When you hear the word accountancy, it makes you wonder what accountancy really means. Many people come to a quick conclusion that accountancy is just a word or term to go with accounting. Many people do not realize, however, that accountancy is the life of any thriving business and is a necessity within any establishment. Once you understand what accountancy is, then you will realize how important of a role it plays in how we run and operate our business finances. We will go over some of the basic aspects of accountancy.
The core of accountancy is maintaining extremely accurate records of any and all aspects of a business and how it earns and spends money. You must maintain multiple types of records to account for every aspect of your business, which is why accountancy can become a very complicated process but is necessary. Different parts of these separate records are your accounts receivable and payable, your current inventory, all of your sales orders for your current tax period as well as an accurate database of your past sales records and your purchase orders. You must also maintain an accurate account of your bank statements and a backup record to cross-reference all of your records to make sure they are accurate and up to date. This is only one part of accountancy.
There is another aspect of accountancy which involves knowing what to list each transaction as. Now in accountancy, you need to be able to define what are your assets, knowing how to identify your liabilities, being able to show your expenses as well as you positive income. In order to do this properly, you must know how to define these different terms and what they do and do not apply to. This can make what some would view a simple task of maintaining proper records even more complicated.
These two parts of accountancy are extremely important, not only for tax purposes but also for banking reasons as well as audits that can arise form businesses that you interact with. Accountancy also provides several benefits to businesses that use accountancy properly.
The biggest and most obvious benefit of accountancy is being able to pay your taxes accurately and on time. However, this is a small benefit compared to other vital benefits that accountancy brings. Accountancy can help you keep an accurate spending balance for your bank accounts, as well as give detailed reports of all of your expenses and cash flow which is necessary for audits. One benefit that you can gain from accountancy, is maintaining accurate expenses and being able to reflect that in your products prices. If you do not accurately maintain records of your costs, then you could accidentally underprice your products and actually lose money. Accountancy will give you a detailed projection of your costs and accurately show you your profit margin that you can compare with your labor and other expenses. Many businesses suffer financially because they do not keep accurate records for every aspect of their business, which is why accountancy plays a very strong and important role in a business. Without accountancy, a business would suffer and eventually fail as it would have no records or projections to help it progress.
Need help managing your bookkeeping and accounting? Our entire team hold degrees and are fully qualified to help you fill the need for proper accountancy in your business. Please contact us for a free consultation.
Capital Gains tax is a federal tax penalty that is imposed on capital accumulation, investment and property. Some of the income that is subject to capital gains tax includes the sale of an investment, a home, a family business, a farm or ranch or even a work of art.
The capital gains tax is applied on the difference between the price paid for an item and the money received from selling it, or the capital gain.
The most common form of capital gain for people is the sale of their corporate stock. The capital gains tax rate for individuals is currently at one of its highest rates ever and is at 28% while the corporate rate is at its greatest level in history, namely 35%. There is an inequality with capital gains tax in the fact that people must pay taxes on all of their gains but are only able to deduct a portion of their losses. This particularly applies to investments that fluctuate between gains and losses over time.
In many states taxpayers are liable, not only for the federal capital gains tax but also the state's own form of capital gains tax. This can actually take the combined rate to almost 40%. California and New York are amongst the highest in the country.
For the government, the capital gains tax payment represent 6% of personal and corporate income tax receipts and 3% of total federal revenues. There is a lot of controversy surrounding the capital gains tax that individuals and corporations have to pay but it actually brings in much less revenue for the federal government than most people would think.
In the USA, capital gains are not indexed for inflation which means that the seller pays capital gains tax on the real gain and also on the gain attributable to inflation. This is one reason that the capital gains tax is lower than regular income tax rates.
The difference between capital gains tax and all other forms of federal tax is that it is basically a voluntary tax. People can avoid paying any of the tax by simply not selling their assets. This is becoming increasingly common, especially with the uncertainty of the stock market, and the government estimates that there are trillions of unrealized capital gains which would all be subject to capital gains tax if it was sold.
If you think that starting your own business is a cakewalk, you're wrong. Aside from developing good products and services, you still need to sell them to the market. One of the essential factors in running a business is effectively managing finances. The language of any business, whether big or small, is accounting.
The business scene is always loaded with work pressure. Therefore, there is an ongoing need for handling accounts and finances effectively. Even small businesses need to be organized to achieve success and to do this, the business owner should get the appropriate accounting software. Businesses usually set long-term goals and to reach the goals, accounting management is required. If you want to be successful, you'll need accounting software. Manually doing all the accounting works can lead to a lot of errors which can terribly affect your bottom line.
