Thursday, January 31, 2008

Small Business Accounting Software Equals Simple Bookkeeping Spreadsheets

Accounting software is used by accountants to enter many complex financial transactions into the financial books of account and is almost invariably based upon double entry bookkeeping principles. A major advantage to those companies and the finance staff is the extent to which financial information contained in the database can be queried for financial control purposes.

An accountant needs to not only ensure the financial records are accurate but also retrieve any part of the accounting records to answer accounting questions on the accounts, provide a legal basis for the transactions and report the financial statements at regular periodic intervals.

The small business has different accounting needs which are better described as bookkeeping than accounting. For non limited companies that do not need to produce a balance sheet then a simple income and expenditure account can be produced much simpler using single entry bookkeeping principles.

Less financial control is often required from small business accounting software as the bookkeeper is often the owner manager who already has an intimate knowledge of each transaction. Books are still required for tax purposes and a solid requirement of preparing a set of financial books for tax purposes is that each entry is supported by third party evidence.

Examples of third party evidence would be sales invoices, purchases invoices and bank statements. Financial transactions where no receipt exists can still be entered in the business books although all transactions not carrying third party evidence could subsequently be disallowed for tax purposes and certainly would be if the amounts entered indicated unusual income or expenditure.

Producing an income and expenditure statement using single entry bookkeeping is little more than making two lists of financial transactions. Those lists being one of sales income received from sales invoices or receipts issued to customers and the other of purchase expenditure being from purchase invoices received from suppliers.

To record sales income it would not normally be sufficient to simply add up the total of the invoices as such a summation does not leave an audit trail of the items which have been included. A written list of sales invoices does provide an audit trail.

Sales accounting for a small business accounting purposes can be either a manual list of the sales invoices or by using a spreadsheet package a list can be made on a bookkeeping spreadsheet. Using a spreadsheet for the bookkeeping has advantages as simple formula can be used to add up the column totals.

The essential information to enter for a sales invoice would be the date of the sale, name of the customer, sales invoice number if applicable and optional a brief description of the item sold. In the next column would be the total sales invoice amount. If items like value added tax are required to be accounted for then an additional column would be required to accommodate the vat or sales tax accounting.

A further small complication might be if at the discretion of the small business owner additional information was required from the bookkeeping records to indicate the totals of the different types of products and services then additional columns could be incorporated to enter the net sales figures in these columns.

There it is then, a simple list of sales invoices to satisfy the sales accounting requirements for a small business where a balance sheet is not required.

On the expenditure side of the business the bookkeeping can also be a simple list of the purchase invoices and receipts showing the amount spent. The list should also produce an audit trail by showing the date of the purchase invoice, name of the supplier, purchase invoice for identification purposes and the total amount spent.

Usually tax returns are the main purpose of producing small business accounts and invariably some analysis is required to show what the expenses have been spent on. That is not difficult to achieve and as with the sales accounting the owner manager can add additional standard columns to the bookkeeping spreadsheet.

The expenditure analysis columns do not need to be a different column for each type of expenditure. It is better to set up and group the analysis columns in general headings which can accommodate all the expenses.

Such columns may include stock, other direct costs, premises costs, general administrative costs, transport and delivery costs, repairs and maintenance, travelling and hotel costs, motor costs, bank and legal costs and other expenses. It is better not to enter too many items under a general heading of other expenses as this is more likely to be investigated as the type of expense has not been precisely identified.

One important column to also include is for asset purchases as fixed assets usually have different tax rules applying to the claim of the expense against tax and should be separated from other expenditure.

Having set up two bookkeeping spreadsheets the task is then to produce the income and expenditure account by collecting the totals of each of the analysis columns. The sales total is the sales turnover from which is deducted the totals of each of the expenditure classification totals with the result being the net profit and loss of the business.

Where stock is bought and sold a further adjustment may be required to account for the difference between opening and closing stock. This is done by taking a physical stock check and valuing the stock at the start and end of the financial period.

