Your accountant plays a very important role in your life and business.
This is why it's so important to maintain a good business relationship with your accountant. Here are some things you can do to maintain a proper business relationship with your accountant and how to obtain the best service from them.
Make sure that he or she understands your needs from them. These needs not only include services but also the amount of attention you need and expect from the accountant themselves to ensure you receive the standard of service that you expect. By doing this, you will know what type of fees you'll be paying, and your accountant will know if they can fulfill the obligations that you expect from them.
Your accountant is there to help and assist you at all times. They're there to help you and won't mind you sending a request for extra services. Never be afraid to consult your accountant on what you should do in any financial circumstance as they are there to be your advisor for financial matters. Maintaining an open line of communication with your them will not only help you make the best decisions with your financial matters, but it will also help you avoid financial problems in the future.
Patience with your accountant is an absolute must. An accountant usually has multiple clients and especially around tax season, they are quite busy. It helps to give your accountant a reasonable amount of time to respond to your requests. An accountant can become unexpectedly busy, so it's good trust that they have your best interest at hand, and any delays may be because of government lag times.
By continually harassing your accountant about issues without giving them a reasonable amount of time to respond, will only decrease the communication and value of the relationship between you and them.
Having an automatic system set up with your accountant will save you a great deal of time. Setting up automatic updates for your accountant to send to you will provide you with the necessary information to see how all aspects of your financing are going while giving your accountant a deadline to have these updates ready for you. Automated payments for their fees (if ongoing) will help as well. This will eliminate stress or confusion regarding your finances for both you and your accountant and will be a mutual convenience.
The best way to continue to receive top notch services, is to properly pay them on time. By not paying your bill on time, you only guarantee that your accountant will not give any attention or regard to your requests. By paying them immediately or before the bill is due, you can expect the most attention and assistance from your accountant. By being loyal and fulfilling your obligations to your accountant, you can expect them to fulfill their obligations you.
By following these tips, you'll maintain a strong relationship with your accountant as well as maintain a good line of communication with them. These simple tips will also eliminate future problems that could arise.
Have you ever imagined how important the back office process is for the success of any organization?
All of us realize the importance of this, but the fact also remains that most of us are actually reluctant to do this work. Outsourcing is one source through which you can stop doing the work, yet your task will be completed in time.
Outsourcing is here to stay and more and more business processes are being outsourced. Back office outsourcing is the perfect solution to all your back office related work queries and worries.
Most business owners feel that, outsourcing the core process of their business is more beneficial than outsourcing the back office processes. Well this is entirely up to you. Think carefully and decide what will be profitable for your business. For many businesses back office outsourcing has provided to be a great way to maximize productivity. Outsourcing makes lots of sense; simply because it is beneficial is many ways for your business.
Most business undertakings, be it large or small scale, can be successfully outsourced and usually for less than hiring an employee. Cost reduction is one of the major driving forces behind this. Imagine a project for which you had to spend lots of money for getting the work done in-house. After undertaking back office outsourcing the same work and in most cases a better quality work will be done for you in less than half the amount. Imagine the money saved and benefits that you will earn for your business.
One reason why back office outsourcing is gaining prominence is due to the fact many business owners do not like the idea of doing burdensome paper work of their business. Simple tasks such as entering data for payroll, keeping track of the daily expenses and profits, entering data on information about employee insurance and many such things can be easily taken care of through outsourcing. Most already have on-boarding procedures and their own secure software to speed up the entire processes.
Obviously, back office outsourcing does have its own share of advantages. However, if you are actually thinking of undertaking the processes for your business, there are certain things which you must know first. The back office work is a vital element for your business. Check out the company that is providing the service to you. See what security measures they have in place to safeguard your data. Look to see if they have reviews and testimonials.
Keep yourself informed about the progress of the work done by the third party. This will actually let you know about the efficiency of your work done. If at anytime you feel that the work is not up to the mark, you can always either communicate this to them or find another source. It's always better to check out the work of the company you're outsourcing to before you actually hire them to do your work.
Back office work might seem at first to be time consuming, but can save you thousands every year. They could be the the back bone and key to freeing up your business processes. An outsourced solution for finances, such as The Bean Counters Bookkeeping, will not only save money, it will save you time. If you're ready to streamline, give us a call today.
The term "market analysis" is often confusing to small business owners, especially for people who focus on a specific niche or market segment.
In fact, many small business owners don't understand the process or complain that conducting a market analysis is too complicated or too expensive and wonder why or if it's even necessary.
What is market analysis?
