Wednesday, October 31, 2007

2007 Review of Client Write-Up Systems

Write-Up And Sanity Are Not Mutually Exclusive Service Makes a Comeback as Technologies Improve Productivity

Write-up services have long been one of the core offerings of year-round accounting firms. Whether performed monthly, quarterly or periodically, client write-up is not an exact process, per se, but often includes entering transactions like bills, invoices, periodic expenses, bank reconciliation and asset treatments, with the end-goal of producing financial statements that explain the fiscal health of the entity. Write-up is often joined by other periodic but technically independent tasks such as after-the-fact payroll, sales tax compliance and other issues. As such, it is an excellent way to keep in contact with clients, which can lead to additional services and revenues.

But write-up has fluctuated in popularity among accountants over the past few years, especially since the boom of self-service accounting software in the later 1990s. The reason why is pretty easy to figure out, too: Many SMB products made it easy for clients to royally mess up their books, so write-up turned into a form of forensic accounting. Gone are the days when the work was basically after-the-fact accounting and clients would just bring in their boxes of receipts, their check ledgers, bills and bank statements. With clients entering transactions themselves, and sometimes editing them without an audit trail, or posting incorrectly and making other errors, the software would give them incorrect feedback on the financial condition of their business.

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Tuesday, October 30, 2007

Bookkeeping Tips for Stall Holders

If you are operating a market stall as a business monitoring sales can be overwhelming. You withdraw cash as a float, you sell your product generating income, and then you get hungry. So you take some cash from the cash takings and buy some food. While wandering across the market to buy some food you notice an item you must have from another trader, and you dip into the takings again. The end of the day rolls on, and you bank your takings, but what do they represent? Float, sales, private expenditure, and business expenditure. To ensure that you are properly recording your sales you need to implement a routine daily reconciliation, identifying the 5 separate elements.

FLOAT plus CASH SALES less BUSINESS EXPENDITURE less PRIVATE EXPENDITURE

equals BANK DEPOSIT

Float ~ this is the amount that is withdrawn from the bank at the start of the day. You will be able to reconcile this amount to the bank statement.

Sales ~ at the end of the day calculate total cash Sales Income.

Business expenditure ~ keep receipts for all business related expenditure incurred throughout the day. Circle the data and the amount with a red pen, and staple them to the Sales Sheet.

Deposit ~ this is the amount that you deposit in the bank at the end of the day. You will be able to reconcile this amount to the bank statement.

Adopting this approach, will greatly assist you at the end of the month, when you or your bookkeeper reconciles your bank statements

Source: http://aniseconsulting.blogspot.com/

Monday, October 29, 2007

Bookkeeping Tips for Freelance Writers

In case you haven't already heard, freelance writers are self-employed individuals who must keep track of their own income and expenses. Bookkeeping comes naturally to some people, while others -- such as myself -- must work at it. Unless you are an extremely profitable freelance writer, you don't have your own accounting department that handles all of your bookkeeping for you, so you must learn how to do it yourself.

You don't need a fancy accounting degree or expensive financial software in order to keep track of your income and expenses. All you really need to know is the first simple rule of bookkeeping: Write everything down! Keep records both in hard copy and on your computer and you virtually can do no wrong because there will always be a way to double-check your figures and to produce financial information when need be.

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Sunday, October 28, 2007

Bookkeeping Workshop Offered in Douglas

A fun and friendly course in beginning bookkeeping and accounting designed for individuals and small business owners will be offered in Douglas Nov. 14, by the Wyoming Small Business Development Center (WSBDC) and Eastern Wyoming College (EWC).

“Bookkeeping for Dummies” will be held from 6-9 p.m. on the EWC campus in Douglas. The cost is $20. Register by Nov. 8 by calling EWC at (307) 358-5622.

Leonard Holler, WSBDC regional director and a CPA with more than 30 years of accounting experience, will serve as instructor and discuss the basics of accounting and bookkeeping.

The WSBDC is a partnership program funded by the U.S. Small Business Administration, the Wyoming Business Council, and the University of Wyoming that helps to strengthen Wyoming businesses and create economic growth by providing management assistance, educational programs and helpful resources for Wyoming small businesses and entrepreneurs. For more information call the WSBDC at (307) 234-6683.

Source: http://www.uwyo.edu/

Friday, October 26, 2007

Ideal Bookkeeping System - How To Create It

Bookkeeping has been around for a long time, and there has been a great deal written on what is essentially the ideal bookkeeping system. This article will demonstrate 2 examples of what are in my mind, the most ideal bookkeeping systems ever documented. Obviously the exact path to follow in forming your ideal bookkeeping system will vary depending on your business size and needs, and extra tips are included at the conclusion of this article.

The following are the 2 examples of what could be could be considered an ideal bookkeeping system. Both books are commonly available in book stores throughout the US, and definitely worth pursuing.