As owner of a small business, you have to know where funds come from and where the go. If you decide to do accounting tasks manually, it can consume a great portion of your time and unless you've got a degree in accounting, quite frustrating.
Here are some of the benefits that you'll get by using accounting software.
You can finish all the accounting tasks promptly. You will be able to run your small business without too many problems.
You will be provided with correct reports as well as special tools to make accounting tasks a lot simpler. That way, you can manage all the financial data of the business effectively.
In minutes, you can manage the cash flow of the business.
With robust accounting software, it will now be possible to predict revenues, bills, and generating reports.
These are some of the benefits of using accounting software. However, don't purchase the first accounting software that you come across. You see, there are things to consider when selecting the proper accounting software for the business. You have to determine the software's functionalities. It should be user-friendly and most especially, it should resemble the paper counterparts so that you can run the software smoothly. Once you're familiar with the software's layout, you can already explore its functionalities.
Most accounting software is based in the cloud and works well with e-commerce. If you want to enjoy all the benefits, you must be able to choose the finest accounting software that is suited to your small business.
In choosing an accounting software, you need to consider the number of your employees. You can find accounting software that is suited for small business with less than 25 employees. Other software is suited for large businesses with bigger numbers of employees.
Software that is suited for small businesses helps the business owner analyze financial data, customize reports like transaction history, profit & loss, check details, reconciliation details, and many more. By simply looking at the various reports, you can already determine your business status. Some software also offers built-in features like forecasting tools. These tools can be used to manage business risks and control cost of operation.
If you're running a small business, now is time to purchase accounting software. By doing so, you can secure your business's future and you can be certain that all your financial tasks are handled effectively.
So, what accounting software does the Bean Counters Bookkeeping recommend? QuickBooks. In fact, we offer training to those new to QuickBooks or confused with how to best use it. Need training? Let's get on a call and chat.
There are many reasons why accounting is being outsourced more and more by different types of businesses and organizations.
Some may think that using outsourced accounting services is a bad idea because of less control and more costs, but that is a myth that has been proven wrong, especially as cloud-based accounting becomes more common.
In reality, there are greater benefits to outsourcing your accounting services than by organizing your own accounting department or doing your accounting by yourself. We'll go over the benefits of outsourced accounting and allow you to see why it is a popular action that many businesses and organizations are taking.
Using outsourced accounting services can actually save you money.
By outsourcing your accounting needs you do not need to hire employees for their in-house accounting department. This saves you not only money but also time. It costs time and money to find certified employees to operate your accounting department. With outsourced accounting services you don't need to worry about salaries, workers compensation, insurance, or many of the other expenses of having employees. Another great benefit is that you do not have to worry about losing an employee and having to find another in-house accountant to replace the one you lost. The Bean Counters will integrate our services with your own accounting software so that you experience a smooth transition.
You can focus more on the accounting data.
This eliminates having to spend time entering your accounting information and allows you to look at your current situation and make plans for future improvements and developments with the data provided. By being able to maintain your focus solely on payments, invoices and profit and losses, you will be able to spend your time on finding better solutions and maintaining a better relationship with your suppliers and customers.
You have a lower risk of error and problems with your accounting.
It's better to trust your accounting needs with a certified professional rather than trying to do your accounting yourself. Unless you have a degree in accounting, you have a very good chance of making an error. This chance of error is nearly eliminated when you use an outsourced accounting firm that specializes in the field of accounting. These errors can have a negative and dramatic effect not only on your records of what is owed and needs to be paid but also on your current costs and projections related to your profits and losses. By not properly and accurately maintaining accounting records, you run a high risk of failure with your business.
As you can see, outsourcing your accounting needs has proven to provide many benefits. These benefits will not only save you time and money but will also provide solutions to help you grow and expand your business based on the information you receive from your accountant.
Accounting can be a very strenuous task that requires a lot of attention to detail as well as knowledge about the field to have it done correctly. Since accounting can be outsourced so easily and can be done at a lower rate outsourced then in-house, this has proven over time to be the best option. Need a professional team on your side? Give The Bean Counters Bookkeeping a call and let's get your books in order!
There is an art to creating deadlines that work. You want your deadlines to stick so that you can get more done, and be even more amazing than you already are. But, if you tend to underestimate how long something takes, or your skill at doing it fast, you may constantly miss deadlines that you set for yourself or that others set for you. Thankfully, there are ways to ensure that you can set deadlines that stick.
Do The Research
When you approach anything that needs deadlines set, don’t just look at the end result; look at the tasks that take up the work to get to the end result. Understand exactly what each step involves. Find out how long it takes other people to do the task. If you don’t, you can’t make a reasonable deadline.
