Saturday, November 20, 2010

Accounting principle- Accrual Basis

 Figures generated / kept in accordance to accounting principle is prepared on accrual basis. For instance, accountant record the provision for warranty ( based on estimate) even though there's no actual cash/ economic outflow yet.

In finance, cash basis figures are more relatively more valuable , as compared to accrual basis ( advocated by accounting principle), in order to value a business.

What do you think ? You prefer a an accrual method or cash method in valuing a business?

Auditing Creditors- Creditor Turnover Analysis

 In audit, it's essential to form an expectation of the Company's results before we really drill into the details. We compare the actual Company's results to our expectation, and investigate the variances accordingly. This is the analytical procedures adopted by most of the audit Company. Besides, we also compare the result / financial position with prior period.

Creditors' turnover anlaysis is one of the auditing procedure we performed. What are we expecting from the audit client, in general. We expect the creditors turnover (days) to increase, as compared to prior period.

To illustrate, majority of our audit clients are affected by the economy turmoil. They are squeezing suppliers' credit ( by delyaing the repayment), in order to maintain the Company's working capital, as our audit client's working capital are most likely affected by the delay of repayment from customers.

We have formed an expectation, and we will compare the actual result with our expectation. Any unusual movements need to be identified.

Auditing: Annual Budget vs Actual Results

 Company prepare budget and use budget as a performance benchmark and monitoring tools. For instance, senior management can question sales department if their actual yeat-to-date entertainment has exceeded the budget before the end of the year. Budget is , usually, prepared and approved at the beginning of the year or before that.

Budget has incorporated management's forecast, estimation and outlook of the business in the coming times.

Is management's budget useful to auditor?

The answer is yes. Budget, which represents management's expectation, should be compared against the actual results. Significant variances should be investigated. Apparently, management would have to explain the variances. It's important for auditor to find out the reason of the variances to identify potential changes in business operation, significant developments during the year.

Understanding how management view the business (by looking at the budget) is a crucial stage in audit planning, it enhance our knowledge and understanding on the business, the industry and the overall economy as a whole.

Disposing capital-intensive business

What's happening in the corporate world now?

Capital-intensive require heavy investment of resources, including, but not limimted to: cash, human resource,management's effort, etc. As part of the restructuring exercise to scale down, there are evidence that a lot of corporate are disposing off capital-intensive business.

How would disposing capital-intensive business benefit the corporate?

- immediate liquidity ( i.e. proceeds from disposal)
- better working capital management
- allow management to evaluate other business opportunities
- lesser resources are required, which allow the business to scale down
- higher return on asset ("ROA") ratio

However, it's always not easy to dispose off a capital-intensive business unit/ busines during this business environment, unless a substantial discount is given to the potential buyers.

Accounting treatment for tax penalty

One of our Accounting & Audiitng blog reader inquired us the following:

" How should penalty on late repayment for tax been accounted for?"

Should it be a tax expense? Should it be other expenses?

To clarify: penalty imposed by inland revenue authority on late repayment for tax should not be accounted for as tax expense; it should be accounted for as administrative expense/ other expense.

No depreciation charge on asset held for sale

This is to confirm that if a property is classified as asset held for sale, no depreciation is to be recorded.

To illustrate, Company ABC entered into Sales & Purchase agreement with 3rd party to dispose one of its property. The Sales & Purchase agreement may take months to complete. In this instance, Company ABC re-classified the property from Property, Plant & Equipment to Asset held for Sale upon entering the Sales & Purchase agreement.

Asset held for sale is de-recognised from the balance sheet upon the completion of the Sales & Purchase agreement.

Auditing Creditors

One of the procedures required to audit trade creditors account is to audit the creditors' statement received from the audit client's suppliers (i.e. external audit evidence).

In normal business circumstances, suppliers will send their monthly Statement of Account to their customers to inform the customers in relation to the outstanding balances. Hence, our audit client will , most likely, receive statement of account from the suppliers.

As part of audit procedure, we can check the suppliers' statement (received by our audit customers) against the creditors' balance recorded in their book. Discrepancies need to be investigated. Statement of account served as an external confirmation to check if our audit client's book has been prepared properly.

However, there are suppliers who do not have practices of sending out Statement of Account to their customers. In this instance, we can send external audit confirmation to the suppliers to confirm outstanding balances.

Cash audit- internal controls in cash process- cash payment

In our earlies entries in relation to cash audit, we discussed about the audit procedures of auditing unpresented cheques. We will discuss more extensively for audit procedures in auditing cash and bank balances of our audit clients.

Auditors may consider test the internal controls of the client's cash process. For this entry, we will provide an overview of the possible audit procedures to test the internal controls in cash payment process:

(a) select certain number of random samples, and test that payment voucher are properly prepared and authorised

(b) select certain number of random samples, and test that bank reconciliations are properly prepared and reviewed

(c) select certain number of random samples, and test that journal entries are properly posted into General Ledger

(d) select certain number of random samples, and test that payment voucher details match with the corresponding payment details

Friday, November 19, 2010

Accounting for Closing Partnership Books on Dissolution

Apart from special circumstances, the following outline of the steps necessary to close the books of a partnership when the assets are sold en bloc, may be found useful:
  1. Open a realization account, and debit there to the book value of the assets, crediting the various asset accounts. The realization account will also be debited with any expenses of realization, and cash credited.
  2. Debit cash and credit realization account with the amount realized on the sale of assets.
  3. Pay off the liabilities, crediting cash and debiting sundry creditors. Any discount allowed by creditors on discharging liabilities should be debited to the creditors’ accounts and credited to realization account.
  4. The balance of the realization account will be the amount of the profit or loss on realization, which will be divided between the partners in the proportion in which they share profits and losses and transferred to their capital accounts.
  5. Pay off partners’ advances as distinct from capital, first setting off any debit balance on the capital account of a partner against his loan account.
  6. The balance on the cash book will now be exactly equal to the balances on the capital accounts, provided they are in credit; credit cash and debit the partners’ capital accounts with the amounts paid to them to close their accounts.