On the income and expenditure account adjust the stock purchases figure by adding the value of the opening stock and deducting the value of the closing stock. The result is not the stock purchases total as shown in the bookkeeping spreadsheets but the cost of the goods which have been sold to produce the sales turnover being reported.

Simple bookkeeping for a small business accounting purposes can be two lists of sales and purchases supported with sales invoices and purchases invoices.

Terry Cartwright a qualified accountant at DIY Accounting in the UK designs Accounting Software on excel spreadsheets providing complete Small Business Accounting Software solutions with single and double entry Bookkeeping Software for both limited companies and self employed business

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Wednesday, January 30, 2008

Signed, sealed, delivered – book-keeping by numbers

AN INNOVATIVE pack designed to take the headache out of finances for small and medium-sized businesses has been launched by accountants Mazuma.

Developed by Lucy Cohen and Sophie Hughes, founders of the Cardiff and London-based practice, the Purpleforce pack provides new clients with a parcel box containing 12 purple envelopes, an easy-to-understand leaflet on how the system works, along with a quirky little story of how the Purple Envelope came about.

All that’s left for sole traders and limited companies that take up Purpleforce to do is fill a Purple Envelope once a month with accounts documents, receipts, sales invoices and bank statements and post it off to Mazuma, where all the bookkeeping, payroll and VAT is sorted.

The accountants then send a set of monthly management accounts back to the client.

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Tuesday, January 29, 2008

Newsday circulation case may get accounting expert

A federal prosecutor yesterday said the government may hire an accounting expert to independently assess how much money advertisers in Newsday and its former sister Spanish-language publication, Hoy, lost as a result of the newspapers' circulation scandal.

Eastern District Assistant U.S. Attorney Cynthia Monaco disclosed the possibility at a hearing in U.S. District Court in Brooklyn.

Yesterday's hearing was part of a planned series before U.S. Magistrate Steven Gold to determine how much money the nine people convicted of fraud in the scandal would be required to pay as restitution to advertisers when they are sentenced.

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Monday, January 28, 2008

Merchants say new streamlined sales and use tax is perplexing

Local merchants who offer delivery service are dealing with a new tax law, seven years in the making, which took effect in Arkansas Jan. 1, 2008. It is referred to as the streamlined sales and use tax agreement and was developed by the state Department of Finance and Administration.

State Rep. Johnnie Roebuck said the law first took effect in 2005 (four years after it was introduced), but continues to be updated. Local merchants who offer delivery services say the new law causes significant bookkeeping difficulties.

According to Arkadelphia City Director James Calhoun, the federal government is urging states to get in line with the streamlined sales tax in order to start collecting local sales tax on Internet purchases. About half the states have complied with the request.

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Sunday, January 27, 2008

10 tips to improve your business bookkeeping

Next to "selling more," the skill many business owners say they'd most like to improve is managing their business finances.

From basics like banking and billing, to more complicated money matters involving financial reports and balance sheets, there's much to know about setting up and managing the money side of a business.

It's temping for many entrepreneurs to focus on making sales, closing deals and pumping up the PR while putting off mundane chores like bookkeeping. But tending to financial basics is critical to keeping a business on track.

Here are 10 keys to keeping your bookkeeping and general finances under control:

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Thursday, January 24, 2008

Big Accounting Firms Use SkyPBX for Skype Service

Well-known international accounting firms use SkyPBX for Skype services to cut down their high telephony bills!

Big Accounting Firms Use SkyPBX for Skype Service

2008/1/15 Taipei

Well-known international accounting firms use SkyPBX for Skype services to cut down their high telephony bills! SkyPBX, which enables Skype calls using regular office phones and PBX, has obvious overcome the security concerns that have long blocked the Skype services into many large companies, including PWC, Deloitte Taiwan, the biggest accounting firms in Taiwan.

