Accounting and Bookkeeping Services for the Small business

Accounting and bookkeeping services function as the backbone for every business. As a small business, it is very essential to ensure you maintain your company's records in a comprehensive manner. Good accounting and bookkeeping practices include thorough record-keeping and ensuring that every bit of expense and revenue is accounted for.

If you're a small business and you're feeling overwhelmed keeping a track of your financial matters, especially your accounting services, you're not alone. Many small businesses start out with small capital. However, it is important to keep track of how this limited pool of funds is used, especially in the period before the business starts to earn revenue for itself.

When do you need help

As accurate record-keeping is vital to accounting services, you must ensure that all transactions, regardless of their size, are noted. However, this can often become a neglected area in daily operations, particularly if the business functions as an enterprise and there is very less manpower resource to spare exclusively towards accounting and bookkeeping department. This also extends to shortage of infrastructure. Most widely available accounting softwares in the market turn out to be an expensive investment. Together with hiring trained manpower resource and maintaining software infrastructure, carrying out integration, and automating systems, the costs of setting up a dedicated accounting unit can be pretty high for the small business.

Determining when you need help can be a tricky aspect, especially when considering accounting services. Even if you started as a small business, once your business starts earning revenue and building a bigger list of clients, your list of accounts payable and receivables will also increase. You may need to consider hiring accountant bookkeeping and accounting service provider.

Outsourced and more reliable

Contrary to what many people may be worried about, outsourcing your work can be a blessing. Accounting and bookkeeping services are a specialized area. If you don't have professional expertise, it is better, and much more profitable to hand over the work to someone who does it dedicatedly. Let's look at a few reasons why outsourcing requirements related to accounting and bookkeeping is a good idea.

Professional expertise: Your accounting & bookkeeping work will be executed by professionals, instead of being hastily put together by yourself after a short online self-teaching session.

A professional will also help you determine what kind of accounting is suited to your business (cash vs. accrual)

Save on costs: It is likely you have a resource in your organization who understands a bit of accounting and bookkeeping. However, it isn't profitable if this resource has to put aside his or her routine work to attend to accounting and bookkeeping tasks.

Superior quality: Accounting and bookkeeping need detail and accuracy. When your accounting work is carried out by a professional, you get reports that are comprehensive and detailed. Superior quality accounting work also helps your tax preparation.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Efficient Record Keeping Strategies to Ensure Smooth Audits

Take any process. You will find that efficiency most often results from investments of time and organization. The same theory applies to accounting functions as well.

Audits are an accounting function where financial statements are examined to verify information. A financial audit determines whether the information contained within financial statements is reliable and accurate.

An audit is significant because it represents the basis of confidence invested in the company by its shareholders. A financial statement is often referenced to assess the 'health' of a company, and an audited statement can significantly enhance an organization's credibility.

How can you ensure greater accuracy in your audits? Below are some ways in which you can improve your record-keeping methods to ensure smoother audits:

Records needed

Maintaining effective records requires that you have a clear understanding of the kind of records you need to keep, and this is dependent upon the type of business that you operate. Some businesses must maintain property and real-estate related records while others must track purchases of other assets, such as machines or vehicles used for your business. In general, the kinds of records needed include:

Gross receipts for income received as a result of your business. Examples include receipt books, credit card slips, invoices, Form 1099-MISC, etc.

Documents supporting purchases you have made for your business, particularly if your business includes procuring or purchasing raw material and converting it into finished goods for your clients.

Records of employment are equally important. As employers, you may need to preserve employment records for four years, as part of good record-keeping practices.

Why keep records?

Records assist in:

Consistent business monitoring

Keep track of triggers that may impact the progress of your business. This can include documents which may indicate areas of potential sales growth.

Accurate financial reporting

The importance of this cannot be overestimated. Make certain to maintain error free income statements and accurate balance sheets. These represent the way in which you manage your business and relationships with your creditors or lending institutions, such as banks.

Maintaining receipts

Compile and organize your receipts carefully. Most businesses receive payments or income from multiple sources. It is critical that you track these sources and segregate your taxable and non-taxable income. Your bank statements should be reconciled regularly, while your investment records should be organized to reflect any taxable income.

