Save 40% of your bookkeeping and accounting costs by hiring a service provider

The importance of bookkeeping and accounting in a business cannot be stressed on enough. Every business owner knows that the progress of his organization is based on the financial condition of his business. But not many people take the pains to hire a professional for their accounting needs. Hiring in-house staff is a stressful procedure, with costs involving search, training, salaries, employee benefits, paid holidays etc. Business owners hence try to skirt the responsibility and try to do it themselves or ask a less qualified person in their organization to do it. This is a grave mistake that can bring doom upon the business. Daily records regarding the financials of the business come very handy in giving an accurate picture of the functionality of the business as a whole, and hence should be handled with care.

Outsourcing bookkeeping and accounting can help solve many issues for business owners. In today’s business scenario of thinning profit margins and cost cutting strategies, hiring an onshore service provider for all accounting needs is a beneficial idea. By letting an outside company handle your bookkeeping and accounting work, you can easily wipe out the drawbacks and limitations of hiring an in-house staff. Amongst many advantages of bookkeeping and accounting service provider are:


SAVE COST
Hiring an in-house bookkeeper or accountant can cost you a lot. It also comes with a lot of complications regarding pensions, employee rights issues etc. Hiring a bookkeeping service provider ensures that you get cost effective solutions to your accounting needs. This is also a means to avoid the hassles related to employing full time professionals. You also have the option of immediately stopping the services in case you are dissatisfied with their performance.

EXPERTS AT YOUR SERVICE
A professional accounting firm hires experts who can dedicate their entire time to your financials. Once you hire such a back office service provider, you can rest assured that your accounting is being done by the most qualified professionals. You hence need not worry about filing each document, miscalculated returns, profit and loss statements etc. These accounting experts also make sure that all your calculations are error-free and impeccable, giving you a clear picture of the state of your financials.

DEVOTE MORE TIME TO YOUR BUSINESS
You can hand over all the financial nitty-gritty of your business to the professional accounting firm and can concentrate on the main functions of your business. This gives you the opportunity to build your business and focus on the profit-making strategies.

EFFICIENT FINANCIAL MANAGEMENT
All the documents related to the expenses and incomes of your business will be filed properly and at the time of occurrence. There will be a dedicated person looking after your financials, resulting in neat documentation, which you can access anytime during the year.

EASY TO USE ONLINE SYSTEM
Most of the bookkeeping and accounting service providers now use online systems, which allow you 24X7 access to your financial records. This also allows you to understand all calculation being made so that you are aware of the finances at all times. The online system is easy to operate and is a convenient way of keeping track of your accounts.

MOST OVERLOOKED TAX DEDUCTIONS BY SMALL BUSINESS OWNERS

Tax time is a dangerous time. It's all too easy to miss a trick and overpay. There is nothing worse than preparing Income Taxes and finding that there were many deductions you could have taken advantage of to lower tax bill. Not keeping track of deductions can be very costly. It is essential to follow an organized bookkeeping and accounting for the entire year to avoid the last-minute rush during tax-filing. The IRS offers a multitude of ways to lower your tax bill. The key is to find which deductions and credits are available -- then taking advantage of them. Below are list of deductions which are generally missed out by business owners:


Personal Assets Converted to Business Use: If business owners have contributed personal assets, such as a computer, find the fair market value of these assets and claim it as a business deduction. This is subject to depreciation limitations, beginning with the date of conversion.

Business Startup and Organization Costs: Business owner may be eligible to deduct some of their business startup costs up and organizational costs. Again there are limitations on this deductions and needs to be checked by professional tax advisor.

Disability Access Costs: Incase improvements or remodeling has taken place for business facility to accommodate customers and employees, business becomes eligible for a deduction for these expenses.

Research and Experimental Costs: Costs of research and experimentation may be deductible if it is chosen not to list them as capital (long-term) expenses. There are many restrictions and qualifications relating to this deduction.

Carrying Charges: Carrying charges are fees and interest on property. Some carrying charges may be deductible if they are not capitalized.

Home Office: A home office must be a separate room in business owner’s home to do business and accounting. Part of a living room or bedroom will not count. A percentage of utility Bills, home owners insurance, property tax, mortgage interest, refinance fees, repairs and maintenance, cleaning supplies, office decor, etc. are deductible. Find out the percentage by dividing the square footage of the office by the square footage of the entire house.

Mileage or Vehicle: There are two ways to take a vehicle expense. One is to take the mileage basis use when picking up product, supplies, office supplies, meetings, handing out advertising or business cards, meals and entertaining clients, etc. The other way is to take the expense of using the vehicle: fuel, parts, mechanics, oil changes, etc. Along with taking expenses, one can also depreciate the vehicle.

