One of the biggest questions a business owner faces when selecting a professional to perform accounting functions is whether to hire a CPA or non-CPA accountant. Most people think that CPA is always best and all non-CPA are not smart enough to be a CPA otherwise they would have it. While CPAs are to be given the professional respect that they deserve, it is ill advised to assume that a CPA is always best for you. Especially if you have a new or small business, you should give serious consideration to a non-CPA firm that can offer total accounting function – monthly bookkeeping, quarterly tax preparation, and accounting advice.
There are situations in which talented accountants do not pursue a CPA designation because they do not meet one or more aspects of CPA qualification determined by the State Government. The most common is no prior experience working for a CPA. Nearly all CPAs earn this designation after college as they work for a public accounting firm in their audit division. Alternatively an accounting graduate can elect to work for a private company in their accounting department. Other reasons for not pursuing a CPA include no desire to work with publicly traded companies or governmental agencies. These entities require accountants to have a CPA in order to be hired.
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Friday, July 10, 2009
Thursday, July 9, 2009
Single Or Double Entry Bookkeeping That Is The Question
The bookkeeping system adopted by a business is based upon double entry principles for all limited companies but self employed businesses may use a single entry bookkeeping system if a statement of assets and liabilities is not required. Bookkeeping is the recording of the prime financial transactions of a business usually by a bookkeeper or accounts clerk in the business books.
The difference between bookkeeping services and accounting may be unclear to the uninitiated while both are of vital importance to financial success. Bookkeeping is an important part of the accounting function and is essentially the record keeping of the financial transactions. Accounting is while incorporating the record keeping also includes the presentation, interpretation and financial control functions including interpretation of the numbers for the financial health of a business of which taxation can play a major part.
Bookkeeping stems from the recording of financial transactions and the accounting term for a business accounts as books. In effect the accounting function prepares a record of the monetary affairs of a business and stores the information in files called books. Hence the term bookkeeping often misspelled as book keeping which is the function of a librarian not that of a bookkeeper.
The financial affairs of a business involve many aspects and start with the recording of what is termed the prime documents. The task of a bookkeeping service which some businesses outsource is to record the prime documents, those prime documents being the sales, purchases and cash/bank transactions. All small businesses do bookkeeping and the most successful use the bookkeeping records as a basis for an accounting function to generate a more efficient financial service.
All business involves buying or selling something and the consequent function of receiving or paying money to the value of those transactions. Recording these transactions in larger business organisations is done by accounts clerks who work under the supervision of the accountant.
Invariably medium and larger businesses use a double entry system for recording transactions. Double entry accounting evolves from the fact that every transaction as a double effect on the business of which these are prime examples.
A sale is made. That creates a record of income for the business which is taxed on that income the other side of the financial transaction, the double entry, is the fact that the organisation who was sold the goods now owes the value of that sales invoice to the business. That is the double entry, record the sales income and also record the debt due from the customer who is now called a debtor.
Someone who owes the business a debt is called a debtor.
A purchase is made. That creates a record of expense for the business which can be deducted from income and lowers taxes and the other side of the financial transaction, the double entry, is the fact that the organisation who supplied the purchase on credit is now owed the money. That is the double entry, record the sales income and also record the credit due to the supplier who is now called the creditor.
Someone who has supplied goods on credit is called a creditor.
The third type of prime transaction is the transfer of money between the debtors and creditors and the business.
When a debtor pays his sales invoice the double entry is to add that amount of money to the business financial records and the opposite double entry goes to the debtor account to reduce the amount owed to the business since it has now received the cash.
When a creditor is paid the amount owed the money is recorded as reducing the cash resources of the business by for example deducting the money from the bank balance and the double entry reduces the amount the business now owes to the creditor account since it has reduced the credit received.
The bookkeeping function is to record these prime transactions. Since every financial transaction has an equal and opposite entry in the books there has to be a mathematical check that both sides of the transactions add up to zero. This check process is called a trial balance where both sides of the entries should be in agreement and normally the point at which the bookkeeping service is deemed to be complete.
Double entry bookkeeping is required for all businesses that require to produce a statement of its assets and liabilities. This statement of assets and liabilities is the total of all the balances from the trial balance and is called a balance sheet.
Many small businesses do not require a balance sheet. In the UK the production of a balance sheet is optional for every self employed business as it is not an obligatory requirement of the self assessment tax return form. A self employed bookkeeping system is not required to produce a balance sheet because the business effectively belongs to the owner and is that owners personal business.
