Friday, February 27, 2009

3 Reasons to Hire a Bookkeeper

Think you don't need to hire someone to keep your books? Think again. Many new business owners spend more than they save both time and money-wise when doing the books themselves. Here's what you need to know about letting go.

  1. How much is your time worth?

    Most business owners who do their own books contend that they want to maintain privacy of their financial matters. However, most of them spend far too much time focusing on keeping their books in order and therefore, forfeit time that could be spent on other tasks or with family, friends, or even relaxing.

  2. Find yourself scrambling to get your books in order for tax season?

    If your books aren't in order, you risk having your CPA (who can cost as much as $150/hour) having to organize them prior to doing your taxes. By having them ready to go and properly prepared, you can save valuable time and money.

  3. How much do you really know?

    Bookkeepers are skilled in just that: keeping books. Its what they do for a living. Not only can they make sure your checks are written out properly and expenses and assets are properly accounted for, but they can also find different tax exempts you may not be aware of currently.
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Thursday, February 26, 2009

Obama Seeks $1 Trillion Tax Increase in Budget Plan

President Barack Obama proposed almost $1 trillion in higher taxes over the next decade on the highest-earning Americans, Wall Street financiers, U.S.-based multinational corporations and oil companies to pay for permanent tax breaks for lower earners.

Obama’s 2010 budget proposal, released today, would reinstate the top two Clinton-era tax rates of 36 percent and 39.6 percent, up from the 33 percent and 35 percent the richest Americans now pay. That would affect about 2.6 million taxpayers. The budget also would raise taxes on capital gains and dividends to 20 percent for top earners, up from the 15 percent set by former President George W. Bush in 2003.

The tax increases, which Obama vowed to impose as a presidential candidate, would take effect in 2011 and be the first on high-income earners since 1993. They also would reverse a course set by Bush of lowering the tax burden on the nation’s wealthiest people.

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Friday, February 20, 2009

Accounting Outsourcing Service Are a Relief during Tough Times

Do you have so much work that you don’t have time for yourself? You have started forgetting important meetings and events to attend? Is it true that you forget to take meals on time? All these are common symptoms to stress, hyper tension and weakness which in turn will make your immune system vulnerable to all health problems. A solution to this problem is to employ someone to do your work but that has its own problems such as too much expense, payment of benefits and high degree of irresponsibility. Accounting outsourcing service is not only an easy way out but also a highly cheap and economical way of dealing with the cut throat competition.

The new age solution is outsourcing all the accounting and back office work to an outsourcer who has significant experience in the field. This has its very own advantages and also rids you of all the mundane work eating up your precious time which you can now use to think of various growth ideas. The entire idea behind outsourcing work is that you are not bothered with the monotonous clerical job of maintaining data. Outsourcing can only be done for work that does not require direct consumer dealings. Since accounting is one area where the contact with the consumers is not needed a person sitting in China can do that for a firm in California.

One of the reasons behind this sudden growth in outsourcing is that not only is it cheaper but the accuracy in their results far exceeds the accuracy had there been employees’ working on the same project. Also the main core business is often neglected when one tries to do all the work under one roof. It has become mandatory to maintain accounting records for as long as eight years and this alone adds a lot of unnecessary work. The profit making ideas and growth opportunities take a back step to maintaining accounting data.

Mostly countries like India, China and other developing countries take the outsourcing work. These countries have most of their employees speak in fluent English and have good educational qualification to undertake the job with the right amount of skill and talent. The standard of living in these countries is very low hence the pay scale is not even half of what a normal employee would get otherwise. All these factors combined with a lot of government aid have led to the growth of accounting outsourcing service in these parts of the world.

The advantages one would derive from accounting outsourcing service are countless. There has been a constant recession and a great possibility of depression in the economies of the world. Saving on costs has thus become not only important but also a necessity. The increasing wage rate with increasing number of benefits has made employers look at other avenues of work. The time spend on growth is more compared to the time wasted before on mundane and boring tasks. Accounting outsourcing service also provides one with accurate data and gives a weekly statistic reports on the way the business is progressing according to accounting charts.