The SkyPBX are outstanding among many other competing products for their unique features, including the unique company Skype account as hunt group, the auto call distribution for multi-simultaneous Skype calls, and the stackable and unlimited port extension, etc.

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Wednesday, January 23, 2008

Brazil: New Accounting Rules For Brazilian Companies

Law 11.638 of 12/28/2007 makes significant changes to our accounting system regarding companies (S.A.) and economically large entities.

Changes wish to adapt the Brazilian accounting to international standards and establish the need for auditing, includes presentation of mandatory new balance sheets an intangible account and the use of market price as a standard.

The changes are still to be further ruled by our Securities Exchange Commission - CVM - Comissão de Valores Mobiliários viewing to adapt to international standard and include the mandatory cash flow and aggregate value balance sheets for all Sociedade Anônimas that are subject to control of the CVM and have a net asset over two million reais, as well as determines that the books must be audited by a CVM approved professional.

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Tuesday, January 22, 2008

TAX ALERT: Remember Your Deduction for Long Term Care Insurance Premiums

As April 15 nears, tax-time frowns may be accompanied by smiles for many aging Americans. Deductible amounts for long term care insurance premiums are going up. For the 2006 tax year they're higher than in 2005; and for 2007, they'll be even higher. "Be sure to claim your deduction if you qualify," says Cameron Truesdell, CEO of LTC Financial Partners LLC, the nation's most experienced long term care insurance brokerage.

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Monday, January 21, 2008

Online Billing Program Helps Private Practitioners Increase Revenue

herapy Partner's innovative online billing program is helping psychologists, psychiatrists and other fee-for-service professionals increase private practice revenue. Mental health providers and other professionals working in private practice are constantly searching for ways to increase revenue that won't interfere with the work they're so passionate about.

Small business owners outside the mental health community have known for some time that accepting credit and debit cards is one of the best ways to expand their business and increase revenue. When businesses offer convenient ways for their customers to pay for products and services, they're more likely to receive payment!

Business owners are well aware of the positive impact accepting credit cards can have on their bottom line. Therapy Partner banked on this idea when it entered the mental health market nearly four years ago with the first online billing program of its kind for the mental health industry.

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Sunday, January 20, 2008

IFRS accounting will make analysis tricky

Canada is moving quickly towards adopting International Financial Reporting Standards (IFRS). The first two parts of this series focused on the costly drawbacks and purported benefits of the move. This time, we examine some specific impacts IFRS will have on the way in which Canadians value their investments.

IFRS is based on so-called broad principles that form a basic accounting framework. However, to get most countries to agree to the structure, IFRS was built using a low-est-common-denominator approach. In other words, the least-strenuous accounting requirement in each particular area was often selected to ensure acceptance. Consequently, much is left open to interpretation and executives must make considerable assumptions to fill in the holes.

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Friday, January 18, 2008

Tax Audit Advice For Small Businesses And Investors

The most overlooked management tool in the average small business is the bookkeeping - until the Income Tax service calls for an audit. Then the small business owner is left scrambling to gather up their records and try and organize them in a professional manner. This is often 'too little too late' for most business owners.

The most important thing to remember is that you are a business. It doesn't matter if you are investing $100 a month, or making candles to sell at a local flea market. A person who provides day-care for children, or the elderly, in their home is as legitimate as a corporate lawyer's office in the downtown core. A person who writes web articles, or has a drop-ship ecommerce website, or a forum poster must all keep tax records for their business.

The Income Tax Auditors are not dissuaded by comments such as:

It is just a hobby It is not full time I work for a company in another country. I do this for fun I am just helping my in-laws I don't make enough to register as a real business

If you are engaged in a task that produces revenue, then you are in business, and all the tax laws apply to you, regardless of how little you make, or how occasionally you work.

Why Are You Being Audited

The first step is to understand that a 'letter of audit' does not mean the Revenue agency found something wrong. Sometimes the government picks businesses within a certain industry at random for an audit. They do this to build a statistical base, and economic information needed to measure the Gross National Product.

