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Archives for Accounting

Business Accounting For Small Businesses

Small businesses rely heavily on their books. Without them, they cannot make ends meet or successfully conduct day to day operations. Therefore, it is imperative that any accounting firm that wishes to be selected for any small to medium-sized business should have the ability to maintain the books of every individual client.

Not every accounting firm provides all types of accounting services, and therefore, business owners must interview different firms to find out which is the perfect match for the business’ specific needs. TIP. Many accounting firms provide bookkeeping and payroll services, with some offering only payroll, while others will also offer tax preparation, business valuation and other niche services only. It is important to know what services each bookkeeping firm provides before making a final decision.

Business owners often have a large number of invoices, monthly or yearly, that need to be processed. A good accounting firm services provider understands the importance of accurately preparing and filing financial reports so that these reports provide accurate, up-to-date information for decision makers. Without accurate financial reports, small business owners can make costly mistakes in their business decision making process. In addition, accounting firms perform additional services like providing payroll management, cash flow analysis and marketing tools for managing expenses. These additional services often make accounting firms well worth their initial investment.

Financial Planning

Not all accounting firms offer financial planners. Small business owners often prefer to deal with an accountant or financial planner to help them successfully achieve their business goals.  In addition, even with accounting help, small business owners may be at a loss when it comes to effectively identifying potential opportunities for growth or expansion. A financial planner can assist them in this process by providing them with advice about which projects should be initiated first, how long they should take to complete each task and what resources should be dedicated to each project.

In order for accounting firms to become successful, they must be able to provide excellent client service.  Good accounting clients should be interested in learning more about your business model, goals and objectives, the current financial situation and what obstacles you expect to come up. With these goals and objectives in mind, they will be able to create a customized CPA accounting plan to meet all of your requirements.

Tax Benefits

The best accounting firms are also aware of the various tax benefits that they can provide to their clients. They often offer tax planning services to their clients in order to help them minimize the potential tax liability that they face in their business operations. In addition, they may also provide assistance with estate planning, assistance with retirement plans and other financial issues. All of these services can make great business sense for small businesses. When accounting professionals are hired by small businesses, they are able to focus on the most critical aspects of their business while their team provides outstanding support, guidance and services that help grow their clientele and increase profitability.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

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Accounting 101: Assets and Liabilities

Making a profit in a business is derived from several different areas. It can get a little complicated because just as in our personal lives, business is run on credit as well. Many businesses sell their products to their customers on credit. Accountants use an asset account called accounts receivable to record the total amount owed to the business by its customers who haven’t paid the balance in full yet. Much of the time, a business hasn’t collected its receivables in full by the end of the fiscal year, especially for such credit sales that could be transacted near the end of the accounting period. 

The accountant records the sales revenue and the cost of goods sold for these sales in the year in which the sales were made and the products delivered to the customer. This is called accrual-based accounting, which records revenue when sales are made and records expenses when they’re incurred as well. When sales are made on credit, the accounts receivable asset account is increased. When cash is received from the customer, then the cash account is increased and the accounts receivable account is decreased. 

The cost of goods sold is one of the major expenses of businesses that sell goods, products or services. Even a service involves expenses. It means exactly what it says in that it’s the cost that a business pays for the products it sells to customers. A business makes its profit by selling its products at prices high enough to cover the cost of producing them, the costs of running the business, the interest on any money they’ve borrowed and income taxes, with money left over for profit.

When the business acquires products, the cost of them goes into what’s called an inventory asset account. The cost is deducted from the cash account, or added to the accounts payable liability account, depending on whether the business has paid with cash or credit.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

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Understanding Depreciation Reporting

In an accountant’s reporting systems, depreciation of a business’s fixed assets such as its buildings, equipment, computers, etc. is not recorded as a cash outlay. When an accountant measures profit on the accrual basis of accounting, he or she counts depreciation as an expense. Buildings, machinery, tools, vehicles and furniture all have a limited useful life. All fixed assets, except for actual land, have a limited lifetime of usefulness to a business. Depreciation is the method of accounting that allocates the total cost of fixed assets to each year of their use in helping the business generate revenue. 