Financial Statements of Companies

 Special features of company financial statements include:

  • Profit and loss account
The profit and loss account will be charged with directors’ remuneration and auditors’ remuneration. If the company has borrowings in the form of loan of debenture stock, the profit and loss account will be charged with interest. Company profits are assessable to corporation tax and the profit and loss account thus includes a charge of tax on profits. Finally, the profit and loss account will show appropriations of profit, for example, dividends paid and proposed.
  • Balance sheet
The balance sheet will include liabilities for tax and proposed dividends. If may also include long-term liabilities in the form of loan or debentures stock. Finally, the capital section of the balance sheet will include share capital reserves.

Company financial statements to be presented to shareholders are subject to detailed disclosure requirements. The illustration below shows the preparation of accounts in a form suitable for presentation internally.

Principal Disclosures for Single Company Accounts

The principle disclosures are classified as follows’

  • Purpose of the checklist
  • Accounting policies
  • Profit and loss items requiring disclosure
  • Balance sheet disclosures
  • Cash flow statements
  • Directors’ report – Summary of matters to be disclosure
Purpose of the checklist

The aim of the following checklist is to provide a guide to disclosure requirements for the more common reporting arias. All principle companies act requirements for single companies are referred to. The basic requirements are listed below,
  1. Long term contracts
  2. Goodwill
  3. Pension costs
  4. Group accounts
  5. Earnings per share
  6. Cash flow statements
  7. Segmental reporting

Accounting policies
  1. General policies (Disclosure of significant accounting policies, this would cover all areas)
  2. Depreciation (For major class of depreciable assets method of used and useful lives or depreciation rates
  3. Developing expenditure
  4. Goodwill (explanation of accounting policy and where goodwill is capitalized and amortized, write off period for each major acquisition)
  5. Stocks and long term contracts (statement of accounting policies and particular reference to method of ascertaining turnover and attributable profit.
  6. Deferred taxation (description of method of calculation)
  7. Foreign currency translation
  8. Leasing – Lessees (policies for accounting for operating leases and financial leases)
  9. Leasing – Lessors (policies for operating leases)

Thursday, November 11, 2010

The Types Of Accounting

Accounting is the art of analyzing and interpreting data. It may not be apparent to some but every business and every individual uses accounting in some form. An individual may knowingly or unknowingly use accounting when he evaluates his financial information and relays the results to others. Accounting is an indispensable tool in any business, may it be small or multi-national.
The term "accounting" covers many different types of accounting on the basis of the group or groups served. The following are the types of accounting.
1. Private or Industrial Accounting: This type of accounting refers to accounting activity that is limited only to a single firm. A private accountant provides his skills and services to a single employer and receives salary on an employer-employee basis. The term private is applied to the accountant and the accounting service he renders. The term is used when an employer-employee type of relationship exists even though the employer is some case is a public corporation.
2. Public Accounting: Public accounting refers to the accounting service offered by a public accountant to the general public. When a practitioner-client relationship exists, the accountant is referred to as a public accountant. Public accounting is considered to be more professional than private accounting. Both certified and non certified public accountants can provide public accounting services. Certified accountants can be single practitioners or by partnership ranging in size from two to hundreds of members. The scope of these accounting firms can include local, national and international clientele.
3. Governmental Accounting: Governmental accounting refers to accounting for a branch or unit of government at any level, may it be federal, state, or local. Governmental accounting is very similar to conventional accounting methods. Both the governmental and conventional accounting methods use the double-entry system of accounting and journals and ledgers. The object of government accounting units is to give service rather than make profits. Since profit motive cannot be used as a measure of efficiency in government units, other control measures must be developed. To enhance control, special funds accounting is used. Governmental units can use the services of both private and public accountant just as any business entity.
4. Fiduciary Accounting: Fiduciary accounting lies in the notion of trust. This type of accounting is done by a trustee, administrator, executor, or anyone in a position of trust. His work is to keep the records and prepares the reports. This may be authorized by or under the jurisdiction of a court of law. The fiduciary accountant should seek out and control all property subject to the estate or trust. The concept of proprietorship that is common in the usual types of accounting is non-existent or greatly modified in fiduciary accounting.
5. National Income Accounting: National income accounting uses the economic or social concept in establishing accounting rather than the usual business entity concept. The national income accounting is responsible in providing the public an estimate of the nation's annual purchasing power. The GNP or the gross national product is a related term, which refers to the total market value of all the goods and services produced by a country within a given period of time, usually a calendar year.