Limited companies must produce a balance sheet under various financial acts and submit the balance sheet to both Companies House and the tax authority each year. The different rules applying to a limited company is because the accounts including the balance sheet are public records available to the members of that company and not necessarily the property of a single individual or partnership.
The self employed bookkeeping system can be simpler being produced from a single entry style of bookkeeping rather than double entry. Single entry bookkeeping makes a single entry for each financial transaction which is sufficient to produce an income and expenditure account, a profit and loss account, but does not make the reciprocal entry that establishes the value of the assets and liabilities.
Single entry can be as simple as making a list of the sales income and the purchase expenses. Such a bookkeeping system is valuable to the smaller business as it requires little or no bookkeeping or accounting knowledge. A smaller business can produce its own accounts without the need for a bookkeeper or accountant particularly if it has access to bookkeeping templates through bookkeeping software to produce the accounts in the accounting format required.
About Author:
Terry Cartwright is a qualified accountant in the UK designs Accounting Software on excel spreadsheets providing complete Small Business Accounting Software solutions for with single and double entry Bookkeeping solutions for limited companies and self employed business
Source: http://www.buzzle.com/
The difference between bookkeeping services and accounting may be unclear to the uninitiated while both are of vital importance to financial success. Bookkeeping is an important part of the accounting function and is essentially the record keeping of the financial transactions. Accounting is while incorporating the record keeping also includes the presentation, interpretation and financial control functions including interpretation of the numbers for the financial health of a business of which taxation can play a major part.
Bookkeeping stems from the recording of financial transactions and the accounting term for a business accounts as books. In effect the accounting function prepares a record of the monetary affairs of a business and stores the information in files called books. Hence the term bookkeeping often misspelled as book keeping which is the function of a librarian not that of a bookkeeper.
The financial affairs of a business involve many aspects and start with the recording of what is termed the prime documents. The task of a bookkeeping service which some businesses outsource is to record the prime documents, those prime documents being the sales, purchases and cash/bank transactions. All small businesses do bookkeeping and the most successful use the bookkeeping records as a basis for an accounting function to generate a more efficient financial service.
All business involves buying or selling something and the consequent function of receiving or paying money to the value of those transactions. Recording these transactions in larger business organisations is done by accounts clerks who work under the supervision of the accountant.
Invariably medium and larger businesses use a double entry system for recording transactions. Double entry accounting evolves from the fact that every transaction as a double effect on the business of which these are prime examples.
A sale is made. That creates a record of income for the business which is taxed on that income the other side of the financial transaction, the double entry, is the fact that the organisation who was sold the goods now owes the value of that sales invoice to the business. That is the double entry, record the sales income and also record the debt due from the customer who is now called a debtor.
Someone who owes the business a debt is called a debtor.
A purchase is made. That creates a record of expense for the business which can be deducted from income and lowers taxes and the other side of the financial transaction, the double entry, is the fact that the organisation who supplied the purchase on credit is now owed the money. That is the double entry, record the sales income and also record the credit due to the supplier who is now called the creditor.
Someone who has supplied goods on credit is called a creditor.
The third type of prime transaction is the transfer of money between the debtors and creditors and the business.
When a debtor pays his sales invoice the double entry is to add that amount of money to the business financial records and the opposite double entry goes to the debtor account to reduce the amount owed to the business since it has now received the cash.
When a creditor is paid the amount owed the money is recorded as reducing the cash resources of the business by for example deducting the money from the bank balance and the double entry reduces the amount the business now owes to the creditor account since it has reduced the credit received.
The bookkeeping function is to record these prime transactions. Since every financial transaction has an equal and opposite entry in the books there has to be a mathematical check that both sides of the transactions add up to zero. This check process is called a trial balance where both sides of the entries should be in agreement and normally the point at which the bookkeeping service is deemed to be complete.
Double entry bookkeeping is required for all businesses that require to produce a statement of its assets and liabilities. This statement of assets and liabilities is the total of all the balances from the trial balance and is called a balance sheet.
Many small businesses do not require a balance sheet. In the UK the production of a balance sheet is optional for every self employed business as it is not an obligatory requirement of the self assessment tax return form. A self employed bookkeeping system is not required to produce a balance sheet because the business effectively belongs to the owner and is that owners personal business.