In the most basic terms, a market analysis is an assessment of:
- A particular problem or opportunity in a market.
- The needs of the target market relating to the problem or opportunity.
- Ideas for marketing a particular product or service that fills the needs of the target market.
When should you conduct a market analysis?
- When you are starting a business.
- When you are entering a new market.
- When you are considering a new product or service.
Why should you conduct a market analysis?
- To minimize business risks.
- To understand the problems and opportunities.
- To identify sales opportunities.
- To plan your marketing/sales approach.
The process of conducting a market analysis can be divided into
Part 1 - Understanding Market Conditions
This gives you basic information about your entire market -- the size, the competition, the customers.
Part 2 - Identifying Market Opportunities
This gives you more targeted information about potential problems or opportunities in the potential market, and includes information about growth, current and future trends, outside factors and more information about specific competitors.
Part 3 - Developing Market-Driven Strategies
Here is where we get into what market research does for you. It helps you to pinpoint opportunities to grow your business. By understanding the market and knowing what opportunities are available you can create a marketing strategy that leaves your competitors in the dust!
Here are 10 questions that can help you get started:
1. What is the market I want to reach?
- Who are they? (Basic Demographics)
- What is their biggest problem in relation to this market?
- Are their needs being met by the products or services provided in this market?
2. Who is my competition in this market?
- Are they successful in this market?
- Are they marketing a similar product or service?
- What is the market share of the three biggest competitors in this market?
3. Is there room for growth in this market?
4. What is the size of this market?
- Is there room for growth?
- Is the industry growing? Stable? Saturated? Volatile? Declining?
5. How is my product or service different from the competition?
6. How can I reach this market?
- How is my competition currently reaching this market?
- Is it the most effective way?
- What are the alternative ways of reaching this market?
7. What are the business models of my competition in this market?
- Are they effective?
- Is there a way to do it differently or better?
8. What do customers expect from this type of product or service?
- What are the core competencies of this product or service?
- What would make the product "new" "different" or "better" for the customer?
9. How much are customers willing to pay for this product or service?
10. What is our competitive advantage in this market?
Knowing the answers to these questions will not only help you figure out if there is a need for your product or service, it will help you figure out the best ways to reach your customers, price your products or service and ultimately make more sales!
Services in Financial Accounting
No matter what industry you're in, or the size of your business, you have various activities everyday and that includes accounting.
Whether the company is private or government-owned, it still makes use of accounting. Companies, offices, and various organizations or institutions cannot operate successfully without an accounting staff.
However, having an accounting staff can get very expensive and so most companies resort to auditing services or financial accounting services. Bookkeepers and accountants are not hard to find; with the use of the internet, you can easily locate them and make use of their services.
A company needs to seek help from a competent and experienced bookkeeper so that all financial activities of the company are monitored and evaluated. By doing so, the company can gain a lot of benefits which can lead to its growth and success.
It's now easy to monitor the sales as well the operating expenses. All expenditures and income are recorded and the accountant or bookkeeper can even provide you with strategies to help increase the profit and sales of a company.
Outsourcing is quite popular nowadays because it is a cost-effective measure for companies who want to cut-down their operation costs. Cloud bookkeeping and accounting services can provide any company or organization with the appropriate financial services, company laws, taxation, and other related matters.
Most of the services are secured, private, and cheap. New companies are opting for these financial accounting services. These accounting services are more affordable that having an in-house staff and you'll reap the benefits of their expertise.
It would be best to choose a financial accounting service based in your country because laws differ across the globe. So while you're conducting a search online, you have to check the location of the accounting service and if ever you choose a foreign accounting service, you have to provide all the necessary information so that nothing goes wrong. We don't recommend that!
The various services offered by Bean Counters Bookkeeping for example, are quite helpful especially in taxation, financial accounting, preparation of account statements, and even top brass services. You don't have to worry about privacy issues because all business dealings are confidential and safe. We can be trusted with your sensitive financial information.
However, it is a good idea to check out the background of any financial accounting services company, just to be sure. You can check out the customer testimonials to see if the previous clients are satisfied with their services. It's one way of telling if the service can be trusted and if it is reputable in the industry.
There are so many cloud based accounting services all over the world. Choosing just one for your company or organization is an overwhelming task. You have to give a large portion of your time in searching for reputable ones.
It would be best to hire a bookkeeper as soon as you start your business operation.
Individuals as well as businesses need it for their everyday expenditures. It's incredibly important to keep track of all financial and money matters.
If you're in the market for bookkeeping service, please consider The Bean Counters Bookkeeping team. Not only are we now accepting new clients, we hold degrees in accounting and are up to date on the newest tax laws.