Pursuing a Career in Accounting? Opportunities Are Yours For the Taking

If you're interested in pursuing a career in accounting or auditing, the opportunities may be yours for the taking. According to the Bureau of Labor Statistics' Occupational Outlook Handbook, 2008-09 Edition, the accounting profession will experience strong job growth over the period from 2006 to 2016. Accounting jobs are expected to grow by 18 percent between 2006 and 2016. This growth is faster than the average for all occupations. It is projected that almost 226,000 accounting jobs will be created during the ten year period. The strong growth in accounting and auditing jobs is expected to result from economic expansion, changes to financial laws, and stricter corporate governance. Accounting career opportunities will also be created by changes to financial reporting standards, business investments, mergers and acquisitions, and other events that are expected to lead to greater scrutiny of accounting practices and company finances. Growth in accounting jobs will also be driven by the desire to make government agencies more accountable. According to the Handbook, candidates with a master's degree, who obtain certification or licensure, or who are skilled at using accounting and auditing computer software will have the best career opportunities.
What jobs do accountants and auditors do? The role of accountants and auditors is quite broad. Generally speaking, accountants and auditors prepare, analyze, verify and communicate financial information for clients that may include corporations, governments, non-profit organizations, or individuals. But the specific job descriptions of accountants and auditors vary depending on the type of accounting and auditing job.
What types of accounting career opportunities are there? There are four major fields of accounting and auditing: public, management, government accounting, and internal auditing.
Public accounting jobs: Public Accountants provide a wide range of consulting services relating to accounting, auditing, tax, and other financial activities. A career in a public accounting involves providing services such giving advice to companies or individuals to help them get certain tax advantages and preparing and filing income tax returns. External auditors are responsible for auditing financial statements for companies to ensure that they have been prepared properly. Many public accountants have the professional designation Certified Public Accountant (CPA) and they may work on their own or in public accounting firms.
Management accounting jobs: Management accountants prepare and analyze the financial information of the companies for which they work. If you pursued a career in management accounting, you would be responsible for maintaining budgets, managing expenses, analyzing financial information, preparing financial reports and managing company assets.
Government accounting jobs: A career in government accounting means you would be employed by a Federal, State, or local government agency. Government accountants are responsible for maintaining and analyzing the financial records of these agencies. They may also be responsible for auditing private businesses and individuals. For example, accountants for the Internal Revenue Service are employed by the federal government to review taxes received by businesses and individuals. In addition, they are tasked with the responsibility of ensuring that the various government agencies are making expenditures in accordance with applicable laws and regulations.
Internal auditing jobs: Internal auditors are responsible for ensuring that the financial records of a company or individual are accurate. They check for fraud or non-compliance with laws, and they help to prevent financial loss. Other responsibilities of an internal auditor may include reporting on audits, advising on or recommending changes to a company's operations an/or financial activities, reviewing data regarding a company's assets, liabilities, stock, income and expenditures, preparing reports and financial statements, and reviewing compliance with corporate policies and government regulations.
What are the educational requirements for a career in accounting or auditing? Your duties as an accountant will vary according to what type of accounting you decide to specialize in or what kind of accounting job you want to pursue. Accordingly, if you are pursuing career opportunities in accounting or auditing, the education and training requirements can vary depending on your role. Most accounting jobs require at least a bachelor's degree in accounting or a related field but some employers will only consider job applicants with a master's degree in accounting, or a master's degree in business administration with a concentration in accounting.
Licensure and certification for accounting jobs: Only a Certified Public Accountant is permitted to file reports with the Securities and Exchange Commission (SEC). Accordingly, if you're interested in a career working for a public company that's registered with the SEC, you need to be licensed as a CPA by your State Board of Accountancy. Most States require CPA candidates to be college graduates and to have some accounting experience. To become a CPA, you must pass a four-part examination prepared by the American Institute of Certified Public Accountants (AICPA). This is required by all States.
Things that can help increase your accounting career opportunities:
o Previous experience in accounting or auditing, such as experience gained in summer or part-time internship programs, will help your chances of getting an accounting job.
o Knowledge of computers and financial software applications will make you a stronger candidate for an accounting job.
What skills do you need to succeed in an accounting career? If you're interested in accounting career opportunities, you must:
o be proficient in math and you must have excellent analytical skills
o communicate effectively
o be good at working with people
o have basic accounting knowledge
o be familiar with accounting software
If you're seriously thinking about accounting or auditing career opportunities, information is available from the following organizations:
o AACSB International
o American Institute of Certified Public Accountants
o National Association of State Boards of Accountancy
o Institute of Management Accountants
o Accreditation Council for Accountancy and Taxation
o The Institute of Internal Auditors
o Association of Government Accountants

Should I Practice Public Or Private Accounting

Bachelor of Science in Accountancy is one of the picked courses among college students. Many have chosen this field of study because it has a wide scope of availability in terms of future stable job with attach high rate of pay. Career opportunities in this course have two categories and these are Public and Private Accounting.
Professionals who worked for a particular Accounting Firm and worked for several clients are called Public Accountants. These kind of firms employ thousands of accountants because their services are offered from one-person operations to multinational organizations. Audit or tax is two paths where in a Public accountant is going to be. Auditors as you called for those in the audit practice strictly and carefully audit financial records and business transactions of a client. Accounting records that are reported by the companies are ensured by the auditors that those documents accurately abide with national accounting standards. Professionals who are in the tax practice provide services similar with that of an auditor but with a more focus specialization. Professionals who handles tax ensures that clients tax record are well documented and do follow the guidelines established by government taxing policies. Another role of a tax accountant is to help minimize the tax liability of a client.
On the other hand Private Accounting is more concern with internal accounting. This internal accounting is the accounting functions of the company. Corporate Accountants which is another name for private accountant performs the same duties as the Public accountant but this task are limited towards the companies that they are employed.
The distinction between Public and private Accounting is that Public is more involved with collecting external financial information's while Private is much inclined with the use of internal information's to aid managers in giving effective decisions.