Limited companies must produce a balance sheet under various financial acts and submit the balance sheet to both Companies House and the tax authority each year. The different rules applying to a limited company is because the accounts including the balance sheet are public records available to the members of that company and not necessarily the property of a single individual or partnership.
The self employed bookkeeping system can be simpler being produced from a single entry style of bookkeeping rather than double entry. Single entry bookkeeping makes a single entry for each financial transaction which is sufficient to produce an income and expenditure account, a profit and loss account, but does not make the reciprocal entry that establishes the value of the assets and liabilities.
Single entry can be as simple as making a list of the sales income and the purchase expenses. Such a bookkeeping system is valuable to the smaller business as it requires little or no bookkeeping or accounting knowledge. A smaller business can produce its own accounts without the need for a bookkeeper or accountant particularly if it has access to bookkeeping templates through bookkeeping software to produce the accounts in the accounting format required.
About Author:
Terry Cartwright is a qualified accountant in the UK designs Accounting Software on excel spreadsheets providing complete Small Business Accounting Software solutions for with single and double entry Bookkeeping solutions for limited companies and self employed business
Source: http://www.buzzle.com/
Friday, July 3, 2009
Cost Benefit Analysis-whether you should outsource your Bookkeeping to Professional Book Keeper
What is a role of a bookkeeper in your organization :
BOOKKEEPERS keep complete, up-to-date, and accurate records of accounts and financial arrangements. Bookkeepers verify and enter information into journals and ledgers or into a computer. They periodically balance the books and compile reports and financial statements. Bookkeepers also receive, record, bank and pay out cash. They balance checkbooks with monthly bank statements. They may calculate employee wages from plant records or time cards and issue payroll checks. Some of the other work they may do includes posting accounts receivable and payable, prepare and make bank deposits, record payrolls, maintain inventory records, purchase supplies, prepare purchase orders and do expense reports. Bookkeepers may also make schedules, sort documents, and file bills. These type of jobs are found in every industry and may have various job titles, such as accounts payable clerk, accounts receivable clerk or assistant bookkeeper.
Cost of a Bookkeeper :
The pay for these jobs depends upon experience, clerical skills, the level of responsibility and the job location. Beginning salaries go from minimum wage to $ 15 per hour. Experienced Bookkeeper can make $ 20 an hour. After having worked for three years with the same firm, a Bookkeeper can earn at $ 25 per hour. A Bookkeepers usually work 40 hours a week; sometimes it may be necessary to work overtime. Some employers have fringe benefits such as paid vacations and sick leave, life and health insurance, and bonuses. Other benefits that the employer may include are participation in a credit union, or retirement and profit sharing plans.
Advantage of outsourcing Bookkeeping work to a professional bookkeeper :
There are several distinct advantages to outsourcing your bookkeeping functions. First and foremost is saving money. You get what you pay for and if you don't pay for quality than you won't have quality service. However, you can save money by outsourcing because you won't be paying for employer payroll tax expense, workman's compensation and general liability insurances, vacation time, sick time, health insurance and other benefits a good full time bookkeeper will expect from his/her employer. Just remember, however, that these costs will be built into the consultant's hourly rate and their fee will reflect these costs. Any bookkeeping consultant who has not taken these costs into consideration is not a bookkeeper you want - if they don't know enough to include these costs into their fees, then they don't know enough to be a help to your business. You should expect to pay at least three times what you would pay an experienced full charge bookkeeper.
And just how do you save money by paying three times the amount you would pay an employee? Well, let's see. There will be no recruiting, interviewing and training costs for start. And if you should find yourself unhappy with the services there will be no additional recruiting, interviewing and training to replace your bookkeeper. Also, you will not have to be concerned about law suits such as sexual harassment, unlawful firing, age discrimination, sexist, etc. Or an increase in your unemployment rates because you laid off an employee that you really wanted to fire but had no lawful cause to do so. So right away we have less time and money spent and potentially less hassle if things don't go well.
And of course you will not be paying workman's compensation and general liability insurance premiums. Also any worthy bookkeeper will expect at least two weeks vacation, coverage for sick time, health and dental insurance and even perhaps more benefits.