Test Things Out
When you are asked to do something new and need to set a deadline, try out a small portion of the task to see how long it will take you so you can best make predictions on time. Remember that when someone else is asking you for a deadline or even suggesting deadlines; if they don’t know what it takes, they’re just pulling a date out of the air. You need to do better than that.
Understand the Scope of the Project
Ensure that you ask the right questions about the project so that you know what the true scope is. For example, you're a web designer and someone says, “How much does it cost to build a website?” That leaves a lot of questions unanswered. There is no way to make a deadline with that information.
Start at the End and Work Backwards
Every project has a final deliverable. Start with that deliverable and work your way through all the tasks that need to get done to reach that final deliverable. Make an outline for each project so that you know everything that has to be done. Some people find it useful to make a mind map for each project. Then you can take that and use it to set realistic deadlines that stick.
Break Down Larger Projects
There is much more to a project than the deliverable. There are steps leading up to the end product or end result. For example if you set a deadline to create a new product in 90 days and it requires several steps, you need to set smaller time-frames for each step in order to accomplish that. Now, what steps will that take? The same can be stated about a project like a website. First you need a domain name, then you need to pick colors, then you need to choose design elements, and so forth.
Set Small Deadlines
Once you break down a project into smaller chunks, set deadlines for those pieces of the project. Some things have to be done in a particular order, other things don’t matter. Knowing this helps with assigning and delegating tasks and setting deadlines for them too.
Add Margin Time
There is a law called Hofstadter’s Law which basically says that everything takes longer than you think. So, add in some extra time. Commonly people multiply the time they think it will take by 1.5. However, if you find you are not meeting deadlines, determine the factor you need for your deadlines. It might be two times your initial estimate.
While you want to be impressive as a person, don’t try to do too much at once. Look at your entire schedule. Include free time, sleeping time, family time, alone time, eating, exercise, appointments and so forth into your schedule so that you can be realistic about how much time you have to work on any given project or part of a project.
Creating deadlines that stick is a process that requires some thought. But, once you get into the habit of making deadlines that stick, you’ll be able to get much more done each day. We tend to fill up our time with something - why not fill up your time with activities and actions that are designed to get things done?
When you embark on starting a business, you'll need to decide if you'll be a service-based business or a product-based business (or both). We're going to share some of the pros and cons of each to enable you to make decisions that need to be made. You can run both types of businesses together as well; in fact, this is becoming more an more popular as digital products and courses that complement products are so easy to create.
Both business options offer many pros. Pros like owning your own business, being your own boss, making money from home, doing what you love, serving people you like, and having more freedom to spend with family and friends.
But, how do you know whether or not you should start a service-based business or a product-based business?
The components of a service-based business are:
* You and your skills
Let’s look at the components of a product-based business:
* A product
* You and your skills
Not much different, really. You are in the equation for both - whether you are selling products or services. Both will require sales and marketing and the ability to deliver the service or product on time. Both may require a certain amount of technology and knowledge. In both cases you can outsource a certain portion of the work so that you can reduce your efforts.
Remember, when you outsource, in some ways you are really paying to increase the time you have to devote to a project. If you think of it that way, you’ll be able to outsource more efficiently. You won’t feel like you’re outsourcing because you can’t do it yourself; you’re doing it because you need more time. When you can strategically use other people’s time and skills, you can better your business.
With a product-based business you can typically get someone else to make the product and someone else to do the customer service. Technology will automate the delivery process, and you can simply oversee it and collect the revenue. Thus, you can essentially earn unlimited money outside of the hours it takes to produce them.
With a service-based business you will be required, for the most part, to speak directly to the clients and deliver your service on their deadline. You’ll be trading hours for dollars in many respects. So, in addition to the time factor involved with sales and marketing, and the upkeep of your business, your income will be limited to the number of billable hours you can work on any given day. This can be increased through outsourcing, but you will still need to be intimately involved with the results, which will take your time.
No matter what type of business you choose, one thing remains the same. The need for bookkeeping. If you're embarking on a new adventure and want to make sure your finances are in tip-top shape and need to see where to better allocated your profits, give us a call and let's chat about being your bookkeeping service.
There are no shortcuts when it comes to starting your own business. Launching and operating a new business is all about putting in the time, taking one step further each day than the day before, and above all, being open to learning from everything around you, including your customers. If you are ready to take the entrepreneurial leap, here are seven quick tips for you to consider.