Part of the total sales revenue of a business includes recover of cost invested in its fixed assets. In a real sense a business sells some of its fixed assets in the sales prices that it charges it customers. For example, when you go to a grocery store, a small portion of the price you pay for eggs or bread goes toward the cost of the buildings, the machinery, bread ovens, etc. Each reporting period, a business recoups part of the cost invested in its fixed assets. 

It’s not enough for the accountant to add back depreciation for the year to bottom-line profit. The changes in other assets, as well as the changes in liabilities, also affect cash flow from profit. The competent accountant will factor in all the changes that determine cash flow from profit. Depreciation is only one of many adjustments to the net income of a business to determine cash flow from operating activities. Amortization of intangible assets is another expense that is recorded against a business’s assets for year. It’s different in that it doesn’t require cash outlay in the year being charged with the expense. That occurred when the business invested in those tangible assets.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

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Profit and Loss

It might seem like a no-brainer to define just exactly what profit and loss are. But of course, these have definitions like everything else.  Profit can be called different things, for a start. It’s sometimes called net income or net earnings.  Businesses that sell products and services generate profit from the sales of those products or services and from controlling the attendant costs of running the business. Profit can also be referred to as Return on Investment, or ROI. While some definitions limit ROI to profit on investments in such securities as stocks or bonds, many companies use this term to refer to short-term and long-term business results. Profit is also sometimes called taxable income.

It’s the job of the accounting and finance professionals to assess the profits and losses of a company. They have to know what created both and what the results of both sides of the business equation are. They determine what the net worth of a company is. Net worth is the resulting dollar amount from deducting a company’s liabilities from its assets. In a privately held company, this is also called owner’s equity, since anything that’s left over after all the bills are paid, to put it simply, belongs to the owners. In a publicly held company, this profit is returned to the shareholders in the form of dividends. In other words, all liabilities have the first claim on any money the company makes. Anything that’s left over is profit. It’s not derived from one element or another. Net worth is determined after all the liabilities are deducted from all the assets, including cash and property. 

Showing a profit, or a positive figure on the balance sheet, is of course the aim of every business. It’s what our economy and society are built on. It doesn’t always work out that way. Economic trends and consumer behaviors change and it’s not always possible to predict these and what income they’ll have on a company’s performance.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

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What Does an Audit Report Contain?

Most audit reports on financial statements give the business a clean bill of health, or a clean opinion. At the other end of the spectrum, the auditor may state that the financial statements are misleading and should not be relied upon. This negative audit report is called an adverse opinion. That’s the big stick that auditors carry. They have the power to give a company’s financial statements an adverse opinion and no business wants that. The threat of an adverse opinion almost always motivates a business to give way to the auditor and change its accounting or disclosure in order to avoid getting the kiss of death of an adverse opinion. An adverse audit opinion says that the financial statements of the business are misleading. The SEC does not tolerate adverse opinions by auditors of public businesses; it would suspend trading in a company’s stock share if the company received an adverse opinion from its CPA auditor.

One modification to an auditor’s report is very serious – when the CPA firm says that it has substantial doubts about the capability of the business to continue as a going concern. A going concern is a business that has sufficient financial wherewithal and momentum to continue it normal operations into the foreseeable future and would be able to absorb a bad turn of events without having to default on its liabilities. A going concern does not face an imminent financial crisis or any pressing financial emergency. A business could be under some financial distress but overall still be judged a going concern. Unless there is evidence to the contrary, the CPA auditor assumes that the business is a going concern. If an auditor has serious concerns about whether the business is a going concern, these doubts are spelled out in the auditor’s report.

 

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

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7 Great Accounting Jobs Right out of College

Anyone going into the accounting field should know that there are abundant opportunities for employment straight out of college, with jobs available in the private and public sectors. Those that want to work with multiple clients can find satisfaction in public accounting. For those that prefer to work for a single company, private accounting may be a better choice.