Questions and Answers About Starting an Accounting Career

An accountant plays a very important role in the functioning and efficiency of a corporation. They provide a number of vital business services to clients including the management of financial matters, auditing, and handling tax issues. However, the specific duties performed in an accounting career will differ depending on what field the practitioner works in, be it public accounting, management accounting, government accounting, or internal auditing.
Accountants will generally use computers and special accounting programs to assist them in their duties. Accountants can summarize and organize data in particular formats to make them more suitable for storage or analysis. The programs also remove a lot of the tedious manual work of accounting out of the job. For this reason, accountants will generally have a very high level of competence with computers and many employers will require them to be proficient in these programs to help keep their work accurate.
The environment in which an accountant works will generally vary depending on what field of accounting he/she is in as well as what type of company or organization he/she works for. The vast majority of accountants work in an office setting, often with many other coworkers and colleagues; although, some accountants are self-employed and may be able to work part of their job at home as well. Most accountants work a standard 40-hour week; though, there are exceptions especially in the case of tax specialists and self-employed accountants who may work longer hours during certain times of the year.
Public accounting firms often send their accountants to their clients' place of work or residence to perform audits. In this scenario, there can also be a lot of traveling involved. Accountants who travel often will most likely use a laptop to allow for the increased mobility of their accounting programs, data, and other information needed on the job.
Accountants, regardless of their chosen field, require a proficiency in mathematics as well as business. Many accountants are unlicensed, especially in the fields of government accounting, management accounting, and internal auditing. A bachelor's degree in accounting or a related field is required to become licensed as a Certified Public Accountant (CPA), Public Accountant (PA), Registered Public Accountant (RPA), or Accounting Practitioner (AP). Some companies will require their accountants to hold master's degrees as well.
There is a large demand for accountants, and as more businesses are created in the coming years, the demand is expected to increase. The rapid expansion of business is also expected to have a large effect on the types of responsibilities accountants will have. Nevertheless, these jobs can be very competitive, and many businesses are increasing their standards by which they hire and the qualifications they demand.
Accountants who have a great knowledge of computers and many different accounting software will have a better change of employment. Also, those who have more education, training, and experience will also have an edge in the job market. It is also important for accountants to demonstrate interpersonal skills as this will also help them perform their job more effectively and get along better with clients.

Find the Right Type of Accountant to Hire

 In today's world of regulated business, there is increasing pressure on companies to have transparency in their financial statements. This push from shareholders and government agencies has caused a large increase in the need for external accounting, transforming audit and tax services into a commodity. The fact that these firms are now so popular means they will offer you many discounts and incentives to obtain your business as a client. In order to obtain the correct firm, it is important to know what type of service professional you need.
First, you need to prioritize the main reason in reaching out to a professional. If you are looking specifically for help with taxes or tax planning there are many small firms available to assist your business. Many of these firms can be franchises such as H&R Block or LedgerPlus or they can also be local private firms. Before committing, it is important to look at the tax firm's employees. Many will have what is called an EA, or enrolled agent. These are licensed tax professionals who are certified by the IRS after taking a test covering all types of business taxes from public to private. This type of professional will be able to do sufficient work for a small business and can be significantly cheaper than hiring a larger or public accounting firm.
If your company is in need of an audit for shareholders, or you are a private firm looking for a professional audit, it is a good idea to go with a public accounting firm. These large firms consist of Certified Public Accountants, or CPAs. CPAs are held to the highest standards by the PCAOB and have to pass a rigorous test and continue education throughout their career. Although public firms will bill you more, they hold themselves to a much higher standard for quality of work. Also, public accounting firms will do a preliminary audit of your business before they decide to take on your company as a client. This is to make sure they do not see any red flags or feel that they could give your company an adverse opinion.
Because of this, you can trust these public firms more being that they do not want to be liable for assuring your financial statements if it later comes out your company has committed fraud. Another bonus of a public firm is their representation if there is ever any litigation against your business. Many times upset shareholders want to sue a publicly traded company because they lost their investment based on so called misleading financial statements. In this case the accounting firm will stand up for you in court and defend your numbers against the prosecuting party.
These are just two basic reasons to choose an accounting firm to help your business. It is very important to evaluate your individual situation before deciding on a specific accounting professional.

Wednesday, September 8, 2010

4 financial basics you should know before you outsource bookkeeping for your restaurant

 All restaurant businesses operate on a very tight profit margin. It is hence of vital importance that you, as a restaurant owner run a tight ship. You need to know the basics of accounting and bookkeeping for your restaurant before you outsource bookkeeping to a professional. Such a basic idea on your part will not only prepare you for working alongside the firm you outsource bookkeeping to, it will also ensure that you are aware of the financial position of your restaurant. The following are some financial basics to keep in mind for your restaurant when you are outsource accounting or bookkeeping.

Management of your restaurant’s cash flow
When you manage your cash flow, you are essentially tracking the cash which goes out as well as comes into your restaurant. When you outsource bookkeeping, this function is basically taken care of by the bookkeeping firm. However, it would help both you and your bookkeeping firm if you know the basics of how to manage your cash flow. Through it, you will also know the business patterns of where your money is coming in and going out from. So whether you have decided to outsource bookkeeping or outsource accounting, knowing how to manage your cash flow will help.