'Organize Your Books in 6 Easy Steps: A Workbook for the Sole Proprietor Service-Oriented Business' By: Donna M Murphy

As the title of this book suggests, this book shows how a sole proprietor of a service-oriented business can create and organize their bookkeeping system in series of basic steps. The proof of this system lies in the testimonials provided- by people such as James C. Smith, the president and CEO of SEMA- who could not praise the content of the book enough. In the 13 years of operating their business, SEMA inc analyzed practices and shortfalls which could have been avoided had they followed the steps outlined in the book.

'Organize your books in 6 easy steps' specifically focuses on cash flow management and understanding and dealing with the IRS to create the ideal bookkeeping system which is appropriate for your business.

'Setting Up and Running a Limited Company: A Comprehensive Guide to Forming and Operating a Company as a Director and Shareholder' By: Robert Browning

This book not only focuses on creating the ideal bookkeeping system within your business, but shows how success for your business will flow on from the basic cash flow management and organization of your bookkeeping. This book is ideal for a business operator looking to solidify a solid bookkeeping system, and to drive success from the foundation of this bookkeeping system.

Whichever bookkeeping system you decide to implement in your business, there are certainly some universal characteristics you should want to include:

Utilize Bookkeeping Software

The days of manual bookkeeping are long gone. Bookkeeping software allows for easy management and fast updates of your financial transactions.

Choose Your Bookkeeper wisely

You should select a focused and dedicated member of staff with a vested interest in the business to take care of your bookkeeping system (you may be the only person suitable for this role).

Stay on top of your bookkeeping

Never put off your bookkeeping! Record every transaction and keep every single receipt- don't let it mount up. The last thing your business needs is to be audited and to be found negligent.

If your business adheres to these basic principles your bookkeeping system will run as smoothly as possible, and success in your business will more than likely follow.

About Author:

For more information and tips on bookkeeping, please visit: http://www.book-keeping-tips.com

More Transparent Bookkeeping Rules For 2016 Bid Cities - IOC

The seven cities bidding to host the 2016 Summer Olympic Games have been told by the International Olympic Committee (IOC) to provide more accurate budgets of costs in their bids. The cities were told at a seminar in Lausanne this week that the final cost estimates should be in 2016 prices.

This Is London reports the IOC has adopted “more transparent” bookkeeping rules following recommendations from London 2012 and Vancouver 2010 organizers whose budgets have come under pressure due to rising property venues.

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Wednesday, October 24, 2007

Accounting fraud is hard to find, but there are clues

Q: How to do I find out whether a company has safeguards and procedures in place to protect investors from fraud?

A: The memory of the frauds at Enron and Worldcom still haunt many investors. There have been countless books written and conferences held to teach investors how to avoid seeing their money vanish due to an accounting fraud.

There's really no way for an investor, outside of a company, to know for sure whether or not the company's financials are fraudulent. Investors must rely on the auditors the companies hire and on regulators to do their jobs ferreting out problems before they reach Enron proportions. But, there are some red flags investors can recognize.

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Tuesday, October 23, 2007

Accounting Professionals: Are The Necessary?

Does your business needs an outside accountant?

It all depends. If you require an audited or reviewed financial statement, then, yes, you need a CPA. In any event, it is always a good idea to maintain a relationship with an accountant no matter how small your business. Whether your accountant is a CPA is up to you. The real question is: To what extent do you need outside accounting services? That also depends on you and the nature of your business.

I always start with the admonition: The Buck Stops With You! You cannot afford to dissociate yourself from understanding the meaning of your financial statements. If you solely rely on your accounting staff or accountant for completely accurate financial data, then you are asking for trouble. If you are going to own or manage a business, then you have a responsibility to learn how to speak the language of business. The language of business is accounting knowledge.

How involved you become in the accounting process will be determined by time schedules, your mental pre-disposition, desire for control, cash flow, etc. One scenario, if you can afford it, is to hire an internal accounting staff to prepare financial statements on a monthly basis and have an external accountant check them over. Another common scenario is to prepare part of the compilation yourself, such as preparing a sales journal and a cash disbursements journal, and then hire an outside accountant to prepare a bank reconciliation and the financial statements for you. Some do this on a monthly basis, others quarterly. Some business owners do the books themselves all year and turn them over to the accountant at the end of the year to verify the balances and do the depreciation entry for tax purposes.

There are numerous ways to work with an accountant. Regardless, you should learn enough about accounting to be able to communicate intelligently with your accountant. Since you are intimately involved in your business you may recognize danger signals that not even your accountant will see.

Selecting an accountant

Relying on the yellow pages to find an accountant can be risky. The best way to find any professional is by a referral. However, you need to interview prospective accountants before signing on. One of the first priorities is to find out what their experience level is. Your business may have very specific accounting and tax issues that require a certain amount of expertise. Perhaps you have a manufacturing concern. What does the accountant know about raw materials, work-in-process, and finished goods inventory accounting? Does the accountant know how to set up job-costing and overhead burdens? Ask for references from other like-kind businesses.