We all love to criticize the IRS, don't we? It's easy to ridicule a huge organization of government bureaucrats who often seem to be Public Enemy #1.
Our negative attitude toward the IRS can lead to a strong desire to just ignore it altogether. But self-employed people who ignore the IRS do so at their own peril.
So when it comes to providing free information about taxes, let's not throw the baby out with the bath water. The IRS does provide some excellent resources to help us make the best of a potentially bad situation.
If you need tax assistance and prefer not to pay for it, do not overlook these five ways to obtain help from the IRS:
1. The Internet
There's a wealth of information just for small business owners and self-employed people at: http://www.irs.gov/smallbiz
Here you'll find everything from how to obtain a federal business tax ID to events and even online learning.
Need tax forms and/or their instructions?
Look no further than the IRS website:
Here you'll find a boatload of links to every tax form imaginable, available as downloadable PDF files or in fill-in format. All form instructions can also be downloaded.
The IRS has many free publications that explain virtually every major (and many minor) tax topics in great detail. Sure, IRS "pubs" are not always written in the most entertaining style, but hey, remember the price - it's FREE (well, actually your tax dollars pay for it, but you might as well use the resources).
2. Telephone Hotlines
Special toll-free numbers exist for the following:
-- To order forms & pubs: 800-829-3676 (in case you'd like to receive a paper copy via snail-mail)
-- To ask business tax questions: 800-829-4933
-- To ask personal tax questions: 800-829-1040
Use common sense when phoning the IRS: to avoid long wait times, don't call on Monday morning. And no matter when you call, be prepared! Write out your questions beforehand and have all relevant documentation in front of you, as well as a favorite book or magazine to read during the inevitable wait time. Stay calm; don't yell; treat the IRS employee like a human being and he/she will likely return the favor.
-- Need help with long-standing problems: 877-777-4778
-- Prerecorded messages on more than 100 topics: 800-829-4477
Topics include items such as:
3. TaxFax Service
Are you still using a fax machine? That's crazy! However, if you are, here's some good news. You can receive most IRS forms instructions via fax by calling 703-368-9694 from your fax machine.
4. Walk-In Offices
Need some face-to-face tax help? For a complete list of IRS offices in all 50 states, including hours of operation and contact information, visit: http://www.irs.gov/localcontacts
If all of this seems too overwhelming, we've got a solution to ease your anxiety. Our team of dedicated, professional bookkeeper would love to keep your books and tax issues in tip top shape all year round. We're currently accepting new clients, so book a free consultation today!
A Review of Bookkeeping Basics
Most people probably think of bookkeeping and accounting as the same thing, but bookkeeping is really one function of accounting, while accounting encompasses many functions involved in managing the financial affairs of a business. Accountants prepare reports based, in part, on the work of bookkeepers.
Bookkeepers perform all manner of record-keeping tasks.
Some of them include the following:
1. They prepare what are referred to as source documents for all the operations of a business - the buying, selling, transferring, paying and collecting. The documents include papers such as purchase orders, invoices, credit card slips, time cards, time sheets and expense reports. Bookkeepers also determine and enter in the source documents what are called the financial effects of the transactions and other business events. Those include paying the employees, making sales, borrowing money or buying products or raw materials for production.
2. Bookkeepers also make entries of the financial effects into journals and accounts. These are two different things. A journal is the record of transactions in chronological order. An accounts is a separate record, or page for each asset and each liability. One transaction can affect several accounts.
3. Bookkeepers prepare reports at the end of specific period of time, such as daily, weekly, monthly, quarterly or annually. To do this, all the accounts need to be up to date. Inventory records must be updated and the reports checked and double-checked to ensure that they're as error-free as possible.
4. The bookkeepers also compile complete listings of all accounts. This is called the adjusted trial balance. While a small business may have a hundred or so accounts, very large businesses can have more than 10,000 accounts.
5. The final step is for the bookkeeper to close the books, which means bringing all the bookkeeping for a fiscal year to a close and summarized.
The Bean Counters Bookkeeping team provides all of these services PLUS
Examples of Other Services include:
Just the thought of taxes can scare people out of their minds. You have to keep all your records and documents in order to be able to file easier at the end of the year. Home business owners have their own set of allowable deductions that differ from other businesses. You have a chance to save a lot of money by knowing how to take advantage of you home business situation.
Know what your deductions are.