Keeping the restaurant inventory
A restaurant generally has a lot of stock and supplies coming in regularly, which keeps it running. When you outsource bookkeeping, your bookkeeping firm needs to carefully review your restaurant inventory so that you can avoid losing money on inventory. Taking a regular look at the restaurant inventory like supplies, products and food ingredients should be part of your day to day activities. This will help in managing your restaurant’s bookkeeping efficiently. The decision to outsource bookkeeping will come handy in eliminating the losses related to inventory. You can also learn a lot while interacting with the professionals when you outsource accounting.

Keeping records of your restaurant
When you outsource bookkeeping, your record keeping remains updated at all times. You will hence be able to see the profitability and overall financial position of your restaurant at all times. An expert firm generally processes invoices and receipts within 24 hours of receiving them. Interact with your bookkeeping firm and know the basics about keeping records. This way, you will be able to keep track of your finances well.

P&L Statement
A profit and loss statement holds a lot of importance for your restaurant. As the statement gives a summary of the inventory, income and expenses, you will be able to see the month-by-month progress of your restaurant. When you outsource bookkeeping, the expert firm you hire will provide you with a monthly or weekly P&L statement, which will help you in taking strategic decisions and maintaining the profitability of your restaurant.

Thursday, August 19, 2010

Thinking to outsource bookkeeping? Take care of these aspects

 The decision to outsource bookkeeping is in the best interest of your business as it saves a lot in costs. When you outsource bookkeeping, you ensure that your books are being taken care of by an expert, so that you can finally focus totally on business activities. However, outsourcing bookkeeping services to the right firm is of utmost importance if you want to reap benefits of outsourcing. You need to check the credentials of the bookkeeping firm properly to ensure that its bookkeeping services suit your requirements perfectly. Be sure to check for the following aspects when you outsource bookkeeping:

Is the bookkeeping firm experienced?
Experience of the firm you outsource bookkeeping to is the most important factor. You need to ask relevant questions to the bookkeeping firm and know about the experience it has. This will give you an idea of whether it will be able to fulfill your business requirements or not. If possible, get references of past clients you can speak to, so you can know the quality of outsourced bookkeeping of the firm in question. There are also some industry-specific companies for outsourcing bookkeeping services that you can inquire about.

Are the bookkeepers qualified?
Your decision to outsource bookkeeping is made on the assumption that your books will be taken care of well. For that to happen, the bookkeeping firm needs to have expert bookkeeping professionals on their payroll. While inquiring about a specific firm for outsourcing bookkeeping services, check about the kind of professionals working there. An experienced bookkeeper working on your books will ensure that your finances will be well maintained and updated at all times.

Which services will be included? Is there enough flexibility?
Is the outsourced bookkeeping package you are availing flexible enough for your business? Your bookkeeping firm may provide services like payable management, accounts receivable management, bank reconciliations, inventory management, recording and reconciling payroll transactions, revenue reconciliation with bank deposits etc. Most firms are also offering flexible services to suit business requirements today, so you need to check the details and determine if you can scale your requirements up or down at any time. Once you ensure that the package is flexible enough, you can go ahead and outsource bookkeeping to that firm.

Is it within your bookkeeping budget?
By outsourcing bookkeeping services, you can save from 40 to 50% in costs; that is the most important objective when you outsource bookkeeping. But you still need to make the most of the package the bookkeeping firm offers you. Have a budget in mind so that you can save the most from your bookkeeping package. You would do well to also negotiate with other bookkeeping firms so that you know the best rate being offered.

The decision to outsource bookkeeping will help your business only if you select the right firm to partner with. So while outsourcing bookkeeping services, take note of the above-mentioned points to ensure you hire the right bookkeeping firm.

Tuesday, June 22, 2010

Score over your competitors by outsourcing accounting services

 Accounting is undoubtedly an integral part of running and developing a business successfully. In addition to helping run the day-to-day functions smoothly, accounting also ensures that the financial picture is clear in case you are looking for an acquisition or a buyer for your business. However, taking care of the accounting functions is no small task. After all, you are not an accounting expert. That is why outsourcing accounting services may be the best decision to achieve your business goals. Hiring an expert for accounting services not only ensures that your finances are in the right hands, it also frees you to take care of strategic decisions so that you can stay competitive in the business.

Outsourcing accounting services to an expert

Many business owners try to take care of their accounting functions by hiring a full-time in-house accounting staff. This is a very expensive option, as hiring, training and retention takes up a lot of business resources. But now, in the cut-throat business scenario, it is financially more viable to use a professional accounting service provider who has the potential to save 40-60% of accounting costs. When you outsource accounting, your work is done by expert accountants, reducing the chances of errors and producing impeccable records. Due to the growing popularity of outsourcing, the number of accounting service providers has also increased exponentially. If outsourcing accounting services can save you significant costs as compared to in-house hiring as well as get the work done efficiently, why would you want to have an in-house accounting department?

What you can expect from accounting services

When you outsource accounting, you will have a team of accountants working dedicatedly on your business financials. Most companies provide custom services, tailored to meet your business requirements, so that you do not have to pay for any service you don't require. Such custom solutions are also scalable, you so can change your workload at any time. However, discuss the details with your accounting service provider so that you know the details beforehand. When you are outsourcing accounting services, also check out other services of the company like bookkeeping, tax preparation, payroll etc. which could be useful to your business. Also iron out the other details with your accounting service provider and discuss how your financial information will be protected and which firewalls and encryption are used by the company.