Keep in mind, that you may go to an established firm with a good reputation, but with whom are you going to have a relationship? Is your account large enough to warrant a relationship with a partner? You need to feel confident with the person assigned to your account. Perhaps a smaller firm with four or five accountants who are all seasoned veterans might work better.

You will also want someone with whom you can relate. The ability to communicate is a crucial factor. Your accountant may be technically proficient but can you understand what he or she is telling you? Does he or she listen when you ask questions? Don’t be afraid to ask for someone else if you are having difficulty communicating.

Another important criterion is “accessibility”. Is your accountant too busy to talk to you? Can you get your questions answered within a reasonable period of time? Do you feel important to him or her? Situations may arise where you need information immediately to make an important business or tax decision, will your accountant respond quickly?

Last, but not least, are the accountant’s billing practices. Billing practices vary from firm to firm. Some firms are very aggressive and put tremendous pressure on staff and partners to bill every minute they can. Some firms require a review process before any work goes out the door. This means that every person who performs any work on your account, including the person who puts the stamp on your envelope, bills you for it.

Find out in advance what happens if you call the firm to ask a simple question that takes less than five minutes to answer. Are you billed for five minutes or are you billed in increments of fifteen minutes even though you only talked for five? Some firms justify this increment billing by explaining that you are paying for the accountant’s expertise that may have taken years to acquire, therefore, they say, it’s worth it.

Some accounting practitioners charge a flat rate for services rendered or a combination of flat services and hourly charges. For instance, an accountant might charge $200 a month to prepare a monthly financial statement but charge $100 an hour for special projects. Within the monthly fee, the client can call to ask questions that last fifteen minutes or less for no additional charge. This way the client is not reticent about calling. Getting your question answered may prevent little problems from later becoming bigger more expensive problems.

Very often projects take longer to complete than anticipated. Complications arise and the practitioner should be paid for his or her work. Always insist that, if there are going to be additional charges over and above what has been agreed upon, that the accountant gets your approval first. Be sure to clarify these procedures before engaging an accountant in an “engagement letter”. This is a document that spells out the responsibilities of both parties and how the relationship is going to work.

Remember, there is absolutely no reason to be intimidated by your accountant. After all, you are paying for the services, and I promise you, the accountant wants your business.

About the Author:

John W. Day, MBA is the author of two courses in accounting basics: Real Life Accounting for Non-Accountants (20-hr online) and The HEART of Accounting (4-hr PDF). Visit his website at http://www.reallifeaccounting.com to download for FREE his 3 e-books pertaining to small business accounting and his monthly newsletter on accounting issues.

Monday, October 22, 2007

Accounting board considers delaying new income tax rule

A committee funded by the American Institute of Certified Public Accountants is calling for a delay in the implementation of an accounting rule that will change the way private companies report their income tax positions.

It's no secret that companies take steps to lessen their income tax liabilities. The more aggressive a company is with its strategies, the more likely the IRS is to later question the move and demand larger tax payments. That possibility makes, in the language of accountants, the amount of money a company puts on its financial statements as its tax liability, "uncertain."

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Sunday, October 21, 2007

Smaller business can use smaller bookkeeping system

Question: I just have a very small and simple business. My husband and I are the only people involved in it. Do I have to have elaborate recordkeeping with monthly and year-to-date statements, a monthly/Y-T-D cash flow and balance sheets? Isn’t there some simpler system or approach?

Answer: As long as you pay all your state and federal taxes on time and have enough to pay all your business and personal bills on time plus a little extra, your accounting system can be on the back of an envelope or two. However, you must save the envelopes so that your calculations, income and expense records can be understood and verified should any taxing bodies choose to audit your returns.

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Friday, October 19, 2007

Accounting for taste

Cultural prizes are under attack, but they serve a valuable role in bringing art to a wider market

Told that she had won the Nobel prize for literature, Doris Lessing surprised reporters with a reaction along the lines of: "Christ, it's about time". And this grumpiness towards awards for authors seems to be spreading across the month. On the eve of the 2007 Man Booker prize this week, thriller writer Robert Harris described these would-be British Oscars for novelists as "evil", accusing judges of stacking the short list with unreadable and unread books selected by criteria of liberal guilt.

Some reports of Anne Enright's victory with The Gathering noted that her book was "bleak and depressing" and "not a bestseller". Even a beneficiary of the Man Booker - Ian McEwan, winner in 1998 and short-listed several times, including this year - has proposed a significant makeover, arguing that short lists should be abandoned, with the judges simply declaring a winner on the day, as happens with the Nobel. This would reduce the sense of authors being tipped and backed like horses.

