels of accounting and in the organization.

Much of accounting though, is also concerned with basic bookkeeping. This is the process that records every transaction; every bill paid, every dime owed, every dollar and cent spent and accumulated.

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Why Outsourcing Your Bookkeeping is a Good Idea,Is it tax time already? It always seems like the fiscal year goes by so fast, and it is hard to get your books together on time. Businesses get so caught up in the bottom line, and just trying to stay afloat in today’s tough economy, that sometimes bookkeeping can take a second base.
Unfortunately, this can be a tragedy, because bookkeeping and having an accurate record of profits and expenses can really make or break your business, just as much as other areas.The real problem is that a lot of people just don’t know how to do proper bookkeeping. Even with the multitude of different accounting courses available, some just don’t have the patience to either take the class, or really grasp the amount of information that is required. Other people, no offense, have a hard time getting all the new math that is required for accurate record keeping.So what is a business supposed to do in order to keep up?

Many people turn to outsourcing their bookkeeping to others. This is a really good idea for those who don’t have the time, patience, or know how to do it themselves, and turn to qualified people to do it for them. There are many people who have the skills not only to do taxes during this time of year, but also keep records for businesses all year round. Some are individuals who are looking to make some extra cash during tax time, or even permanent year round income, and there are companies that you can turn to for help.There are many different resources online and locally that you can turn to for all of your bookkeeping needs.If you have someone in your company with these kinds of skills, you can use them as well, and there is an abundance of soft ware available that is simple and easy to use.

Paying your own employees can be a little less expensive, but in some cases, even your own people are too busy to do this.What are some of the advantages of outsourcing your bookkeeping? Well for one thing, accounting services are staffed by qualified people who have the latest training and technology to do it properly. It can be more cost effective because of this training, and you need to cut down on your overall costs wherever you can.

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