When you are outsourcing accounting services to a professional company, you can focus completely on your business activities and get a competitive edge that sets you apart in the market.

Wednesday, June 9, 2010

Outsourcing bookkeeping: Is it the right decision for your business

 To outsource or not to outsource bookkeeping is the question today for a lot of businesses. With the focus on saving costs in the tough economy we have today, a lot of businesses are turning to outsourcing for their non-core activities like bookkeeping and accounting. While most trust a bookkeeping service provider to maintain their books of accounts efficiently, some are still in the dilemma of whether to outsource bookkeeping or not. If you are one of those business owners still doubting the feasibility of outsourcing your financial functions, read on.

Most business owners are not experts in accounting and bookkeeping and hence find tasks related to their business finance cumbersome and tedious. Moreover, as they are not experts in bookkeeping, they might end up making mistakes which might affect the business bottom line. Hiring in-house staff becomes an expensive option, with payments related to office space and bonuses eating up business profits. In such a situation, outsourcing bookkeeping to a professional firm may be the best decision a business owner can make.

Some reasons you can outsource bookkeeping to an experienced bookkeeping firm are:
  1. Many businesses like restaurants operate on very thin profit margins. A single error in their books of accounts can mess up a lot of their business functionality. When you select an online accounting bookkeeping firm, you are handing over all your bookkeeping functions to experienced professionals. You can hence outsource bookkeeping and then quit worrying about mistakes in your finances, knowing that a professional is taking care of them. You can also ensure that your bookkeeping is being done correctly by having 24/7 access to your books.
  2. There are a lot of firms to which you can outsource bookkeeping functions to. Such fierce competition has resulted in online accounting bookkeeping services being available at very low rates, which saves significant costs to small and mid-sized businesses. It is also easier to find out the most reputable and experienced service provider by asking current clients of the bookkeeping firm in question and inquiring about the firm's reputation in general. The costs which are saved through outsourcing bookkeeping can then be re-invested into the business for expansion or diversification.
  3. Outsourcing bookkeeping functions to a professional bookkeeping firm ensures that your books are up-to-date at any given period of time. With such impeccable financial records, you can take strategic decisions with ease. Such updated records also give the true financial picture of your business, so you can run it efficiently.
As a business owner, the decision to outsource bookkeeping will benefit you the most. You can save costs as well as get your non-core work done without spending time on it personally. Just look for a reputable bookkeeping firm, and outsourcing bookkeeping will work well for you.

Tuesday, May 4, 2010

Want to make outsourcing accounting a success for your restaurant? Follow a weekly accounting system

 The restaurant industry is a harsh one, with more changes in ownership than most businesses. In such a tough situation, you need to make your restaurant business strong financially by outsourcing accounting. Handing over your books of accounts to an accounting firm ensures that your financials are in good hands so that you can focus on your business better. However, even after you have selected the firm for outsourcing accounting, your role as the owner of the restaurant doesn’t end; you need to ensure that the accounting service provider you have hired is taking steps in the best interest of your restaurant.

The turnover of a restaurant is very fast, with income, expenses and inventory coming in and going out each day. So even when you are outsourcing accounting, you need to keep close tabs on such details so that you can avoid a month-end chaotic situation. Having a weekly accounting system for your restaurant will benefit you in this case. In case you have a small staff, you won’t be able to handle a weekly accounting system easily. The decision to outsource accounting can be in your best interest in that situation.

Industry experts believe that outsourcing accounting and having a weekly accounting system is the best step for a restaurant business. Getting weekly updates on accounting of your restaurant will allow you to respond quickly to any financial situation your business faces, which in turn, will help you stay stable in the restaurant business. While outsourcing accounting functions to an expert firm, ensure that they can follow the weekly accounting system, through which you can get the relevant updates and reports for your restaurant.

There are a number of accounting service providers today which specialize in the restaurant industry. Such outsourced accounting firms have an exact idea as to the requirements of a restaurant, so they will be able to help you out with your finances. You can make inquiries with various firms who provide accounting services and check out the packages and the services they include in them.

A good firm for outsourcing accounting will be able to customize its package according to the requirement of your restaurant. Getting a weekly accounting report from such a firm will be an easy task and will help you in running a profitable restaurant for a long time.

Tuesday, April 20, 2010

Want to save time and effort for your real estate business? Outsource bookkeeping

 If you are in the real estate business, you will know that taking care of bookkeeping functions of the business takes a lot of time and effort. This is mainly because real estate bookkeeping is very different than bookkeeping for other businesses. It is more complex and requires the attention of an experienced bookkeeping professional. If you want to avoid the headaches and stress associated with real estate bookkeeping, you can outsource bookkeeping functions.

Real estate bookkeeping is so complex that the business owner may sometimes ignore core business activities to complete it. This has an adverse effect on the business and affects its bottom line. If you chose to outsource bookkeeping to a professional firm having experience in real estate bookkeeping, you can stem such losses. Not only will such a firm be expert in real estate bookkeeping, it will also ensure that you get to focus on your core business activities.

Getting a professional firm for bookkeeping services also means that you save on the money you spend on hiring in-house resources. An accountant-level employee comes very expensive and hiring an in-house one can put a strain on your resources. A real estate bookkeeping firm generally also offers affordable and cost-effective packages in comparison to hiring an expensive bookkeeper in-house. The costs saved with your decision to outsource bookkeeping can then be re-invested in business activities, so that you can expand and diversify your business as required.