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Thursday, October 18, 2007

Employee should learn from costly bookkeeping mistake

Dear Amy: I work for a small family-owned business. My employers pay my rent and electricity, and give me a salary. (I live in an apartment attached to the office.) I realize that they have been extremely generous to me.

Recently I made a big mistake concerning two of their subcontractors. I overpaid these subcontractors by about $8,000. I realize that this was a bad mistake. The subcontractors brought the mistake to my employer's attention. One was overpaid by $6,000. They returned the check, so no money left my employer's account.

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Wednesday, October 17, 2007

How to Choose the Perfect Tax Attorney

First of all, why would you need a tax attorney? What situations require an attorney? Basically, you should not need such a professional in case you can handle your taxes on your own, but in case you are overwhelmed by tax issues, tax debts, or, even worse, in case you are charged with fraud of some sort, then the first thing you need to do is choose a tax attorney. But not any attorney - go for the best one! Here is how:

After deciding that you need an attorney, you might ask yourself: where do I find such a specialist? Just like in the case of choosing lawyers or real estate agents, it is safer to ask for recommendations - one of your relatives or friends must have used, at some point, the services of such an attorney. A nice, clean reputation talks more than a thousand words, so make sure you choose a reputable and experienced tax attorney. Secondly, you could do some research on your own - make sure you are only considering attorneys which are specialized in taxes and not in another legal or financial matter.

When you are searching for a tax attorney, one of the most relevant aspects is considered to be the fee of the specialist. We all know that dealing with lawyers or attorneys is never cheap. But the question is: should we be cheap when selecting the right attorney? The answer is: No. Why? Because usually, the smallest fee does not lead to the best results. And the best results are what you are after, right? Still, that does not mean that you should select the first and very expensive tax professional you meet. You can feel free to interview more specialists, to discuss about all the taxes, to get an estimative and accurate evaluation and only then make your final choice.

The fee is not the only practice criteria that need your consideration. You should be interested to find out the schedule of the attorney, the strategy that he/she desires to follow and the ways that he/she can provide in order to lead you to the desired results.

But besides the wide range of professional qualities that any great specialists should have, the tax attorney must own numerous personal abilities and skills, in order to make sure that he/she establishes an optimum collaboration with you, the client. So, first of all, think that this attorney will handle your tax and financial problems - this is a serious matter which, probably, you don't understand completely. This is the main reason why you need to be able to trust your attorney completely. Secondly, your attorney must be communicative and must understand and explain all the aspects of your problem, so make sure you choose a specialist who owns these important qualities.

Deciding regarding the right attorney is not the easiest matter. But once you know what you should look after, your job is less difficult. Besides, being informed and prepared in order to make the right decision is always the biggest plus.
Author Resource:- Get your tax questions answered and free access on the income tax attorney and the property tax attorney .

Author Resource:- Get your tax questions answered and free access on the income tax attorney and the property tax attorney .


Tuesday, October 16, 2007

8 Reasons Your Business Needs Accounting and Legal Professionals

The highest and best use of time for an effective CEO or General Manager is to develop an organization that is focused on sales growth and profitability. A close second priority is to navigate the business successfully through a labyrinth of complex laws, taxation issues, accounting issues, and regulations. Regardless of the size of the business it makes good business sense to have an independent accounting firm and legal firm on your team.

Here's some of the reasons why:
  1. You don't know what you don't know. By getting an accounting firm and a legal firm on your team you'll have a better chance of success.
  2. It takes more than a check book to know what's happening in your business. It takes financial statements and what's more, they need to be accurate and timely. Financial statements can be expanded to reveal the profitability of each line of business or each location. With high quality information about the various aspects of your business, it's easier to make correct decisions.
  3. Taxation is complex . First there's planning to minimize taxes to keep more cash in the company. There's all types of taxes – sales taxes, property taxes, income taxes, estate taxes, etc. There's also the issue of compliance with various deadlines and filings. And don't forget the importance of paying taxes “on time.” Most compliance issues are accompanied by heavy financial penalties for “getting it wrong.” And you guessed it – most penalties are not tax deductible.
  4. Organizing the flow of transactions can be critical to reduce the chances of embezzlement and fraud and to obtaining accurate data. Accountants are familiar with how to handle a division of responsibilities to help assure better financial control. Even in cases where there's a trusted and competent accountant in your company, it makes sense to “verify” the data through an accounting firm. In a sense the accountant is a “your knowledge source about the business.” How good is the data? Many a company has been wiped out by failing to verify that the accounting systems are working properly.
  5. Accountants do not practice law and vice versa – lawyers are not accountants. It takes both to run a successful business. For many issues it takes teamwork to find the right solutions for your business since taxation and legal issues are often intertwined. For example, how your business is organized is one of those issues.
  6. Lawyers are invaluable when it comes to conducting business. From the time you decide to organize a business, lease an office, buy real estate, hire employees, enter a contract or resolve a dispute you need legal advice. When you're new at business it's initially shocking how a lawyer reads even “simple” agreements differently from ordinary business people. “Legal” issues are real issues and their subtleties are practically beyond comprehension. A lawyer is the key to understanding them, the key to avoiding being taken advantage by others and the key to avoiding traps and pitfalls that exist in abundance.
  7. Compliance issues exist in law just as it does for taxation. The United States is a nation of laws and just about every business and every business activity is regulated. In addition, each and every state has its counterpart, and each and every local government has its own laws too. Also just about every law has its “team of enforcers” who are focused on their specialty.
  8. An accounting firm and a legal firm can preserve your wealth. When you are successful at accumulating assets there are plenty of groups focused on taking it away:
    • Criminals - from inside or outside your business
    • Taxing authorities
    • Litigants – from inside or outside your business
    • Competitors
In short, lawyers and accountants help you keep what you earn.