Accounts Payable

A wide range of businesses, particularly in the healthcare field, employ accountants to perform collection calls on overdue accounts, send invoices, and resolve problems with clients in regard to their bills. It’s a rapidly expanding field with multiple opportunities.

Auditing

Auditing is more than just ensuring that the numbers add up. A wide array of companies employ accountants to look for sources of lost revenue. That can encompass identifying areas of duplicated effort or deficiencies in control mechanisms. Individuals may also be responsible for investigating consumer or vendor claims.

Bookkeeping

Accounts are essential personnel for any business endeavor. In addition to tracking and monitoring income, costs, and financial transactions, individuals will be responsible for providing clients with regular reports and updates about their financial status. They are often called upon to handle a company’s payroll. Don’t overlook the opportunities for accountants at schools, universities, and government entities.

Forensics

The job of a forensic accountant is to examine data, discover where money has gone missing, and how to recover it. As individuals advance in the field, they may also be called upon to testify in court cases as an expert witness and work with law enforcement personnel.

Information & Technology

This is ideal for individuals that are as enthusiastic about technology as they are numbers. There’s a myriad of accounting software from which individuals and companies can choose and accountants in this field will be responsible for helping clients select the best financial software for their needs.

Loans and Analysis

Believe it or not, many banks employ accountants as tellers, credit analysis specialists, and loan officers. Individuals often perform credit checks and financial pre-approvals for loans on homes, vehicles, and business equipment.

Tax Preparation

Preparing taxes is an essential service and many newly fledged accountants begin illustrious careers performing tax preparation. It’s also possible for accountants to acquire regular business clients through the contacts they make doing taxes.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

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Accounting Software can Save you Time

Time is your most valuable asset. Accounting software can save you time that can be invested back into the business or on pleasurable pursuits. The software provides greater accuracy and multiple record types that can be recalled at any time for any reason. Accounting software is equally applicable whether you’re operating a large corporation, small business, brick and mortar store, or online enterprise.

Even your accountant utilizes software to minimize the potential for errors and automate tasks. You’ll find that today’s options for accounting software is affordable, easy to use, and provides capabilities and functionalities of which you may not be aware. It’s ready to use straight out of the box and typically doesn’t require much in terms of setting it up.

One of the great things about accounting software is the ability to automate the repetitive tasks that take up your time. The software is able to automate invoicing, payment reminders, collections and budgeting, just to name a few. The software is also able to integrate with multiple departments.

Invoicing, statements and other documents can be created automatically and sent to clients electronically via email or printed out and faxed. The feature saves you a substantial amount of time and facilitates payment collection without the need to rely upon time-consuming Excel spreadsheets.

Most accounting software will allow you to automatically transfer and import data from spreadsheets into the program. If you offer credit accounts, the software can identify contact information for those that owe you money and provide a detailed account of the transaction. Financial reports can be prepared for yourself and you’ll have the option of being able to send them to other recipients as needed.

Today’s modern accounting software will have powerful analytics, the ability to create custom reports, and delve deep within your company’s structure to determine where any improvements or changes should be made. With accounting software, you’ll spend less time on repetitive tasks and have the tools to plan for your company’s health and future.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

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Accounting Experts can Save your Business Money

Business owners mistakenly believe they’re saving money by attending to their accounting task themselves. What they’re actually doing is taking time away from their families and other business tasks such as planning for future growth. Hiring an accounting firm to care for your finances saves time, money, and enables you to focus on other priorities.

Business Planning

Professional accounting firms work with businesses at all stages of development – from startups to long-established endeavors. They have a wealth of experience they can utilize to help you advance your business to the next stage in its evolution and provide guidance on managing monetary growth. They can also assist if you need to make changes in its structure.

Informed Decisions

Your accountant will be able to advise you on multiple issues to help you make better informed decisions about your business. They can advise you on a variety of topics ranging from strategies to provide the best return on your investment to endeavors that are risky for your business.