1. Inquire within – It’s passion that builds companies, not just ideas. If you don't have the same feeling about your aspiring venture as you had the first time you fell in love, then consider waiting for the right one.
2. Get to know your customers - Companies serve people. Do you know your customers' needs inside and out? Are you familiar with their pain points? Make learning about your prospective customers your top priority before taking the jump. Let your future customers "co-create" your enterprise. They'll likely be the first ones waiting when you open your doors.
3. Know your market - Do you understand the lay of the land in which you will operate your business? What is your unique advantage? What's your "voice"? If there are other companies offering a similar service in your field, study them closely. Figure out what they are doing right and what you can do better.
4. Hire a great attorney - Nothing substitutes the value of a good legal adviser when launching a business. More important than just about any other team addition, a good attorney will provide the best business education you'll ever get.
5. If you need to hire, hire great - A well rounded, passionate team can overcome just about everything. There is nothing more fun than working with a group of passionate, smart people towards a common goal.
6. Find a bank that loves you - Maybe an old school notion, but there is hardly a more critical relationship in the early days of a business than with one's bank. Don't go for the best-known one, go for the one that loves getting your business. Their support in the early days of your company will go a long way, whether it's with a small credit line, better borrowing terms, etc.
7. Your local government can help - Depending on your business, you will be amazed at how many underused resources exist for new start-ups that are offered by local, city or federal governments. Co-working space, grants, networking events, great introductions - they are often up for grabs.
Make sure to consider these tips if you’re thinking of taking the plunge in starting your own business. You may not think of some of these initially, but they can be a great asset as you’re building your business.
Debt has a way of creeping up on us if we let it. It's important to keep our debt at reasonable and manageable levels, or we could end up incurring insane interest charges and scraping to make our payments. Even for those who manage debt well, unexpected business changes can result in difficulty making ends meet.
When we find our business having problems with debt, the first course of action is to take a look at the budget. Finding ways to cut back on unnecessary expenses can help pay down debts and keep monthly bills current. But what happens when we can't solve our debt problems with budgeting?
Sometimes we need outside help. It's hard to go to someone else when you're having money troubles, but if you don't gain control over your debts, your business will suffer. So it's important to take charge before it's too late.
Some small business owners turn to debt consolidation as an answer to debt problems. They transfer high-interest debts to a lower interest credit card, or they put up the equity in their homes to get the money to pay them off. While these options can provide lower payments, they are not without drawbacks. Closing numerous accounts and putting all of your debt into one account can negatively affect your ratio of debt to available credit, lowering your credit score. And if you use your home equity to secure the money needed to pay off business debt, you're putting your home at an unnecessary risk.
Another popular option for those with debt problems is credit counseling. Credit counseling agencies offer help with budgeting, and in some cases, they will set you up with a debt management plan. A debt management plan involves negotiation with creditors to obtain lower interest rates and lower payments. The debtor makes one monthly payment to the credit counseling agency, and the agent forwards payments to each creditor.
A debt management plan can help you get out of debt faster, but it can also impact your credit. A note is added to your credit report stating that you are undergoing credit counseling. This means that you can't get new credit. However, the notation is removed once you've paid off your debts.
It's also important to make sure you're dealing with a reputable credit counseling agency. Some charge high fees or fail to make payments to creditors on time. There have also been some that were found to be outright scams, keeping the money that debtors sent them to pay their bills with. When considering credit counseling agencies, make sure they're members of the Association of Independent Consumer Credit Counseling Agencies (FCAA), or the National Foundation of Credit Counseling (NFCC). These organizations regulate and monitor member agencies, making sure that they operate legally and ethically.
An overabundance of debt can wreak havoc on our finances, business, and our credit scores. It can also be the cause of undue stress. By seeking help at the first sign of trouble, we can often prevent our debts from spiraling out of control.
The best way to avoid major debt problems is to hire a professional bookkeeper when you start your business so will know exactly where you stand before it gets out of control We'd love to be your solution. Contact us today for a free consultation!
When it comes to being a service provider, sometimes it becomes necessary to end a business relationship. It doesn’t necessarily mean that something is wrong with the person as a human being, but it may mean that you’ve both outgrown each other. Or some other reason may have arisen that causes you to want to end the relationship.
Reasons to End a Client Relationship
You’re Suffering from Scope Creep
When you started with the client, you had well-defined responsibilities which you’ve allowed to get out of control. You’re now doing work far outside of your niche and you don’t enjoy it. You’re not being paid enough to outsource, and you’re starting to feel resentful.