Source: http://www.attorneyaisle.com/

Monday, October 15, 2007

Bookkeeping rates are reasonable for any business

Every business needs to maintain their financial record as this helps it in the long run. There is a close relation between the financial records of a company and its successful running. If the business is workings then it means that the financial status of the firm is properly managed. Bookkeeping is an important business tool for any size of business to help them record all the financial transaction. Bookkeeping records every single transaction irrespective of the size of the expense and other stuffs related to it. A bookkeeper is an individual also known as accountant clerk who is responsible to keep all the records of an organization. Bookkeeping is one such important task that is essential for all kinds of organizations whether it is a business, charity or a local club. It is an essential part of almost every business or an organization to run it efficiently.

Bookkeeping is a procedure that an organization considers to gather accounting information of its business. Bookkeeping is a tedious task for accounting firms as it takes long hours to maintain the accounts. Bookkeeping rates differ from one firm to another depending on the efficiency of the service provider. If a firm has its own department of bookkeeping then it can prove expensive for the organization. Keeping trained staffs and managing them is very tedious job. The cost of a trained staff is really expensive as their quite efficient to handle the accounting task. The first job of bookkeeping is to accumulate all the data. Then, there are other process which is followed accordingly.

Bookkeeping rates is the tariff that a service provider charges from its client. There are many bookkeeping methods that a business can come across to handle its accounting task. Some of these methods are data entry bookkeeping, single entry bookkeeping, commercial bookkeeping, one-write systems, computerized systems The accounting task consists of listing the payments on a page along with the deposits received from people and others. Double-entry bookkeeping system is the most commonly used method of bookkeeping. A bookkeeper is liable for writing up the daybooks for your company. The daybooks consist of entire records of purchase, sales, receipts and payments. It’s the responsibility of bookkeepers to enter the transaction records correctly in the supplier’s ledger, customer ledger, and daybook. Then, the books are brought for the trial balance phase for a financial account.

Commercial bookkeeping systems are accessed from a stationery outlet. Infact, it is a package system with instructions written and forms as well to use consequently. While, a one-write system is a copyrighted system that is set up by using carbon-backed cheques.It resembles that when an individual writes something on a cheque, the data is also transferred to a record system. In a single entry system, the transaction is recorded only once, either as income or expense, as an asset or a liability. These entries must be recorded on a one page that is called a revenue and expense journal. Double entry bookkeeping records every transaction twice. In this system, an account is credited with a particular amount and it is also debited at the same time accordingly.Today, computerized system has huge demand as every organization whether big or small needs to manage its data and records accurately.

Article Source: http://articlekarma.com

Sunday, October 14, 2007

How to Save Money on Business Accounting and Bookkeeping

It is a well-known fact that as your business becomes larger and more successful you will probably have to hire some type of extra help in dealing with financial calculations and bookkeeping. The larger you company becomes, however, the higher your accounting costs are likely to be, often making the need to pay for financial services a frustrating drain on your profits.

There are ways to minimize these expenses, however, by increasing the efficiency of your company’s financial infrastructure.

Since most accountants charge by the hour, your primary goal should be to make the work as easy (and non-time consuming) as possible for your accountant. One of the easiest ways to do this is to ensure that all records are stored in a manageable and orderly fashion. This usually means getting in the habit of storing your monetary figures on a computer, often in the form of a spreadsheet, chart, or other easily accessible document.

When entering figures into your computer it is often a good idea to get the simple calculations out of the way yourself before an accountant comes in. After all, it doesn’t make sense to pay someone else a high hourly rate to do something that you could very easily do all by yourself.

Finally, when it does come time to hire help, you should compare offers from a number of accounting firms before making a choice. It might also be a good idea to hire temp bookkeepers for the more routine record keeping work, as they will generally charge you a lot less than a fully-qualified CPA.