About Author : Peter Terry has extensive knowledge about bookkeeping and knows the importance of this for running a successful business. To know more about Accounting outsourcing service, accounting firm NYC, accountant New York and bookkeeping NYC visit

Thursday, February 19, 2009

Pros and Cons of Doing the Bookkeeping or Outsourcing to a Bookkeeping Service

Every small business is required to keep bookkeeping records to produce at the end of the financial year a set of accounts to show the sales income, business expenses and the net profit for tax purposes. Medium and larger businesses employ accounts clerks, bookkeepers and accountants to maintain the financial records and produce regular accounting information.

Small businesses and in particular self employed business have a choice in how the financial accounts are prepared and produced. A small business may employ the services of a bookkeeper to produce the accounts while another similar business may keep a manual record of financial transactions while a third option is to use a bookkeeping software system.

Small business has a choice as to how it produces its financial records. Some simply do nothing but the best option is to make a finite decision regarding the path to take. Financial accounts, financial control over the business activities and the knowledge of how well or badly the business is performing is crucial to success in the business environment.

The underlying necessity is that if the small business does not take a decision on its financial accounting then at the very least it must accumulate documents of prime significance such as sales invoices, purchase invoices and possibly bank records during the financial year and assemble these into some sort of order after the end of the financial year for tax purposes. Failing to keep financial records often results in a succession of administrative burdens and often also leads to financial penalties if taxation deadlines are not met.

If the small business owner chooses not to go down the route of using bookkeeping software or outsourcing the financial function to a bookkeeper or accountant then manual financial records must be kept. Producing an income and expenditure account for the business using the prime financial documents of business is not rocket science and most businessmen capable of running and managing a business have the skills required to producing the bookkeeping records.

The major disadvantage of a small business keeping manual records is that documents get lost which may result in profits and taxes being over declared, fines and penalties through inaccuracies and often when accounting is produced in this way it is done at the end of the financial year purely for tax purposes rather than as an essential tool of the business and that reduces financial control within the business during the financial year to a minimum and often zero.

If a manual bookkeeping system is adopted then disciplined recording of the financial information on a regular basis should be enforced and regarded as an essential function and not an administrative burden. An understanding of the detailed accounting records and the effect on the business allows effective management decisions to be taken earlier than if someone else performs the bookkeeping function.

Other alternatives include utilising bookkeeping software which is effectively often a manual system in itself but within definite parameters to produce the essential information. A bookkeeper might be employed whether a manual system is used or bookkeeping software adopted.

Using bookkeeping software has many advantages. First of all any small business that has purchased bookkeeping software is more likely to keep regular up to date accounts than one that has not. And secondly the bookkeeping software is likely to provide a fixed set of disciplines and produce the type of records a small business requires for both the preparation of regular financial statements and the end of year tax returns.

Another major advantage of bookkeeping software is that records tend to be less likely to be lost or mislaid; the packages can be backed up as required but essential financial performance can be improved by greater financial control. All businesses work towards producing a satisfactory bottom line and only by producing regular financial statements can the business obtain the earliest information to achieve that satisfactory performance.

Bookkeeping software comes in many different formats from simple spreadsheets to more complex data based accounting software. For a small business the bookkeeping software of choice is often a simple system requiring limited accounting knowledge but must also be a package that produces the desired end result.

The worst bookkeeping software is a complex program requiring prior accounting knowledge that the small business either does not fully understand, cannot be bothered or does not have the time to learn and having tried the system then abandons it. Better to avoid the wasted time and effort by choosing the appropriate accounting package at the outset.

Bookkeeping software in effect automates the manual keeping of financial records. The most important aspect of using a bookkeeping package be it a da6tabase accounting system or a simpler set of bookkeeping spreadsheets is the enhanced financial control and the effect that intimate accounting knowledge can have to influence the net profit.

