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What Kind of Spender are You?

People generally fall into 1 of 2 categories when it comes to spending – impulse or deliberate. Both types of spending have an important impact on your personal and/or business finances. The truth is that everyone makes an impulse buy from time to time. It’s only when it’s a consistent habit that you need to be concerned.

Impulse Spending

This is the type of spending that’s not pre-planned. An example is going into a store to buy a loaf of bread and leaving with $10 or more – usually more – of other items. Impulse spending it typically triggered by a reaction to something seen or an emotion. The mind is an expert at justifying these types of purchases.

Impulse buying is often a type of “retail therapy” to make yourself feel good. Try to find other activities that elevate your mood such as meditating or taking a walk. Impulse buying makes it more difficult to manage your money, can lead to excessive credit card debt, and leave you with insufficient funds to pay essential living expenses. It can lead to the failure of a business.

Deliberate Spending

These are purchases that are pre-planned, made with forethought, and for a specific reason. It applies to everything from food to office equipment if you have a business. You buy only what you need and with the features you’ll actually use.

Breaking the Habit

Kicking the habit of impulse buying can be extremely difficult. It can be very helpful to make a list and stick to it when you go shopping. It can take time to learn to be a deliberate spender. When tempted toward an impulse buy, take a step back and examine why you want to buy a specific item.

Your Accountant Can Help

An accountant is a valuable ally in helping you control your financial health. They can assist with personal and business finances, along with guidance on purchasing decisions. He/she can help with investments, savings income issues, and budgeting.

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 (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

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Early Retirement Distributions: A Last Resort

A record number of people are turning to credit cards and/or taking hardship withdrawals from their 401(k) retirement funds. They’re doing so to pay for reasons ranging from medical bills and to prevent losing their homes to job loss and tp meet the basic expenses of everyday life. Inflation and the overall increase in the cost of living is a major motivator.

Hardship Distributions Rise

Taking early distributions is essentially prioritizing short-term needs over long-term saving goals. The number of people utilizing hardship distributions has increased 36 percent over the last quarter.

Credit Cards Aren’t the Answer

Credit card debt has risen dramatically, topping $4 trillion for the first time ever. A full 60 percent of Americans are living pay check to pay check and using credit cards to make up for deficits in income. Hiring is down and job seekers are relying on credit cards until they find new employment. Statistics show that 22 percent of the population doesn’t have any savings. The upcoming holidays are exacerbating the situation, as people struggle to purchase Christmas gifts.

Long-Term Consequences

Early withdrawal from retirement accounts don’t come without a price. The IRS imposes a 10 percent penalty on early distributions before the age of 59.5 years of age. That’s in addition to the tax an individual will pay on the income. That doesn’t even count the overall loss to your retirement funds that can be extremely difficult to make up.

Seek Professional Advice

Before deciding to hit your retirement fund, speak with your accountant or a financial adviser to fully understand the ramifications of an early distribution. The experts can provide advice on alternative solutions. In some circumstances the IRS may waive early withdrawal penalties for situations that include a federally declared disaster, terminal illness, long-term care insurance, and domestic abuse. There are limits to how much can be withdrawn and other terms can apply. The rules are complicated and complex, but an expert can help anyone navigate the intricacies.

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 (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

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The Amazing World of Forensic Accounting

People have become accustomed to hearing the term forensic in connection with everything from elections to DNA results. Forensics also exists in the field of accounting

How is it Used?

Forensic accounting is utilized to investigate embezzlement or fraud, along with analyzing financial data. Forensic accountants use their powers of research, discovery and problem solving to detect irregularities, always keeping the intended goal in mind.

Famous Cases

Forensic accounting has solved dozens of crimes throughout history. Some of the most notable were the Bernie Madoff Ponzi scheme, Enron scandal, and the Barclays Bank fraud case. The accounting practices have been utilized to convict those involved in the banking, pharmacy, healthcare industries, and laundering of COVID-19 funds. Infamous Chicago gangster, Al Capone, was caught through the efforts of forensic accountants – he committed income tax fraud.

Early Beginnings

The art of forensic accounting was known and used in ancient Egypt by the pharaohs. The father of modern-day forensic accounting is credited to CPA, Frank Wilson, who was working for the Internal Revenue Service (IRS). He was charged in 1930 with investigating the financials of Al Capone.

Multiple Categories

The use of forensic accounting can be found in multiple areas encompassing securities and tax fraud, breach of contract or warranties, and insolvency, bankruptcy and reorganization. It also comes into play in cases of business valuations, money laundering, fraud risk assessments, and computer forensics.

Special Certifications

Those working in the field of forensic accounting in the U.S. have earned the credentials of Certified Forensic Accountant (CRFAC). Candidates for the certification must have a bachelor’s or master’s and be a licensed certified public accountant (CPA) or an international equivalent.