About the Author: Jeremy Maddock is a successful web-based freelance writer, who covers financial services and other business issues.

source: http://ezinearticles.com/

Friday, October 12, 2007

What is the difference between accounting and bookkeeping?

Bookkeepers perform a critical function for the firms and organizations they serve. Regularly challenged to maintain precise and accurate records, bookkeepers produce the vital reports that keep management up to date on the financial condition of their company.

Bookkeepers are responsible for maintaining the "business checkbook", much like a personal checkbook. They record routine money transactions like customer payments into a "cash receipts journal" and checks to vendors into a "cash disbursement journal." They also process payroll. At month end they transfer or "post" the "journal" totals to the "general ledger" in preparation for financial statements prepared by the accountant.

Accountants are responsible for the design and management of the financial systems that bookkeepers use. They prepare monthly financial statements and tax returns at year end. Accountants may also prepare budgets for management and loan proposals for bankers; and perform cost analysis for the company's products or services.

Trust, reliability and confidentiality head the list of qualities that employers look for when selecting and promoting Certified Bookkeepers. Strong organization and communication skills are also important. Not only are bookkeepers challenged to record routine money transactions, to reconcile accounts and to locate misguided transations, they also must be able to paint a picture--both verbally and on paper--of all the activities within their assigned area of responsibility.

Source: http://www.iq4.com.au/

Thursday, October 11, 2007

How is financial analysis different when it comes to consolidated accounts?

On the whole, financial analysis of consolidated accounts is comparable to that of parent company accounts. The sample financial analysis that we recommend does not differ from individual or consolidated accounts. However, some items exist only in consolidated accounts. These must be well understood and clearly reflected in financial analysis.

One example is goodwill, which reflects the difference between the price paid for an asset and its revalued book value. Goodwill treatment varies considerably depending on the accounting standards (e.g. not amortised, amortised over 5 to 40 years, subtracted from shareholders' equity). In financial analysis, the main problem is in calculating returns: charging goodwill off equity, for example, via pooling of interests or writing it down sharply, could result in artificially inflated returns (as the company would have shrunk its equity and thus capital employed).

Associate undertakings, or consolidation via the equity method, is a way of consolidating subsidiaries over which the parent company exercises considerable influence (generally when it owns between 20% and 50%). With going too much into detail, this method amounts to revaluing the stake at the level of the subsidiary's equity value. On the P&L, associates make it possible to book a share of earnings instead of just the dividends received. Subsidiaries booked as associates pose the following problems:

- calculating returns: associates are not included in consolidated operating profit; if capital employed is considered to be a fixed asset + its working capital requirement, ROE is false!
- How cash flow is to be booked: the company receives dividends but does not have direct access to the associate's cash flow; this is reflected in the consolidated cash flow statement.

Minority interests come from the full consolidation of companies in which the parent company does not hold 100% of the shares. On the P&L, minority interests represent the fraction of total net profit from minority shareholders in these subsidiaries, while, on the balance sheet, it is the portion of shareholders' equity belonging to them. Minority interests are considered differently, depending on whether financial analysis aims to assess the company's solvency (the creditor's point of view) or to assessing equity value (shareholders' point of view).

From the creditor's point of view, minority interests do indeed strengthen the group's solvency. They are indeed equity. But minority interests do not "belong" to parent company shareholders and should therefore be excluded from its equity valuation.

One more thing: it is worth pointing out that the accounting principles that apply to consolidated accounts can differ from those used for drawing up parent company accounts, which are often heavily dependent on tax concerns.

Source: http://vernimmen.com/

Wednesday, October 10, 2007

Bookkeeping basics

Introduction
Your accounts can only ever be as accurate as the books you keep. In this section we explain the books you will need - and those you won't!

Cash Book
This is your single most important "book". It records all of the payments made into and out of your business's bank account. It is crucial to set up the book appropriately at the commencement of business. Your accountant will help you with this.

Sales invoice file
It is both very helpful to your business, and reassuring to the tax man, if you issue your sales invoices in strict numerical order. You should also set up a file with file dividers for each month and file your sales invoices in strict numerical order. The only exception to this rule is that unpaid invoices should be kept in a special section at the front of the file until they have been settled, at which point you should mark the invoice "paid" and also write on it the date paid, and then file it in strict numerical order. You should also regularly review the unpaid section of the file and take steps to chase up payment as often as possible.

Purchase invoice
This is a file with a file divider for each month and a front section file for unpaid bills. On receiving an invoice, file it in the unpaid section until such time as you pay it. On paying the invoice you should write "paid" and the date on the invoice itself, and then transfer it from the unpaid section of the file to the section for the month in which you made the payment. You should also, of course, ensure that the payment is recorded in your cashbook.