Bookkeeping can be outsourced to an accountant or bookkeeper and there advantages in doing so. A quality outsourced finance function does produce accurate timely financial records. If the small business has a volume of paperwork that becomes a burden to process and keep on top of then a bookkeeper may be the best solution.

Employing a bookkeeper becomes essential when the paperwork burden reaches a stage when it distracts the small business owner from getting on with the main task of operating the business. A bookkeeper has to be paid and that cost should be viewed as the cost not of producing the financial records but as the amount to be paid to release the time of the small business owner and also to produce the financial statements on which action can be taken to improve profitability.

A major disadvantage in using a bookkeeper is that the small business owner may remove themselves from the detailed records. A small business manager who prepares the financial accounts tends to see every transaction several times both when the trnasaction is made, the paperwork received and also when entered in the financial accounts.

This second view of the accounts can be important, errors in management judgement can be noted, mistakes and bad practises become more apparent. Missed documents are much more likely to be noticed if the small business owner produces his own bookkeeping records than if the task is carried out by a third party such as an accountant or bookkeeper. Nobody knows the business as well as the small business owner knows his own business.

The conclusion and decision each small business should take is doing something. A manual bookkeeping system may suffice but the business may be better served using bookkeeping software to increase financial control and performance. If the administrative burden of maintaining the paperwork detracts the small business from its main operations then an accountant or outsourced bookkeeping services is a logical solution.

Terry Cartwright a qualified accountant at DIY Accounting designs UK 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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Tuesday, February 17, 2009

Bookkeeping course for nonprofits offered

POWELL - Nonprofit organizations in the Big Horn Basin can learn how to streamline their bookkeeping systems in a QuickBooks for Nonprofits workshop that meets from 9 a.m. to 3 p.m. Feb. 20 in the Northwest College Center for Training and Development.

Included in the workshop is an opportunity to become familiar with the newest QuickBooks software using a 140-day trial CD that participants can install on their personal computers.

Students will train on QuickBooks Nonprofit software, learning how to run reports and track program budgets, donations and more. They'll also work with a new feature in the 2009 program that displays up-to-the minute information on income and expenses, vendor balances and important reminders.

Students are asked to bring their December bank statements, January transactions and chart of accounts, if available. Follow-up training can be arranged.

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Monday, February 9, 2009

10 Tips for Taxpayers Hit by the Recession

For many tax filers, this tax season may be unlike any other.

If you’ve lost your job, are searching for a new one or attempting to strike out on your own, your tax return may be affected. The same is true if you are collecting unemployment, lost your home in foreclosure or tapped your retirement accounts early.

These tough financial times, in fact, are raising so many, and so varied, tax-related questions that the Internal Revenue Service has set up a special section on its Web site addressing them: What if I lose my job? What if I can’t pay my taxes? What if my income declines?

The answers to these questions could change your usual strategy, which is why many of you need to take extra care when doing your taxes this year. And if there’s any silver lining to earning less money, it may be that you’re more likely to qualify for the many tax breaks that come with limits on how much you can earn to claim them.

Indeed, taxpayers who earned too much to collect the stimulus checks mailed out last year — but have watched their income decline or disappear altogether since then — may have a chance to collect the extra cash now.

When every dollar counts, you want to be sure to take advantage of all breaks available. Below are 10 tips for tax filers feeling the ill effects of the recession:

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Sunday, February 8, 2009

Tax Tips for Freelance Professionals

Here are some tips and strategies for thinking about your taxes. There are special circumstances that apply to freelance writers and other creative professionals, so I will highlight what you need to know to prepare your taxes and to avoid IRS investigations.

First, let me start with some fabulously great news. Being self-employed is quite possibly one of the best tax strategies available today. Other good tax strategies include being a landlord and being an investor. All three strategies have one thing in common: you are in full control of your tax situation, and you can reduce current income by any losses you have from freelancing, renting out property, or investing.