Even if there is a problem, it rarely means that you are in legal danger. Sometimes the paperwork did not add up. The Revenue agency may just want to make sure that your mistake is not intentional, or far greater than they first expected.

How To Prepare for an Audit

Preparation for an audit starts years before a letter lands on your desk. The first step is to register the business and find out whether retail tax applies to the services and products offered. This is especially important if the income is generated in another country.

The first step is to use a reputable bookkeeping system. This may be a bookkeeping journal, or a software program. The computer programs are the easiest for new companies to use. They generate reports automatically.

Keeping records of income and expenses is only half the task. A small business owner also needs to keep a record of the time spent with the business. Many business owners use day planners, or even a blank notebook to keep a daily record of their activities. This is one of the best tools to prove that you've been engaged in a full time business, and deserve to claim all tax benefits, especially if the company has not started generating revenue at the moment.

The third tool needed is a business account. All income should be deposited in this account, and all money should be paid in the form of a check that can be tracked.

Organize Paperwork

One of the worst things you can do is drop a shoe box of receipts on the auditor's table and hand them some hand written balance sheets. It is better to have an accordion file, divided by month, or weeks, even if there is only one receipt in each section.

Each receipt should have the 'journal number' printed on it, and each journal entry should have a receipt number in the description box. This will make it easy for the auditor to find what they are looking for.

This is most important for questionable receipts. An expense $1000 for cleaning may look suspect, but if the receipt is filed with a note explaining that your refreshment table spilled soiling 2 people's suits and the rug at an office complex, complete with contact names, the auditor will quickly overlook the expense.

Paper Trail

The paper trail is the life saver. Always have a paper trail. Cross reference things. If you are using a tool such as Microsoft's Business manager, you can assign tasks a number, use this number on receipts, keep a journal of time spent, cross this with people's names, and then use the numbers in the bookkeeping journals.

A paper trail is just that, a method of tracking a project, purchase, or sale. The better the paper trail, the quicker an auditor will dismiss your case and let you go home.

About the Author
Mark Walters is a third generation entrepreneur and author. He offers free training and investing videos designed to speed you towards financial independence at

Thursday, January 17, 2008

UA accounting programs in nation's top 25

The fact that the undergraduate, graduate and doctoral programs in the Culverhouse School of Accountancy are all ranked in the top 25 does not surprise Karl Stingily.

When Stingily, vice president of internal audit for FedEx, was working on his bachelor's degree in accounting in the late 1970s, he said, the school always ranked in the top 20 nationally.

"It seems like every year since then we've ranked highly," Stingily said.

For 2007, Public Accounting Report, a trade publication for public accountants, ranked the undergraduate program as No. 15 nationally, the graduate program at No. 21 and the doctoral program at No. 25.

The University of Texas at Austin ranked No. 1 in all three categories, and the University of Georgia and the University of Florida ranked ahead of the Capstone.

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Wednesday, January 16, 2008

New accounting standards leave too much to chance

Vague wording means loopholes won't be closed

Canada's auditors and accounting standard setters are aggressively promoting the adoption of International Financial Reporting Standards (IFRS) as a step forward for investors. The premature nature of the change and its costly drawbacks were detailed in part one of this series yesterday. Now it's time to examine the purported benefits of IFRS and the impact it will have on investors.

The notion of a single international accounting framework is a great concept with many potential benefits. However, it remains a theory that is far from implementation. Simply put, IFRS is too weak in its current form for investors to accept on par with current Canadian standards. Nonetheless, we are on course to implement IFRS in just three years.

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Tuesday, January 15, 2008

Tax Filing Season Underway

The start of the tax season is officially here as people throughout the country are receiving their tax forms. Now the countdown begins before the filing deadline on April 15th. Those who expect money back are sure to be the early filers, while those that owe money might try to put it off until the deadline. Either way, there are many things you should know before filing your taxes this year.
"I like to get it done, get your return back sooner. Of course if you have to pay it would be better to wait, but it's better to do it sooner than later," says Alan Ivan of La Crosse. No matter when you finally decide to do your taxes this year, it's important to make sure you covered all your bases before you file.