Source: http://www.freelanceuk.com/

Tuesday, October 9, 2007

Top 10 Reasons To Use A Professional Bookkeeper In Your Small Business

If you are an Entrepreneur trying to run your business and also handle your own record keeping you should READ THIS:

Having your company Financial Records set up and maintained by a Professional is vital to growing a successful business. As a small business owner, you may be deliberating about whether you should or can afford to use the services of a Bookkeeper.

Here are 10 reasons why it is not only advisable, it could be critical to your survival as a business owner.

Reason 1: You can spend more time on areas of your business that generate revenue, areas where you excel, areas that you enjoy

Reason 2: It will eliminate the frustration of trying to figure out how to do it - and/or how to correct errors

Reason 3: Having data properly recorded eliminates overpaying, or double paying bills

Reason 4: Having accurate records will show you if customers owe you money

Reason 5: Having current figures will eliminate problems with bank accounts like overdraft fees

Reason 6: Maintaining good records will save you time when looking for information

Reason 7: Providing your Accountant/ Tax Preparer with properly maintained records will help to lower their fees and increase the accuracy of the tax reporting. Which also lessens the likelihood of problems with the taxing authority.

Reason 8: Having expenses properly categorized enables you to take all the deductions you are entitled to - reducing the amount tax you have to pay

Reason 9: Reports generated from current, accurate records provide valuable information that can be used to make decisions about your business

Reason 10: Delegating tasks, starts you on the way to growing your business.

About the Author: Rosemarie Zera has been running a Bookkeeping and Tax Service Business for over ten years. Recently moved to San Antonio, Texas. Wrote an ebook entitled "Keep Your Books = Grow Your Business." More information and resources can be found on website: http://www.thecalculatedsolution.com

Source: http://ezinearticles.com/

Monday, October 8, 2007

Cheque Tips for Safeguarding Your Business

In the last Profit Pointer, we provided some tips on safeguarding your business against bookkeeper fraud. One of our tips was that you be the first person to review your bank statements each month. Below are more tips that deal with writing cheques.

  • Get a banking package that returns your cheques to you each month. This gives you the ability to physically review all the cheques that have passed through the account.
  • Look at the signature line on all of your cheques. With the prevalence of automated banking, the signatures on cheques are no longer verified by a human being. This means that cheques with no signature or fake signatures (even crude fakes) can pass. Make sure it's your signature on every cheque.
  • Write post-dated cheques with extreme caution. Again, because so many deposits are put through automated banking machines, cheques are often not manually reviewed until after a deposit has been made. A supplier can deposit a post-dated cheque at any time and there's a good chance it will still go through your account.
  • Match up cheques to a supplier's invoice. If there's no invoice, investigate. Where is this money really going? Also, keep an eye out for phony or inflated invoices. One way to minimize the risk of a phony invoice is by having purchase order numbers and matching those numbers to invoices.
  • Keep an eye out for duplicate cheques. One bookkeeper had a nice racket going with the two partners of a firm. Each partner had full signing authority on the bank account. Every month, the bookkeeper would present a cheque to the first partner for her invoice. She would then present an identical cheque to the second partner for the same invoice. Because neither partner checked the bank statements, no one was the wiser.

Source: http://www.lastminutetraining.ca/

Sunday, October 7, 2007

An Overview of Web-based Bookkeeping Solutions

Web-based accounting first came on the scene in the late 1990s as an alternative to desktop accounting. Today there are myriad solutions to help you manage your books online, including Bizfinity, eLedger, NetLedger, QuickBooks for the Web and ePeachtree.

When you use an online application (sometimes called a hosted solution), you contract with a service provider to securely store and back up your financial information. You access your financial records online by entering a password, and the service provider is responsible for providing software updates, security and data storage.

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Friday, October 5, 2007

Don't Make These 6 Mistakes

Here's a rundown of the six most frequently made mistakes made by bookkeeping freelancers. Think about where your soft spots are, and work to firm them up before they become chronic.

  1. Not Preparing. Do you occasionally go into a sales presentation less prepared than you should be? If you haven't completely thought about what you are going to say, how you are going to say it, and what visuals you will use? Let's face it -- you're winging it -- and you know you run the risk of making a weak presentation that does little to influence your client to commit.
  2. Waiting For Clients To Find You. There are times you get lucky: You make a client with very little effort. Every bookkeeper will stumble onto a good deal, once in a while. But with all the competition you have, you can't afford to take it easy. You've got to be consistently proactive. Those new clients that come to you with no effort on your part are icing on the cake.
  3. Not investing in yourself. Are you a student of accounting? When was the last time you attended a seminar, or read a marketing book? Look for and attend conferences and seminars that will add to your knowledge of marketing, and of accounting. Proactively invest in your career and your future.
  4. Letting Your Sales Cycle Get You Down. Every bookkeeping freelancer has seasons of plenty, when everyone seems to be signing up, and dry spells, when closing a sale is extremely difficult. Remain optimistic no matter where you are in your growth cycle. Your next new client is just around the corner.
  5. Not Using Evidence to Influence. In a rush to get through the close and take home the sale, don't forget to use evidence to influence and convince your clients. Make your case with testimonials, statistics, and demonstrations. The extra effort will bring in more sales and more loyal clients.
  6. Letting Yourself Go. Work at maintaining your health as well as your appearance. Get enough rest, eat sensibly, and moderate your drinking. Start your day feeling healthy and enthusiastic. It will make all the difference in your results. It's sad, but true -- people buy more from those who look successful, happy, and healthy.