Most professional bookkeepers will have their own offices saving you space within your office. So you will not be buying that extra desk, calculator, computer and computer software. Your bookkeeper will be providing all of that as part of his/her fee. No software updates, computer maintenance, training costs, etc. Of course should you prefer to have your computerized bookkeeping records available to you at your office, a small investment in software installed on your computer makes this possible. Also no office supplies to be paid for. You will be amazed at just how much pens, pencils, and paper can be used by a bookkeeper. Your consultant bookkeeper will either ask you to drop off the work at their office, will pick it up at your office or some may even offer remote bookkeeping service. And by having your bookkeeping done off site, your bookkeeper will be able to work more efficiently and accurately because her/his office will most likely offer less distractions than your busy office. All of this is saving you money.
And the best reason for outsourcing is that you control the amount of money spent on bookkeeping. What I mean by this is that the person you hire to do your bookkeeping will be doing just that - not answering the phone, dealing with drop-bys, chatting to other employees, etc. Also you can start with just a few hours a month and add on when you need to and then adjust downward again should it be necessary. Can you imagine finding an employee to start with only four hours a month, then asking them to put in 20 hours a week for awhile and then back down to four hours a month again. I don't think you would keep them for very long, but a free lance bookkeeper is able to work around these variables and even more importantly expects to work with flexible schedules.
So have I convinced you yet? If so, then just remember "you will get what you pay for". Go for top quality because your financial records are the core of your business and without great bookkeeping you cannot expect to succeed no matter what type of business you have. After all don't you think you are worth it ?
About Author : Mr.Bhaskar Thakkar is a qualified Chartered Accountant and professional bookkeeper from India. He is a president of M/s. BT Associates, Chartered Accountants. The said firm provides Book keeping, Accounting, Auditing and Tax preparation services to various Chartered Accountants in UK, US and Canada. The firm is also specialized in preparation of VAT returns, Payroll Processing. Visit 1. btassociate.com,. A division of said firm provides various outsourcing solutions please visit 1. jobs2india.com., to get more details.
Source: http://www.articlesbase.com/
BOOKKEEPERS keep complete, up-to-date, and accurate records of accounts and financial arrangements. Bookkeepers verify and enter information into journals and ledgers or into a computer. They periodically balance the books and compile reports and financial statements. Bookkeepers also receive, record, bank and pay out cash. They balance checkbooks with monthly bank statements. They may calculate employee wages from plant records or time cards and issue payroll checks. Some of the other work they may do includes posting accounts receivable and payable, prepare and make bank deposits, record payrolls, maintain inventory records, purchase supplies, prepare purchase orders and do expense reports. Bookkeepers may also make schedules, sort documents, and file bills. These type of jobs are found in every industry and may have various job titles, such as accounts payable clerk, accounts receivable clerk or assistant bookkeeper.
Cost of a Bookkeeper :
The pay for these jobs depends upon experience, clerical skills, the level of responsibility and the job location. Beginning salaries go from minimum wage to $ 15 per hour. Experienced Bookkeeper can make $ 20 an hour. After having worked for three years with the same firm, a Bookkeeper can earn at $ 25 per hour. A Bookkeepers usually work 40 hours a week; sometimes it may be necessary to work overtime. Some employers have fringe benefits such as paid vacations and sick leave, life and health insurance, and bonuses. Other benefits that the employer may include are participation in a credit union, or retirement and profit sharing plans.
Advantage of outsourcing Bookkeeping work to a professional bookkeeper :
There are several distinct advantages to outsourcing your bookkeeping functions. First and foremost is saving money. You get what you pay for and if you don't pay for quality than you won't have quality service. However, you can save money by outsourcing because you won't be paying for employer payroll tax expense, workman's compensation and general liability insurances, vacation time, sick time, health insurance and other benefits a good full time bookkeeper will expect from his/her employer. Just remember, however, that these costs will be built into the consultant's hourly rate and their fee will reflect these costs. Any bookkeeping consultant who has not taken these costs into consideration is not a bookkeeper you want - if they don't know enough to include these costs into their fees, then they don't know enough to be a help to your business. You should expect to pay at least three times what you would pay an experienced full charge bookkeeper.
And just how do you save money by paying three times the amount you would pay an employee? Well, let's see. There will be no recruiting, interviewing and training costs for start. And if you should find yourself unhappy with the services there will be no additional recruiting, interviewing and training to replace your bookkeeper. Also, you will not have to be concerned about law suits such as sexual harassment, unlawful firing, age discrimination, sexist, etc. Or an increase in your unemployment rates because you laid off an employee that you really wanted to fire but had no lawful cause to do so. So right away we have less time and money spent and potentially less hassle if things don't go well.