They Make Unreasonable Demands
Remember that what is unreasonable to you is reasonable to them, so it’s best not to confront them on this behavior but rather try to set limits. If you try to set limits and they won’t let you, it may be time to end the relationship because you are a bad fit.
They Keep Trying to Make You Reduce Your Rates
Anyone who agrees on a rate, then keeps trying to talk you down, doesn’t respect your business. They may even think of you as an employee or a liability instead of a partner in their business, which may cause them to feel resentful of paying you at all. If the issue of pay comes up a lot, it may be a good idea to move on.
They Are Slow Payers
Any client who won’t pay on time on a consistent basis is a liability to your business and your cash flow. As a service provider, you need to get paid for the work you do on time. If you have an agreement to get paid in a certain way, you should get paid. Give your client a warning and set a three strikes and you’re out rule.
They Don’t Listen
When a client hires you as an expert in your niche but they will not listen to anything you have to contribute, yet they still want you to be responsible for ROI, you have a serious problem that has to be fixed. If you cannot fix it, let them go.
They Are Unresponsive
If you ask for information and they won’t ever give it to you or are often late with the information, and it affects how you perform your duties, it may be best to let the client go. Their unresponsiveness can ruin your schedule and affect not only the work you do for them but also the work you do for others.
They Are Disrespectful
You know when someone shows you contempt or disrespect. You are a business owner now and you don’t need to put up with any of that. When you feel as if someone is disrespecting you, ask them if they’re saying what you think they are saying so that they can clarify. If they are being disrespectful, it’s time to part ways.
The Best Ways to End the Client Relationship
Look at Your Contract
Check the contract to see what the rules and methods of ending the relationship are and stick to that.
Keep It Business Related
Even though sometimes ending a client relationship feels personal, it’s best if you don’t get personal but keep it all business. Only address business things in your notice. Don’t get personal. If you must be vague rather than detailed to keep it professional, do that.
In most cases it’s best to give notice according to the contract. In most cases you can safely give a month’s notice, which is longer than a typical employee relationship because it may take them time to find a replacement. But, if the relationship is contentious you may try to end it sooner.
Ending a relationship is never easy, but once you do let go of clients who aren’t ideal, you’re going to free up space to attract your ideal clients. Plus, once it’s over you’re going to feel so much better about your business and yourself.
If you're currently unsatisfied with your bookkeeping service, contact us today for a free quote!
Offering an internship is beneficial to both your business and the people taking advantage of the internship offer. However, it does require a good deal of effort to run a successful intern program. The focus on any internship should be teaching a new generation of workers, not free labor.
Here's how to make the most of an internship program so that both businesses and interns gain maximum benefit.
Test Drive Future Contractors or Employees
If you are in the market for a new contractor or an employee, having an internship program is a great idea. You can hire two or three interns, with the idea that if one works out they will become permanent. Seeing more than one intern working can let you know if your expectations are too high or on target.
Get Short-Term Support
If you don’t need full-time support, but you have more work during summertime, then having interns during that time is a great way to give back to the community by training future workers, but without having to make promises of permanent work.
Find Low-Cost Labor
Due to lack of experience, interns often get paid less than someone you have to hire on a permanent basis. In some states it’s legal to use an intern free as long as you have approval from certain colleges so that the student can get credit. Plus, most states require you to be a non-profit before allowing you not to pay interns.
Get Fresh Ideas
Bringing in new blood often brings in new ideas. If you run your internship asking for fresh ideas from your interns, leaving the door open for them to bring their ideas into the mix instead of just focusing on tasks that you assign them, you’ll boost your business in ways you haven’t considered.
It feels great to help students and young people who haven’t started their career yet. Giving them information to put on their resume, even if you cannot hire them later, will help them in more ways than you can imagine. Experience is hard to come by but required for most large companies.
Attract Top Talent
If you are a small company, or even a work-from-home company, you likely cannot afford the best talent. But, with an internship program you can get top talent because they need experience to get those top-paying jobs.
Acquire New Technology Skills
If you’re short on new technology skills, by starting an internship program you can recruit interns who have outstanding technological skills to do the things you cannot do. Even if it’s short term, you can get a lot of things off the ground.
Improve Training Programs
Whether you hire contractors or employees, an internship program will help you improve your training programs. Upon doing an exit interview with the interns you hired, you can ask the right questions so that you can find out how you can do better.
Remember, internships aren’t free labor anymore. There have been several lawsuits against for-profit companies using interns as free labor who have been forced to pay the interns after the fact. Some companies under a very limited basis can get by with doing unpaid internships but only under very specific circumstances. So if you want to offer unpaid internships, make sure you consult a lawyer in your state who has experience in this area.