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Monday, January 14, 2008

Bookkeeping 'errors' make mockery of FBI's fight against criminals

It's a good thing Eliot Ness didn't have this problem.

According to a summary of an 87-page audit of FBI finances by the Justice Department's inspector general, the FBI has had wiretaps repeatedly cut off by telecommunications companies for failing to pay its phone bills.

More than half of the nearly 1,000 FBI telephone bills reviewed by Inspector General Glenn Fine were not paid on time. That included one bill for $66,000 at a field office. Neither the locations nor the specific cases involved in the wire taps were made public because the information was deemed "too sensitive," according to Mr. Fine.

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Friday, January 11, 2008

Basic Business: Good Record Keeping

Record keeping is considered by many entrepreneurs as one of the "least important" part of operating a business (unless you are an accountant). However, good record keeping is essential to your financial survival. Here is a quick, crash course on basic record keeping.

Everyone in business must keep records. What can good record keeping do for you? I'll give it to in a straight no-glamour content.

Let's Start Now:

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Thursday, January 10, 2008

Accounting rules will hit profits

Companies will have to change the way acquisition costs are handled under new accounting rules – a move that will hit profits and could damp the urge for mergers.

Fees charged by investment bankers, lawyers and accountants are currently bundled into the overall cost of a takeover and go on the balance sheet as part of “goodwill” – the accounting catch-all term used to cover the difference between the price paid and the actual value of the assets.

Separating the fees will force companies to book a one-off expense for each deal, denting their net income for that period.

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Wednesday, January 9, 2008

Cash vs. Accrual Accounting

All businesses need to choose either the cash or accrual accounting method.

It's important to understand the basics of the two principal methods of keeping track of a business's income and expenses: cash method and accrual method (sometimes called cash basis and accrual basis). In a nutshell, these methods differ only in the timing of when transactions, including sales and purchases, are credited or debited to your accounts. The accrual method is the more commonly used method of accounting.

Under the accrual method, transactions are counted when the order is made, the item is delivered, or the services occur, regardless of when the money for them (receivables) is actually received or paid. In other words, income is counted when the sale occurs, and expenses are counted when you receive the goods or services. You don't have to wait until you see the money, or actually pay money out of your checking account, to record a transaction.

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Tuesday, January 8, 2008

Mortgage bankers lobby asks for accounting relief

The largest trade group representing the U.S. mortgage industry on Tuesday told U.S. accounting rulemakers that lenders need to use more flexible bookkeeping if they are to save home loans headed for foreclosure.

The Mortgage Bankers Association argued that the authors of today's accounting rules did not envision a time of widespread mortgage failures on the scale now being faced. If they had, the trade group said, the accounting rules would have allowed more flexibility to easily modify many home loans before they fail.

"Unfortunately, no one at that time, the MBA included, could have foreseen a day in which thousands of loans that are in default (or in reasonably foreseeable default) might be modified within the same reporting periods," according to the nine-page letter addressed to the Financial Accounting Standards Board, which sets U.S. accounting rules.

Source :

Monday, January 7, 2008

A little more notice would have been nice

A new state sales tax code took effect New Year's Day. Businesses only learned about the changes — which, at least initially, will complicate their bookkeeping — in early December.

Somewhere along the way the Department of Finance and Administration dropped the ball on getting word out to businesses so they could make necessary adjustments for the changes in sales tax collection.

On the Friday before Christmas, the DF&A was explaining its goof and the overall situation to the Arkansas Legislative Council.

You'd think the DF&A would have gotten word out sooner to businesses and the public since the changes include adding sales tax at the point of delivery and lifting the $2,500 sales tax cap on retail purchases and services.