When you look to hire professional bookkeeping services, ask around for a firm which has experience in real estate bookkeeping. Such a firm will know the general rules and policies which are best suitable for your real estate business. By deciding to outsource bookkeeping to a professional firm you can ensure that your books are updated and error-free at all times. You can also avoid the mistakes made in entering transaction into your books by having a whole team from the bookkeeping service firm work on your books.

When you outsource bookkeeping functions for your real estate business to a professional firm, you ensure that it is in the right hands. Your books will be updated on time and what's more, it will be affordable than any other option you were considering. You can hence quit worrying or spending time on real estate bookkeeping and focus on your core business.

Monday, April 12, 2010

Want to increase profits of your restaurant? Think of outsourcing accounting services

 In our last post, we discussed some basics of outsourcing accounting services for a restaurant business. Continuing with our topic of restaurant accounting and bookkeeping, we thought of highlighting HOW outsourcing accounting services can help your restaurant business grow. As said before, profit margins of restaurants are quite thin as compared to other businesses.
Outsourcing accounting services is a good way to ensure that your costs are reduced while getting your financials done efficiently. Some ways in which the decision to outsource accounting can help your restaurant are:
  1. Maintain Impeccable Restaurant Financials
  2. Having your books of accounts updated at all times is very important, especially in the restaurant business. Outsourcing accounting services to an expert accounting firm ensures that there is a team of experts working on your books at all times. Having impeccable records means that you won't have to scramble at the last moment when it's tax time. If you are trying to take care of accounting yourself or hiring a bookkeeper, you are likely to make mistakes too. If you outsource accounting, you eliminate any errors that your books might be having. Accounting professionals of an experienced accounting firm ensure that your books are free of any errors and up to date at all times.
  3. Spend More Time on Expansion & Profitability
  4. As a restaurant owner, the most important benefit of outsourcing accounting services will be the time you save. You can spend this time on thinking about strategic opportunities related to expansion, mergers or simply increasing profitability. When you outsource accounting, you leave all the non-core functions headaches to an accounting firm, while you focus on important, revenue generating or expansion activities.
  5. Save Costs and Increase your Profitability
  6. A good way of increasing profit margin of your restaurant business is reducing costs related to everyday activities. Outsourcing accounting services not only save you the cost of hiring in-house staff, it also saves you the money spent in training and hiring. If you are allotting space to your accountant, you can also save on its rent by deciding to outsource accounting. The savings that you accumulate over a period of time added to your bottom-line or re-invested in your restaurant.
  7. Take Strategic Decisions with Ease
  8. Time is of essence when you are thinking of taking strategic decisions. If your books of accounts are not updated or you do not spend enough time exploring different opportunities, you might end up taking wrong decisions for your restaurant business. Outsourcing accounting services means that you will have the time to explore any opportunities you find for your restaurant. It also means that when it's time to take the decisions, the financial position of your restaurant is crystal clear, so that you can judge whether the deal is viable for your business or not. Outsourcing accounting services hence helps in taking strategic decisions as well.
With outsourcing accounting services, you can not only increase profits of your restaurant business, you can also manage it well and expand when the time is right. When your profit margins start showing an improvement, you will know that the decision to outsource accounting was a good one for your restaurant.

Thursday, February 25, 2010

4 ways outsourcing bookkeeping services can help grow your business

 Managing and growing your business is not an easy task, considering that you have the responsibilities of all the departments on your head. If you are looking for ways to reduce your load and dedicate time to growing your business, outsourcing bookkeeping services may be the right step for you. Business owners generally ignore the number of hours they spend in taking care of their bookkeeping functions, which they can avoid by outsourcing bookkeeping services. By outsourcing bookkeeping functions to a service provider, you can not only save on time but also ensure that your bookkeeping records are maintained impeccably.
The following are 4 ways outsourcing bookkeeping services can help in developing your business:
  1. Save Time
  2. The most important benefit for business owners of outsourcing bookkeeping services is that they can save on time, which can be used for expansion of the business. Outsourcing bookkeeping can ensure that you as the business owner can focus on your core business activities so that you can take your business to the next level.
  3. Save Resources
  4. Outsourced bookkeeping services are generally cheaper than hiring in-house bookkeepers. Outsourcing bookkeeping services to a service provider also means that you can save on office space as well as the rent associated with it. The resources saved by outsourcing bookkeeping services can then be re-invested into the business, increasing the scope of expansion.
  5. Reduce Mistakes In Bookkeeping
  6. If you are trying to complete bookkeeping yourself, you are likely to make mistakes. Even if you hire a single bookkeeper for your business, there might be errors in the final documents. On the other hand, a bookkeeping service provider has a whole team of bookkeeping professionals, who are experienced in the field and can ensure that the finished work is impeccable and without mistakes.
  7. Have Impeccable Financial Records
  8. Outsourcing bookkeeping to an expert means that you can stop worrying about the state of your financial records. The bookkeeping service provider you hire will be experienced and reputed, which means that you won't have to scramble at the tax time to update your records. Outsourcing bookkeeping services is as good as handing over your financial records of your business to an expert and then forgetting about it till March every year.
While looking to hire a professional bookkeeping service provider, check its reputation and experience carefully. When you find the right service provider for outsourcing bookkeeping, you can proceed with growing your business according to your plan.

Monday, February 1, 2010

Outsourcing accounting: Is it good or bad for your small business?