Streamlining

A professional accountant can streamline your books, establish better bookkeeping practices, and “find” money you never even knew you had. You’ll know exactly where your money is going, how much, and discover ways to save your business money. A professional can also assist with strategic spending and saving money with vendors and others with which you regularly conduct business.

Tax Penalties

An accounting professional will be cognizant of all the current tax laws to save you money and avoid errors or omissions that lead to tax penalties. The firm’s professionals will know your business and meet all applicable deadlines, while minimizing taxes and maximizing benefits for greater profitability.

Exit Strategies

There will come a time when you decide to retire and an accounting firm can help you define the best time to exit or what you may need to do before selling the business.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

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Great Ways to Keep Track of your Finances

In today’s busy world, it can be difficult to monitor and manage your financial health. Keeping track of your finances involves more than simply knowing how much is in your account or making sure you pay the rent or mortgage on time. There are a number of ways that anyone can utilize to better manage their money that includes the following, in no particular order.

Accurate Budgeting

A budget doesn’t mean you can’t spend for fun. It does mean that you need to account for the must-pay expenses first, such as rent, car payments, utilities, groceries, and insurance premiums. The remainder will provide information on major expenditures ad areas where you might save.

The Little Things

Small expenses are the bane of a budget. They nibble away at money that you could be saving and they account for a significant amount of money each day. Some of those small expenses include eating lunch out, whether it’s by yourself or with co-workers, or designer coffees and juices. Start saving receipts from each purchase and total them up at the end of the month or use a debit card for each purchase so you can go back and identify each one on your bank statement.

Savings

Everyone should have a savings goal whether it’s for a major purchase or for retirement purposes. If your budget doesn’t have a category for savings, create one. It can be any amount you want, but financial advisers recommend a set percentage of your income. Don’t be tempted to draw upon your savings. If you have extra money at the end of the month, shift it to your savings.

Software

There are dozens of software programs that will help you budget your money, track expenditures, and even send you alerts via mobile device so it’s easy to manage your money on the go with today’s busy lifestyles.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

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What are Auditors?

Accountants and auditors help to ensure that the Nation’s firms are run efficiently, its public records kept accurately, and its taxes paid properly and on time. They perform these vital functions by offering an increasingly wide array of business and accounting services, including public, management, and government accounting, as well as internal auditing, to their clients. Beyond carrying out the fundamental tasks of the occupation-preparing, analyzing, and verifying financial documents in order to provide information to clients-many accountants now are required to possess a wide range of knowledge and skills. Accountants and auditors are broadening the services they offer to include budget analysis, financial and investment planning, information technology consulting, and limited legal services.

Specific job duties vary widely among the four major fields of accounting: public, management, and government accounting and internal auditing.

Internal auditors verify the accuracy of their organization’s internal records and check for mismanagement, waste, or fraud. Internal auditing is an increasingly important area of accounting and auditing. Internal auditors examine and evaluate their firms’ financial and information systems, management procedures, and internal controls to ensure that records are accurate and controls are adequate to protect against fraud and waste. They also review company operations, evaluating their efficiency, effectiveness, and compliance with corporate policies and procedures, laws, and government regulations. There are many types of highly specialized auditors, such as electronic data-processing, environmental, engineering, legal, insurance premium, bank, and health care auditors. As computer systems make information timelier, internal auditors help managers to base their decisions on actual data, rather than personal observation. Internal auditors also may recommend controls for their organization’s computer system, to ensure the reliability of the system and the integrity of the data.

 

Government accountants and auditors work in the public sector, maintaining and examining the records of government agencies and auditing private businesses and individuals whose activities are subject to government regulations or taxation. Accountants employed by Federal, State, and local governments guarantee that revenues are received and expenditures are made in accordance with laws and regulations. Those employed by the Federal Government may work as Internal Revenue Service agents or in financial management, financial institution examination, or budget analysis and administration.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

 

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