Retirement Plan Costs: As owner of a small-business and having recently established a retirement plan for the business, the business may be eligible to receive a non-refundable tax credit for expenses incurred to implement the plan. The tax credit may be claimed for a maximum period of three years for retirement plans established after 2001.

Advertising & Promotion Cost: Business cards, newspaper ads, information packets handed out, free samples, flyers, product testing, videos and CD's all can be claimed under business expenses. Money paid to hire temporary help with promotional activities like delivering flyers, product, stuffing envelopes or for even cleaning office and car, etc. can also be claimed under business expenses.

Dues and Subscriptions: Dues to professional organizations and magazines that have to do with particular trade or business can be part of deductions.

Educational Expenses: Classes or seminars that improve business can be claimed under deductions.

Gifts: Gifts to clients and associates are deductible.

Laundry and Cleaning: This includes uniforms and Protective clothing and also owner’s clothing when they go out on touring for business purpose.

Travel expenses related to business: Hotels, airfare, cab-fare, parking, and cleaning while away from home, trip log is required to claim these deductions.

Communication expenses: Cell phone, long distance calls on home phone, extra phone lines into home for business, fax or Internet can be claimed as deductions.

Items such as paper clips, bank charges, credit card charges and home office expense seem small and unimportant at the time, but multiply those little things over a year or two and then multiply it times 35% and it can add up to quite a bit of money that should be in your pocket rather than in the federal fund.

Remember there are hundreds of deductions throughout the tax laws, and many can be quiet difficult to grasp. It is advisable to seek help from a qualified tax consultant with sufficient experience to determine which deductions apply specifically to your business.

HOW TO AVOID THE 7 DEADLY BOOKKEEPING SINS?

If you are a business owner from a non-accounting background, you need to be aware of the 7 deadly sins you need to avoid while handling your bookkeeping and accounting task:

1. Do not try to do it all yourself or hire unqualified help:
   Time equals money. If you try to do everything, you will obviously slip and forget important things. Especially with bookkeeping, if you are not qualified to handle this type of work, your struggling will be useless since it will not give you the results desired while preventing you from carrying more revenue generation activities. Similarly seeking unqualified help of spouse, family, friends, and neighbor can harm your business growth. It is much cheaper to get qualified online bookkeeping and accounting help if you do not have the budget to hire in-house bookkeeper or accountant.
   
   
2. Do not let your filing system slide into chaotic disarray:
   Be advised that crumpled receipts in a shoe box do not constitute a filing system. A proper filing system should be broken out by receivables, payables, bank statements and tax records. Depending upon your business needs, you might also want to keep a set of file folders by job. At year-end closing, the year’s non-permanent files should be bound together and archived in a safe location. Keeping multiple years’ worth of receipts together in one file drawer leads to wasted time filing and retrieving records. In addition annual archiving helps tremendously in the event of an audit or even a lawsuit.
   
   
   
3. Do not use improper accounting structure:
   One of the common problems non-accounting owners struggle with is finding the right expense category, cash flows, retained earnings, capital etc. Don’t let the technical terms bog you down. Seek help from an expert accountant or bookkeeper to set up the right kind of infrastructure for your business records which can be followed smoothly for a long time.
   
   
4. Do not be afraid to use time saving accounting software:
   Another issue to tackle is having the right accounting software in place. The move towards a paperless existence will be beneficial in saving time and resources in the long run. Educate on the popular accounting software available and select the right one for your business. You can also search for a professional accounting service provider who can set up the software for you and help you optimize and customize it to your requirements.
   
   
5. Do not fail to have a proper back-up system in place:
   Never ever forget to take back up of your accounting and bookkeeping systems. Systems do get attacked by virus, and sometimes crash. Have a disaster recovery plan in place to ensure you are equipped to deal with the worst case scenario.
   
   
6. Do not forget to have separate personal and business accounts:
   Have separate accounts and credit card for business and personal expense. Never merge them. It can create unnecessary confusions and problems while filing tax and during an audit.
   
   
7. Do not forget to set up written bookkeeping policies and accounting procedures:
   Last but not the least, take time to sit down and write rules and procedures for bookkeeping and accounting transactions which should then be systematically and consistently followed. Developing policies and procedures “on the fly” allows you to only correct problems after they have occurred, rather than anticipating potential issues in advance. Poor or incomplete procedures can result in real dollar losses to your company as well as exposing it to fraud risks. Remember, unwritten procedures are useless. To hold employees accountable and eliminate any confusion you must maintain written policies and procedures. Often small business owners are simply too busy to do this, so they let it slide without realizing there are accounting experts who can develop the policies and procedures for them.