Maintaining organized receipts assist in facilitating smooth audits, any they also help you accurately track of expenses and income.

Review reports periodically

Review your accounting and financial statements periodically to check for accuracy. Periodic reviews allow you to note mistakes in their initial stages and avoid having them snowball into larger issues.

Additionally, reviewing reports periodically ensures you are tracking expenses and costs. If at any stage you uncover an expense discrepancy, it can be addressed immediately. Discovering discrepancies which could have been easily resolved at the last minute only points towards poor report management and can create problems during an audit.

Consolidate reports and data

Most accounting data is voluminous and substantial. Instead of manually pouring over multiple, diverse entries and worksheets, which can result in unnoticed errors, consolidate related data in a single place.

A single source will also assist you in knowing exactly where to look for specific information.

Again, consolidation is easier when you review your records regularly. A small unit of data is easier to consolidate than larger chunks, which makes regular review and consolidation more meaningful. Invest in automation, if it helps your financial record-keeping. If executed by the right vendors, automating your accounting systems can help you reduce actual errors while allowing you to process more data in a shorter period of time.

Implementing the above record keeping strategies will help ensure that your business has a smooth audit.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Checklist for Meeting with Your CPA

Inevitably, it's that time of the year again when you need to prepare to meet with your CPA to discuss taxes. You need to take stock of your investments, any financial transactions undertaken, and, most importantly, the paperwork to support these.

Typically, the biggest challenge revolves around locating and compiling the relevant paperwork when it is needed. To make the most out of your meeting, it makes sense to locate these documents and papers before you head out to the CPA.

Following is a short list of some common documents you should have before rushing off to your CPA.

Income Records
-Invoices
-Bank Statements
-Brokerage Statements
-Investment Account Statements
-Schedule K-1

Invoices, Bank Statements and Investment Accounts
As a small business, you need to carefully track your receipts and invoices. Any record of income, such as bank statements and investments need to be provided. The form 1099-INT which reflects your savings and interest is also required by your CPA.

For this reason, it is important to perform timely reconciliations of your bank statements and to keep your income receipts, investment account documents, and brokerage account papers easily accessible.

Schedule K-1
If your business is classified as a partnership or corporation, you are also required to report any income or loss in the form of a Schedule K-1. This form carries details of individual shares of income within a partnership or corporation.

Expenses
Miscellaneous office related expenses
Mileage
Payroll documents
Mortgage interest statements
Rent
Interest expenses
Insurance

Office Expenses:
Your expenses could range from direct office expenses, such as supplies, to more significant expenses, such as travel.

Mileage Expense
If you use your car for business purposes, you can claim it as a deduction or at least miles driven for business purposes as a deduction. Make sure you also track receipts for any tolls incurred while driving for business purposes.

Payroll Expense:
If your company hires employees, then you need to provide documentation of their salary or wages. There is also the Form W-2, W-3, and other state payroll returns such as Form 940 that you will need to keep updated.

In fact, the Social Security website has the capability of online W-2s, where you can create and print up to 20 W-2 forms for your employees. Check this URL: http://www.ssa.gov/bso/bsowelcome.htm to access the service.

Do you have people assigned to specific tasks in your company or hired for a specific expertise or duration? If so, then you need to report their earnings from you via a separate form such as a 1099-MISC which contains details of payments made to agents contracted by you.

You can also claim tax deductions if you are providing retirement plans to your employees. Keep this documentation on hand.

Mortgage Interest:
Many small businesses or enterprises operate out of the owner’s home. If you are using your home for business purposes, you can include documents to support your mortgage interest, insurance, and other maintenance-related expense documents for the purpose of deductions.  If you are self-employed, you may need to use Form 8829 for claiming this deduction.

Office Rent:
If your office premises are rented, you could claim deductions on the rental taxes related to real estate and other utilities.

Interest Expense:
Some small business owners have taken loans for business activities. Any money borrowed for business purposes can be deductible, if you have valid documentation supporting its usage.

Insurance:
Insurance policies taken for the purpose of business coverage can be reported as a tax advantage, so be certain to keep track of these insurance papers.

Use this checklist to prepare for your next tax meeting with your CPA.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.