Second, let me tell you that the IRS is fully aware of the tax benefits of being self-employed. They are on the lookout for individuals who (1) have high wages, and a correspondingly high business loss, or (2) have business losses year after year. If you are in one of these situations, you need to start thinking about how to protect yourself in case the IRS audits or "examines" your tax return. We'll discuss that later on.

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Friday, February 6, 2009

What Obama Doesn't Understand About Tax Cuts

Here is a great interview with economist Robert Barro on how tax cuts really work to boost an economy, as well as his thoughts on the Obama stimulus package. (He hates it.) But this hunk is really great:

I don't think it is really confusing at all, because when you cut taxes there are two different effects. One is that you cut tax rates, and therefore give people incentives to do things like work and produce more and pay more -- maybe, depending on what kind of taxes. And then you also maybe give people more income. This income effect is the one that's related to this Keynesian multiplier argument, where it's usually argued that government spending should have a bigger effect. So that's the income effect. But the tax-rate effect, inducing people to do things like work and produce more and invest more, is a whole separate effect, and that could easily be much bigger than the multiplier thing, than the income thing.

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Thursday, February 5, 2009

Tax help for new entrepreneurs

Inside Entrepreneurship: If you're starting out, don't forget your taxes

AS THE LAYOFF COUNT continues to rise across the country, many professionals will pursue consulting assignments to help make ends meet. Some of these professionals will find the income and career freedom to their liking and never return to salaried employment again.

Others will try to transform a consulting gig into a full-time position as quickly as possible. After all, entrepreneurship is not for everyone.

One of the more challenging aspects of transitioning from salaried employment to self-employment is managing tax filings and payments. The obligations are definitely manageable, but certainly more administratively intensive than preparing a single annual tax return based on W-2 reported income.

Barbara Petty, founder of Seattle-based ACCMAN Inc., a small-business accounting services firm, says, "It's common for freelance professionals to assume they can operate their business and save all their accounting work until April of the following year. By this point, they may have missed several quarterly tax filings and owe penalties and interest on late tax payments."

Here's a short list of business setup action steps and reporting responsibilities for new freelance entrepreneurs.

AS THE LAYOFF COUNT continues to rise across the country, many professionals will pursue consulting assignments to help make ends meet. Some of these professionals will find the income and career freedom to their liking and never return to salaried employment again.

Others will try to transform a consulting gig into a full-time position as quickly as possible. After all, entrepreneurship is not for everyone.

One of the more challenging aspects of transitioning from salaried employment to self-employment is managing tax filings and payments. The obligations are definitely manageable, but certainly more administratively intensive than preparing a single annual tax return based on W-2 reported income.

Barbara Petty, founder of Seattle-based ACCMAN Inc., a small-business accounting services firm, says, "It's common for freelance professionals to assume they can operate their business and save all their accounting work until April of the following year. By this point, they may have missed several quarterly tax filings and owe penalties and interest on late tax payments."

Here's a short list of business setup action steps and reporting responsibilities for new freelance entrepreneurs.

1. Business structure. The starting point for determining how you will report business activity to the Internal Revenue Service is the selection of a business entity structure. The most popular choices include a sole proprietorship; limited liability company, or LLC; corporation; or partnership. A sole proprietorship, LLC and a corporation with an "S" tax reporting designation may provide tax saving advantages to small business owners.

2. Licenses. In Washington, new companies have to apply for a master business license, which is available at the Department of Licensing, plus obtain a city license. Some cities like Issaquah are linked to the master business license to limit paperwork. Others cities, like Seattle, require a separate application.

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Wednesday, February 4, 2009

Online accounting – For convenient business monitoring

Online accounting and bookkeeping has become a necessity for smooth functioning and convenient monitoring of any professional business. It is becoming popular now days among various industries, insurance, retail, pharmaceutical, banking and other business sectors. It not only saves valuable resources but also increases the productivity of the concerned business.