There are several deductibles that the home-based business owner is entitled to. There are auto/vehicle deductions that can help with mileage, gas, insurance, and/or other related expenses. You can write off your business cards and stationary, plus any business meals and entertainment. All business traveling expenses, education, and even the interest on your business credit card can be counted in your favor. Your Internet service and web page related expenses could be deducted as well. Office furniture, supplies, your phone and other communication devices are also necessities that have deductions. Any postage or delivery of goods charges is also considered a business expense. The home-based owner can also get deductions on rent and utilities that keep the business running. Deductions that you will want to use are:
* Half of your self-employment tax amount, which can offer you a huge savings.
* As much as 100% of your medical insurance costs for you and your family.
If you make more than $600 per year in self-employment you must file your taxes. You may qualify for the C-EZ form if you have had a bad year or just got started. Your total business expenses will have to be less than $5000 for that year; you have no inventory, or have to file a 4562 form (depreciation and amortization form). Make sure first and foremost that your expenses are less than $5000 and that you have taken all the deductions you are entitled to.
A large decision is who will be doing your taxes. You need to decide if you plan to do them yourself or if you want someone else to do them for you. There are several advantages in using a tax professional. They can save you much time and unneeded frustration. They can spot deductions you might miss or not know about. It also saves you from being responsible for any errors that were made in the preparation, which could end up saving you thousands. No matter how you decide to prepare your taxes be sure to claim all possible deductions to save you money in the long run. A business has many breaks for the taxpayer for a reason and you should make sure you know what you qualify for and how to save.
Home Office Tax Expenses
America is a country built on small businesses. Yes, the big companies are the darlings of the media, but the guts of our economy are the little guys pursuing the American Dream from the extra bedroom. Fortunately, the tax code contains deductions tailored to help cut your tax bill.
When claiming home office tax expenses, it is important to keep a receipt for each and every amount you are claiming. When dealing with the IRS, receipts are your ammo. Keep them at all costs.
When maintaining a home office, taxpayers often wonder how they differentiate a business expense from a simply home expense. The key is the square footage. Simply divide the square footage of your office by the total square footage of the home. This number is typically represented by a percentage such as 20 percent. Put another way, the home office represents 20 percent of the square footage of the house. Once you have the above answer, you can multiply it by the total yearly amounts paid for rent or mortgage interest, insurance, maintenance, utilities, taxes, depreciation of the home and repairs. Each of these home office tax expenses figures can then be deducted.
In addition to the above, you can also deduct expenses completely related to the business. For instance, the purchase of a desk for the office is entirely attributable to the office and can be deducted in full.
Words of Caution
There are some limitations to home office tax expenses. If you are reimbursed by an employer for various home office expenses, you cannot also claim those expenses as a tax deduction. Sorry, no double dipping.
For some time, there has been an urban myth that the Internal Revenue Service keeps a close eye on home-based businesses. This may have been true ten years ago, but is clearly not the case today. To this end, the IRS has actually come out and issued clear statements to the contrary. Do not fail to claim home office tax expenses because of a fear of an audit. It is simply not a rational fear!
Running a small business can be both stressful and incredibly gratifying. Make sure you claim home office tax expenses to help your cash flow.
The Bean Counters Bookkeeping team would love to help you sort out your books, loans, credit cards, and taxes. Book a free consultation today and let's get you compliant this year.
This is that time of year when we all start getting those emails that want to scam us into revealing our secret codes and passwords.
You know the ones that have subject lines like: “Your Account Is About To Be Closed,” “There’s A Block On Your Account,” “Could You Help Me Claim My Funds,” or my all-time favorite “Congratulations – You’ve Won The Giveaway.”
Most of us have spent more than usual recently, and the last thing we need is for our bank or credit cards account to be hindered. That is exactly what these “phisher” are counting on, and unfortunately some of us are tempted to follow the instructions sent to investigate.
First and foremost, DON’T FOLLOW THE INSTRUCTIONS IN THE EMAIL! If you think there might be a problem, access the account in question as you normally do on your PC and not with the link supplied in the phony email.
There are some very authentic looking email supposedly from banks, that even go so far as to copy the colors of the bank logo and stationery style. But, don’t fall for the scam. In fact, don’t even open the email, because many are just set to loose a virus program on your computer by being opened. Simply forward the suspicious email to the “spoof email” address supplied by your bank, or credit card company.
Nearly 10 million Americans fell prey to identity theft last year, costing businesses and individuals billions of dollars. Here are some other tips to help you:
This may all seem like a lot of unnecessary work, but if you’re ever the victim of identity theft – even just once – you’ll realize that it’s well worth the effort.