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Sunday, January 6, 2008

ACCOUNTING ADVICE: Tips on tax savings for small businesses

There are many things small business owners can do throughout the year to save on taxes come year-end. Many of these you may already know, but I thought with a new year and the perceived fresh start that this would be a good time to instill a few reminders.
  1. Equipment purchases - The cost of computers, office furniture and machinery used in the business can be deducted rather than simply depreciated up to the about of $128,000 for 2008.
  2. Employing an owners child - For 2008 a child can earn tax free up to $5,500. Thus a teenager employed in a parents business can obtain valuable experience and a tax-free income. Since this is earned income, the "kiddie tax" does not apply.
  3. Retirement plans - The annual limit on contributions to both traditional and Roth IRAs for 2008 increases to $5,000 (plus another $1,000 for those age 50 or older).
  4. Home office deduction - this can be a tricky one, and one I've written on before, but it can be a valuable one for small business owners who do a lot of work from home.
All of the above a valuable deductions that small business owners can easily take advantage of, but they must be done with proper documentation. As with any case, please consult your tax advisor so that you can rest assured you are above any reproach in the eyes of the IRS.

Finally, as we start a new year, I just want to take a moment to thank you all for your support. I do this for all of you who read it, so please feel free to e-mail me any comments, questions or article requests. May you all have a blessed and prosperous New Year and let's work together to make Montgomery County strong.

Source :

Friday, January 4, 2008

Tax system is far from social justice

THE Liberal Democrat/SNP administration in the City of Edinburgh Council should not simply roll over and accept the SNP Government's refusal to fund the £37 million renovation of the Commonwealth Pool in time for the Commonwealth Games.

It is abundantly clear that the people of Edinburgh cannot afford to pay more council tax to fund a project which will benefit the whole nation, not simply Edinburgh.

As I understand it, if the Scottish Government does not fund the majority of the costs of the project, then Edinburgh city budgets will be cut and the most vulnerable people in our city will suffer the consequences.

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Thursday, January 3, 2008

Accounting Professor Offers Tax Prep Tips

While many individuals are planning New Year’s resolutions, planning your spending may save taxes in that new year. The first thing to do is review last year’s return to remind yourself of what you earned and what deductions you have taken. Then, consider changes that have happened in 2007. Some of these changes may reduce your taxes even if they didn’t reduce them in the past.

Dr. Marianne Rexer, Ph.D., CPA
Dr. Marianne Rexer, Ph.D., CPA, professor of accounting at Wilkes University, suggests taxpayers address the following questions to help with tax planning:

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Wednesday, January 2, 2008

Kingfield's bookkeeper retires after 37 years

KINGFIELD - The town books will be closed this last day of the year, but this will be the last time Sandra (Jean) Orbeton does it.

She is retiring today after 37 years working for the town.

"When someone has done the work well over 30 years, they do it by rote. They know where everything is and they know everyone in town so it's hard to replace that institutional memory," Administrative Assistant Greg Davis said Friday.

Orbeton won't leave her successors without her wisdom if they need it. She's not planning to change her phone number, she said Friday, and she will complete her portions of the town report.

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Tuesday, January 1, 2008

N.Y. audits cite schools for sloppy bookkeeping

ALBANY — Audits of 226 school systems last year found districts commonly made payments to employees that they were not entitled to and did not adequately monitor expenses to ensure they were appropriate, according to a report the state comptroller released this week.

Comptroller Thomas DiNapoli said his office completed more than double the number of audits in 2007 than 2006. They included audits of nine charter schools, the first time the state has reviewed finances of the publicly funded, privately run institutions. The charter schools, however, are contesting the state's right to audit their books.

All told, the Comptroller's Office has finished 334 audits in 332 school districts to comply with a 2005 law that requires reviews of all 834 school districts, boards of cooperative educational services (BOCES), and charter schools by March 31, 2010. Another 200 audits are under way.

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