Forensic Professionals Needed

There will always be a need for forensic accountants, as there will always be those that seek to cheat and defraud. The demand for the professionals continues to grow and offers opportunities with highly sophisticated data analytics, machine learning, and artificial intelligence tools.

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 (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

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The 4 Basic Types of Accountancy

There are many subfields and specialties within the accounting industry. However, there are 4 basic types that individuals will encounter.

Individuals that operate a business or are self-employed may have an accountant that maintains the records for their business and personal account.

Financial Accounting

This has a focus on reporting the financial information of an organization. Statements are prepared for regulators, investors and suppliers.

Management Accounting

This is for internal use by management. It has an emphasis on analysis, measurement and reporting.

Tax accounting

In this type of accounting, the professional prepares tax returns, payments, and ensures that tax deadlines are met. They do this for individuals, small businesses, large corporations, and organizations. This is the type of accounting with which most individuals are familiar.

Cost Accounting

The accountant focuses on determining a company’s variable costs for production and services based on its organization’s structure.

Why Accounting is Important for Businesses

For an enterprise to survive and grow, owners must know how much they’re spending for expenses that include labor, production costs, overhead, and liabilities. These expenses determine profit and losses. An accountant keeps clients advised of these essential numbers, allowing them to control costs, make informed decisions and plan for the future.

Accounting for Individuals

Individuals don’t have to own a business to benefit from the services of an accountant. The professional is able to help clients take advantage of all the credits and deductions to which they’re entitled, thereby reducing the amount of taxes they owe.

Tax Preparers vs Accountants

A tax preparer isn’t necessarily an accountant. Tax preparers can’t perform all the same services as an accountant. Kiosks spring up everywhere during tax time. While these tax preparers are capable of completing and filing taxes for the average person, people with a business or are self-employed should consult an accountant.

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 (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

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The Role of Accounting in Supply Chains

The world discovered during the pandemic the integral role that supply chains play in delivering goods around the globe. They also discovered the disastrous consequences when those supply chains are disrupted. Your accountant can play a major role in the management of your personal supply chain network.

Acquisition and Distribution

An effective supply chain management system for any business relies on three elements. The first is reducing costs, followed by increasing the speed of products from the source to the customer, and finally, compressing that cycle of acquisition and distribution. A variety of factors at any point in the process can affect any company’s bottom line, though it will hurt smaller enterprises first.

Accounting, Costs and Logistics

Accounting is a critical component of logistics, whether you’re operating a small mom-and-pop business or a billion-dollar company. One of the many services your accountant provides is helping you to lower your costs and operating more efficiently, which can be accomplished through supply chain management. The result is cutting of expenses, getting products from vendors to you quicker, and out to customers faster and at a lesser cost to you.

Good supply chain management reduces your cost, helps you remain competitive, and increases profitability.

Strategic Planning

Your account will provide you with analytics, an economic perspective, and help you create strategic financial plans – all from an objective viewpoint. You can then evaluate the information, anticipate challenges, and prioritize opportunities.

Final Outcomes

The ultimate decision on your supply chain is always yours. The job of your accountant is to assist you in reducing cost and waste, while increasing financial flexibility. Your accountant will provide you with the information you need to make informed decisions that are best for your company.

Some accountants also have specialized expertise in supply chain management. It enables them to be an active partner with others in the supply chain for its establishment and implementation. Most importantly, your accountant will provide you with options to reduce costs, operate more efficiently, and boost revenues.

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 (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

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The Father of Modern Accounting

The profession of accounting is one of the oldest in existence. It’s been practiced for centuries and can be traced back to the 13th century

where it was being used to great benefit by the Venetians. However, Italian mathematician, Luca Pacioli, was the first to describe double entry bookkeeping in his 1494 book. The method was in use by the Venetians during the Italian Renaissance. That publication earned him the appellation of “Father of Modern Accounting.”

Earliest Accounting

Even before Pacioli and the Venetians, a rudimentary form of accounting was being used by the Mesopotamians in 7500 B.C. They used a system of clay objects, each of which represented a specific type of goods, the number and their financial worth. The Mesopotamians even kept an account of labor and costs.

Pacioli Taught de Vinci

The mathematician lived with Leonardo de Vinci and instructed him in math. Pacioli was also known as Luca di Borgo in reference to his birthplace of Borgo, Sansepolcro, Tuscany. He was educated in what was required to be a merchant.

Pacioli’s Knowledge

In his book, Pacioli described the use of ledgers and journals, emphasizing the need for balancing credits and debits at the end of each day. Also included was the information on recording assets, accounts receivable, expenses, income, capital, and inventory. In his book, he introduced the rest of the world at that time to income statements and balance sheets. Pacioli also proposed a code of ethics for accountants.