As every business involves accounting, book keeping, payroll and tax preparation, not everyone can afford in-house departments for keeping the same up to date. Here online accounting and bookkeeping services helps as it can be outsourced at affordable prices.

Online tax preparation services helps to monitor the tax returns. It also helps in preparing ledger & journal entries and provides the complete financial statements along with accurate financial data that can be used in future financial planning.

Small businesses that cannot afford the expenses of separate accounting departments generally outsource accounting and tax preparations services. Online outsourced accounting and bookkeeping services are widely used among not only small businesses but large corporate as well that tends to outsource their work to save resources and money.

Online bookkeeping services are very cost effective than traditional bookkeeping services. Businesses do not need to set up separate accounts departments for day to day accounts functioning and tax preparation. Online accounting services can easily fulfill all your accounting needs in affordable prices. It provides the well organized, reliable and accurate financial records and data. These records and data can be very helpful in preparation of correct financial plan and getting the competitive advantages.

It also has reduced chances of human error and provides the highly useable information for business. Its reliability and accuracy delivers complete piece of mind. Therefore online accounting and tax preparation services can be very conveniently used for smooth functioning of the businesses all over the world.

About author: Get online accounting and outsourcing tax preparation services from the National Leader in accounting, bookkeeping and tax preparation online.

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Tuesday, February 3, 2009

Tax Time: Um ... help?

It's that time of year again: The time of year when those of us with small businesses struggle to collect all the data we have been ignoring and pile it into a paper bag or shoebox to take to our tax preparer. It's the time of year when we once again promise ourselves that this year we will record our sales and keep track of our expenses as we go, instead of procrastinating until tax time.

We know that our financial statements shouldn't be something we just print out for the bank or the tax return. They contain vital information that can help us make better decisions about our business, but they are only as current as our bookkeeping input. So we promise ourselves ... again ... this year.

There are many reasons we put off doing the bookkeeping paperwork for our businesses. Even if we are good at organizing our financial information, we don't want to take the time away from making sales, helping our customers, or solving more urgent business problems. Sometimes we put it off because it seems so overwhelming that we just don't know where to start.

Yet we are also reluctant to ask for help with these tasks. We might be too embarrassed to admit that we've fallen behind in such a basic but important part of running our business. We think that contracting with a professional bookkeeper will be too expensive, or too risky. We're concerned about hiring an employee to help us with the bookkeeping, or we're worried about training someone already on staff when we're not sure that we know everything a bookkeeper should do.

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Monday, February 2, 2009

IRS tax tips: Read this before choosing a tax preparer

If you will be paying someone to do your tax return, choose a tax preparer wisely. You are legally responsible for what’s on your tax returns even if they are prepared by someone else. So, it’s important to find a qualified tax professional.

The most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions, and other items. By doing so, they have your best interest in mind and are trying to help you avoid penalties, interest, or additional taxes that could result from later IRS contacts.

Most tax return preparers are professional, honest and provide excellent service to their clients; you can use the following tips to choose a preparer who will offer the best service for their tax preparation needs.

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Sunday, February 1, 2009

You can do it yourself with tax software

NEW YORK More than 62 percent of federal income tax returns are completed using tax preparation software. And while the IRS says professionals prepare more than half of returns, that still leaves more than 50 million people each year handling their own 1040s.

Here are some questions and answers about using tax-preparation software, and about the protections and support they offer filers who have problems.

Q: How do I know if a company's software follows all the IRS rules?

The IRS requires all tax preparation software to meet specific standards before it is approved for e-filing. Tax laws change each year, so make sure the program in use is for the current tax year (2008).

Q: Does that mean the software can guarantee a user doesn't make a mistake?

TurboTax – and other programs like H&R Block's TaxCut – asks a series of questions designed to help users enter W2 information and other income details the right way. But John Hewitt, chief executive of Liberty Tax Service, warns that you can enter certain types of income in the wrong spot, which would result in the wrong tax being calculated. So it is important to pay close attention to the questions as they are asked.

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