Outsourcing is a bit of a dilemma to many small businesses. Small business owners wonder whether outsourcing non-core functions can bring them enough benefits or whether it is too great a risk to take. A major issue for small businesses is to decide whether outsourcing accounting and bookkeeping, which takes up a major chunk of their time, is the right step for their business. In order to determine whether outsourcing accounting to a professional accounting firm is the best step for a small business, it is necessary to analyze the advantages and risks associated with it. If you are one of those small business owners facing the same dilemma, read on.

The advantages of outsourcing accounting for small businesses are many:

Focus on revenue-generating activities
The main advantage of outsourcing accounting for a small business is that it allows the small business owner to focus on the core business activities without worrying about the state of books of accounts. The major problem faced by many small business owners is the inability to dedicate enough time to revenue-generating activities. With an accounting firm taking care of all accounting and bookkeeping functions, the small business owner can rest assured that business finances are being taken care of, and can hence dedicate his/her full focus on business activities.

Leave the accounting functions to experts
Outsourcing accounting to a professional accounting firm ensures that experts are working on your accounting. This reduces the chances of errors in your books of accounts. This also means that your books will remain up to date at any given point of time, so that you get the true picture of your business profitability and can take business decisions accordingly.

Save costs
Outsourcing accounting to a professional is cheaper than hiring in-house resources. By outsourcing accounting, small businesses can save up to 40% of costs. This is a significant amount of saving for a small business. This amount can be re-invested into the business. With the many accounting firms in the market today, you can select a service provider who has experience in your industry.

Customized accounting services
Accounting firms provide customized accounting services, which meet specific small business requirements. You can ask for specific reports at regular intervals so that you get the correct picture of your business’ profitability. You can also omit those accounting services your business doesn’t require. Outsourcing accounting functions hence ensures that your business has the solution most suitable for it.

There are also certain disadvantages of outsourcing accounting that need to be taken into consideration:

Outsourcing accounting means that you have to send confidential accounting information to the accounting firm. If proper security measures are not taken by the accounting firm in question, confidentiality of the accounting information may be breached. Small business owners need to double check on what security measures are being taken to protect their confidential information to avoid a breach.

Inexperienced accounting service providers
Inexperienced accounting firms are a major issue for outsourcing accounting. Outsourcing accounting to an inexperienced service provider can damage the profitability of your business as well as take up extra time for correcting the mistakes that accounting firm makes. While outsourcing accounting, check the experience of the accounting firm and talk to past clients in order to get an idea about the skills of the firm.

The advantages of outsourcing accounting far out-number the possible disadvantages of the same. If small business owners select the accounting firm carefully, their business can prosper steadily even in a tough market.

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Friday, January 8, 2010

Outsourcing bookkeeping: 5 things to check

Are you a small business owner looking for ways to save costs? Outsourcing bookkeeping is a great way to reduce costs while getting the work done efficiently. Outsourcing bookkeeping tasks ensures that you hand over all the bookkeeping activities to an expert and focus all your attention to the main business activities. But here's the catch: you need to hire the right bookkeeping firm to do the job for you. You need to make an informed decision regarding hiring an experienced bookkeeping firm, which suits your business requirements perfectly and has the potential to add to your business' growth. While outsourcing bookkeeping to a professional firm, keep the following pointers in mind:

How experienced is the bookkeeping firm?

The most important factor in outsourcing bookkeeping functions is the experience of the firm you select. While checking out various firms, ensure that you ask relevant questions about its experience. If possible, get references of past clients, so that you can speak to them yourself and know the quality of work of the bookkeeping firm in question. There are some firms which specialize in providing bookkeeping services to specific industries. If you can find one which specializes in your industry, it would be ideal for your business.

What are the qualifications of the professionals?

You should be outsourcing bookkeeping to a firm which has qualified and experienced bookkeepers. Check with the bookkeeping firm regarding the qualifications of the bookkeepers who will be working on your books of accounts. Qualified people working on your bookkeeping ensures that your finances will be maintained efficiently, without any mistakes.

Is the bookkeeping firm technologically advanced?

If your bookkeeping service is going to include online bookkeeping, the bookkeeping firm will need to be updated with the latest technology. To provide the right bookkeeping services, the firm will need the right kind of softwares and programming. Experienced bookkeeping firms are experts at handling various bookkeeping softwares like QuickBooks, Peachtree, MYOB, Great Plains etc. They also have strict measures in place for ensuring data security. Before outsourcing bookkeeping, ask questions about the kind of technology the bookkeeping firm uses.

Which services will be included? Is there enough flexibility?

While outsourcing bookkeeping, check which services are included in your package. Professional bookkeeping firms generally provide bookkeeping services including accounts payable management, accounts receivable management, bank reconciliations, inventory management, recording and reconciling payroll transactions, revenue reconciliation with bank deposits etc. Moreover, their services are flexible, so you can scale your requirements up or down at any time. This flexibility saves a lot of costs at the time when your bookkeeping requirements are minimal.

Does the bookkeeping package match your budget?

Outsourcing bookkeeping
functions has the potential to save you up to 40% cost of in-house resources. However, you still have to make the most of the deal the bookkeeping firm offers you. Fix a budget that is affordable for you and stick to it when you are outsourcing bookkeeping for your business. You can also compare bookkeeping packages other firms are offering, so that you get the best bookkeeping package available.

Outsourcing bookkeeping
to an expert bookkeeping firm ensures that you save costs as well as manage books of accounts efficiently. Invest some time in researching for a good firm, which can become your partner in making your business more profitable.

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