And of course you will not be paying workman's compensation and general liability insurance premiums. Also any worthy bookkeeper will expect at least two weeks vacation, coverage for sick time, health and dental insurance and even perhaps more benefits.
Most professional bookkeepers will have their own offices saving you space within your office. So you will not be buying that extra desk, calculator, computer and computer software. Your bookkeeper will be providing all of that as part of his/her fee. No software updates, computer maintenance, training costs, etc. Of course should you prefer to have your computerized bookkeeping records available to you at your office, a small investment in software installed on your computer makes this possible. Also no office supplies to be paid for. You will be amazed at just how much pens, pencils, and paper can be used by a bookkeeper. Your consultant bookkeeper will either ask you to drop off the work at their office, will pick it up at your office or some may even offer remote bookkeeping service. And by having your bookkeeping done off site, your bookkeeper will be able to work more efficiently and accurately because her/his office will most likely offer less distractions than your busy office. All of this is saving you money.
And the best reason for outsourcing is that you control the amount of money spent on bookkeeping. What I mean by this is that the person you hire to do your bookkeeping will be doing just that - not answering the phone, dealing with drop-bys, chatting to other employees, etc. Also you can start with just a few hours a month and add on when you need to and then adjust downward again should it be necessary. Can you imagine finding an employee to start with only four hours a month, then asking them to put in 20 hours a week for awhile and then back down to four hours a month again. I don't think you would keep them for very long, but a free lance bookkeeper is able to work around these variables and even more importantly expects to work with flexible schedules.
So have I convinced you yet? If so, then just remember "you will get what you pay for". Go for top quality because your financial records are the core of your business and without great bookkeeping you cannot expect to succeed no matter what type of business you have. After all don't you think you are worth it ?
About Author : Mr.Bhaskar Thakkar is a qualified Chartered Accountant and professional bookkeeper from India. He is a president of M/s. BT Associates, Chartered Accountants. The said firm provides Book keeping, Accounting, Auditing and Tax preparation services to various Chartered Accountants in UK, US and Canada. The firm is also specialized in preparation of VAT returns, Payroll Processing. Visit 1. btassociate.com,. A division of said firm provides various outsourcing solutions please visit 1. jobs2india.com., to get more details.
Source: http://www.articlesbase.com/
Thursday, July 2, 2009
New Software for Faster I-T Returns
CHANDIGARH: Speeding up the process of filing income-tax returns and making it more convenient, a software called ‘Uttam Sewa’ has been prepared by the department concerned to facilitate the work of over three lakh assessee across city and Mohali.
Scheduled to be launched in the city by July 15, the software will not only ensure a simpler filing process, but also speed up disposal of refund cases, which usually entail a waiting period of a year or more. I-T authorities claim the refund would now be done within three months of filing returns. The software will also allow immediate reflection of returns on internet, officials claimed.
While the assessees and their tax consultants are busy preparing the returns that are to be filed by July 3, so are the offices of commissioner of income tax (CIT) I and II that are gearing up for the software launch.
“As a pilot project, this programme will be launched in five cities identified by Central Board of Direct Taxes this year. Chandigarh is one of them and we will cover range IV and V of CIT I and entire range of CIT II. CBDT chairman and member secretary are likely to launch the same on July 13 or 14,” AK Kaushal, commissioner of income-tax I, who also heads the committee formed to execute the new programme, said.
Read More Article...
Scheduled to be launched in the city by July 15, the software will not only ensure a simpler filing process, but also speed up disposal of refund cases, which usually entail a waiting period of a year or more. I-T authorities claim the refund would now be done within three months of filing returns. The software will also allow immediate reflection of returns on internet, officials claimed.
While the assessees and their tax consultants are busy preparing the returns that are to be filed by July 3, so are the offices of commissioner of income tax (CIT) I and II that are gearing up for the software launch.
“As a pilot project, this programme will be launched in five cities identified by Central Board of Direct Taxes this year. Chandigarh is one of them and we will cover range IV and V of CIT I and entire range of CIT II. CBDT chairman and member secretary are likely to launch the same on July 13 or 14,” AK Kaushal, commissioner of income-tax I, who also heads the committee formed to execute the new programme, said.
Read More Article...
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