With a little concentration, you can stop yourself from falling into these traps. Your clients will notice the improvement, and your sales will improve as you do.

Source: http://www.bookkeeperlist.com/6mistakes.shtml

Thursday, October 4, 2007

Bookkeeping: Online Diploma

Online diploma programs in bookkeeping are usually designed to prepare students for immediate employment as entry-level bookkeepers. This article gives an overview of the online bookkeeping diploma programs.

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Wednesday, October 3, 2007

Tax Return Online Brings Convenience to your Doorstep

A business comes into existence for creating profits but it also has a responsibility towards the society. Any conscientious business owner recognizes this duty and by paying tax to the government fulfils a part of that responsibility. However tax laws of any country can be quite complicated and the complex form filing and record maintenance requires professional expertise. This is the reason why filing tax returns becomes a tedious task for every individual and organization. A certified public accountant is employed by most to help them deal with tax preparation, tax payment and filing for tax return. The technological advancements across the globe have managed to have an impact even on the divisions of every country. Filing of tax return online is now a convenience that can be enjoyed by every internet savvy person with the help of his accountant.

Tax return online has done away with the concept of voluminous paperwork, long hours in the line to acquire the forms in the first place and then submit the same to the state or local tax collection agency. The internal revenue service prepares the forms that are then collected by the tax filers, filled and submitted for tax return. As all financial documents like profit and loss statements, balance sheets, trail balances and other financial statements are required to be in perfect order for filing tax return the expertise of a competent accountant is essential for any individual or business filing tax return. Nowadays as all such details and financial records are usually prepared online with the use of specially designed accounting software.

Hence filing tax return online makes it much more convenient as all the documents required are already stored online. Also the process of filing tax return online does not require the cumbersome paperwork which was earlier an essential part of any work related to tax preparation and tax return filing. As the tax season approaches every business and individual starts preparing for the ordeal of getting all their financial records in place and try to hire the best certified public accountant available. The process of filing tax return online has made it possible to locate an accountant through the internet and send him the required documents through the internet itself. Many accounting websites provide the option of filing tax return online and one can simply visit these sites, verify the authenticity of the website and the accountants involved and simply file your tax return online.

Almost every individual and firm is in favor on the process of filing tax return online as it saves much time and effort and enables the individual to concentrate on his core business and utilize these resources in other business areas. Also every firm offering the service of filing tax return online also has the facility of calculating the exact tax amount. Also the fees charged by a firm filing tax return online on your behalf will have nominal charges as compared to the amount which would otherwise have to be paid to the in-house staff. Hence, filing tax return online works out to be a convenient solution for all involved.

Article source: http://www.articlesbase.com/taxes-articles/tax-return-online-brings-convenience-to-your-doorstep-183623.html

Tuesday, October 2, 2007

Double Entry Bookkeeping

Definitions for Entrepreneurs

The Basis for Modern Bookkeeping, Double Entry Bookkeeping is an Essential Knowledge Base for both Entry-Level and Experienced Entrepreneurs In a nutshell, double entry bookkeeping is the record keeping mechanism that requires two actions for every transaction, thus balancing two separate sides of a financial equation. For instance, when a computer is purchased, there is both an increase in the amount of assets a company holds, and a decrease in the amount of money it has in the bank.

Financial record keeping such as the double entry system originated in Europe during seafaring times, where ships would leave port with a certain amount of money, and then return with less money but more goods in exchange. It was the captains' responsibility to ensure that the value of the goods, along with the amount of money that returned, was equal to the amount of money he started out with at the beginning of the voyage.

Of course, these transactions were quite confusing at times, since captains sometimes left with goods to exchange or returned with items that were not sold. In these instances, the calculations to determine how much money the captain should have became quite taxing. This is where Friar Luca Pacioli came in.

In 1494, Pacioli determined that there needed to be an account of all of the ship's trading practices, so he wrote a book-length piece on the subject. His book [title] became a best seller of the time and was used as the end-all resource for double entry bookkeeping for more than two hundred years.

Half a century later, the principles of double entry bookkeeping still stand, although the details have been refined dramatically over the years. Modern-day entrepreneurs use the double entry system to track and report their business transactions for banks, shareholders, government agencies and other commercial enterprises.

Source: http://entrepreneurs.suite101.com/
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