Many of us forget that were it not for what we carry in our wallets or in our purses, we’re all John and Jane Doe’s if we can’t speak due to injury or are unaccompanied by someone who knows us. How much less stressful is it to know that in a bank box, no matter where you are, there are items that can verify your identity. Better to be safe, than sorry!
Parts of an Income Statement, Part 2
Of course profit and cost of goods sold expense are the two most critical components of an income statement, or at least they're what people will look at first. But an income statement is truly the sum of its parts, and they all need to be considered carefully, consistently and accurately.
In reporting depreciation expense, a business can use a short-life method and load most of the expense over the first few years, or a longer-life method and spread the expense evenly over the years. Depreciation is a big expense for some businesses and the method of reporting is especially critical for them.
One of the more complex elements of a an income statement is the line reporting employee pensions and post-retirement benefits. The GAAP rule on this expense is complex and several key estimates must be made by the business, such as the expected rate of return on the portfolio of funds set aside for these future obligations. This and other estimates affect the amount of expense recorded.
Many products are sold with expressed or implied warranties and guarantees. The business should estimate the cost of these future obligations and record this amount as an expense in the same period that the goods are sold, along with the cost of goods expense. It can't really wait until customers actually return products for repair or replacement, should be forecast as a percent of the total products sold.
Other operating expenses that are reported in an income statement may also have timing or estimating considerations. Some expenses are also discretionary in nature, which means that how much is spent during the year depends on the discretion of management.
Earnings before interest and tax (EBIT) measures the sales revenue less all the expenses above this line. It depends on all the decisions made for recording sales revenue and expenses and how the accounting methods are implemented.
While some lines of an income statement depend on estimates or forecasts, the interest expense line is a basic equation. When accounting for income tax expense, however, a business can use different accounting methods for some of its expenses than it uses for calculating its taxable income. The hypothetical amount of taxable income, if the accounting methods used were used in the tax return is calculated. Then the income tax based on this hypothetical taxable income is featured.
This is the income tax expense reported in the income statement. This amount is reconciled with the actual amount of income tax owed based on the accounting methods used for income tax purposes. A reconciliation of the two different income tax amounts is then provided in a footnote on the income statement.
Net income is like earnings before interest and tax (EBIT) and can vary considerably depending on which accounting methods are used to report sales revenue and expenses. This is where profit smoothing can come into play to manipulate earnings. Profit smoothing crosses the line from choosing acceptable accounting methods from the list of GAAP and implementing these methods in a reasonable manner, into the gray area of earnings management that involves accounting manipulation.
It's incumbent on managers and business owners to be involved in the decisions about which accounting methods are used to measure profit and how those methods are actually implemented. A manager can be requires to answer questions about the company's financial reports on many occasions. It's therefore critical that any officer or manager in a company be thoroughly familiar with how the company's financial statements are prepared. Accounting methods and how they're implemented vary from business to business. A company's methods can fall anywhere on a continuum that's either left or right of center of GAAP.
Need help with your bookkeeping? Each and every bookkeeper on The Bean Counters Bookkeeping team holds degrees in accounting. We provide basic through top-brass services to help your business realize bigger profits. Give us a call for a free consultation.
Parts of an Income Statement, Part 1
The first and most important part of an income statement is the line reporting sales revenue. Businesses need to be consistent from year to year regarding when they record sales.
For some business, the timing of recording sales revenue is a major problem, especially when the final acceptance by the customer depends on performance tests or other conditions that have to be satisfied.
For example, when does an ad agency report the sales revenue for a campaign it's prepared for its client? When the work is completed and sent to the client for approval? When the client approves it? When the ads appear in the media? Or when the billing is complete? These are issues a company must decide on for reporting sales revenue, and they must be consistent each year, and the timing of reporting should be noted on the financial statement.
The next line in an income statement is the cost of goods sold expense. There are three methods of reporting cost of goods sold expense. One is called "first in-first out" (FIFO); another is the "last in-last out" (LIFO) method and the last is the average cost method. Cost of goods sold expense is a huge item in an income statement and how it's reported can make a substantial impact on the reported bottom line.
Other items in an income statement include inventory write-downs. A business should regularly inspect its inventory carefully to determine any losses due to theft, damage and deterioration, and to apply the lower of cost or market (LCM) method. Bad debts are also an important component of the income statement. Bad debts are those owed to a business by customers who bought on credit (accounts receivable) but are not going to be paid. Again the timing of when bad debts are reported is crucial. Do you report it before or after any collection efforts are exhausted?
Keep an eye out next week for Parts of an Income Statement Part 2.