Pacioli’s Impact on Accounting

His description of double entry accounting revolutionized the way that businesses began overseeing and managing their operations. It improved the efficiency of enterprises and helped owners achieve greater profitability. The essentials of double entry accounting have changed little over the centuries. The information contained in Pacioli’s book is still relied upon today by lending institutions, investment agencies, not for profit organizations, and businesses – a gift to the financial world from the “Father of Modern Accounting.”

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 (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

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Getting to Know Your Accountant

You’ll have a wide variety of questions to ask any accountant you’re thinking of hiring. While many people feel self-conscious about asking questions, it’s important to remember that he or she will be responsible for ensuring business taxes are completed and filed on time to helping you reach your financial goals. Never hire an accountant without getting to know more about them.

Tell Me About Yourself” Isn’t Intrusive

You’ll want to know if they’re licensed, have any special skills, their work background and experience. It’s an opportunity to learn why he or she became an accountant and the most gratifying part of the profession for them.

Software

If you’ve been using one of the consumer software programs available, you’ll need to know if your software is compatible with the accountant’s. You may have to print out and provide paper documents for transfer to your account if you decide to hire him or her.

Range of Services

Accountants can provide a wide range of services besides filing your taxes. They can provide guidance to assist you in attaining your financial goals, help you in operating more efficiently, and develop strategies for your changing needs. An accountant can be your trusted financial adviser from startup to retirement.

Clients and Reputation

It’s a good idea to find out the type of clients and companies with which the accountant normally works. Don’t hesitate to ask for references and to explore the professional’s social media accounts and website. A good accountant isn’t difficult to locate, but a great one will have earned a reputation for excellence.

Fees, Charges and Outsourcing

How an accountant calculates fees is also a critical question. An accountant is supposed to simplify your financial life, but fees and charges shouldn’t outweigh the benefits. You’ll also want an accountant that tends to your financial health personally, not one that outsources the job.

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 (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

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Top 5 (Most Important) Questions to Ask Your Accountant

Your accountant does much more than just file your taxes. He or she performs a wide variety of services to help you reach your business and financial goals. There are some essential questions you should ask your accountant each year to help maximize your business.

What Financial Goals Should I Pursue

Your financial goals will change over time as your business grows and your needs change. You may want to lower tax liability, increase profit margins, operate more efficiently, or be seeking an exit strategy. It’s important to talk to your accountant each year to ascertain what your primary goals are for the year.

Cost Saving Strategies I Can Use

Every business owner should be concerned with how to save their business money. Doing so can mean reducing overheat costs, waiting on expansions or upgrades, re-evaluating partnerships, or simply spending less. Your accountant can guide you in all those endeavors.

Tax Liabilities and How to Reduce Them

Knowing your liabilities will ensure you have enough money set aside to pay your taxes each quarter with no surprises. The information will tell you where funds should be dispersed or invested for greater profitability.

Which Financial Reports are Most Important

Your accountant tracks and monitors a variety of information. You need to be informed about every facet of your enterprise, but there are some reports that can be more important at any given time. Don’t be reticent about asking your accountant which reports of which you should be most aware. Doing so will keep you informed of current and future business trends, allowing you to make highly informed decisions about every aspect of your business.

Where Can Automation be Employed

Whether its payroll, machinery and equipment or customer service, there are a wealth of ways in which businesses can automate services and processes. Some enterprises are more automation friendly than others and can result in considerable savings. Automation is a topic that should definitely be discussed with your accountant each year.

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 (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

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What is a CPA?

CPA stands for certified public accountant. The professional designation is earned by accountants that have obtained a higher level of education in multiple areas that includes accounting, auditing, finance, taxation, and other areas of financial expertise. They’re licensed, trusted and highly-trained professionals that assist clients in attaining their financial goals. All CPAs are accountants, but all accountants aren’t CPAs.

What They Do

A CPA provides consulting services and helps clients create strategic financial plans for the future. The professionals file taxes, maintain financial records, provide litigation consulting, and assist clients with retirement planning and exit strategies.

They work with individuals, businesses, multiple industries, education, government, and a wide variety of non-profit organizations to keep clients informed of their financial standing. A CPA can represent a client during a tax audit only if they’ve qualified as an Enrolled Agent and received the right to practice from the U.S. Government.

Some CPAs choose to specialize in fields ranging from environmental issues and agriculture to forensics. The professionals work for clients ranging from athletes and celebrities to some of the largest corporations in the world, along with small business operators. CPAs are committed to continuing education to provide the most effective and efficient services for their clients. A CPA utilizes highly-sophisticated and specialized software to ensure accuracy.

Ethics

CPAs have a code of ethics. The information between clients and CPAs remains confidential. A CPA in Florida is required to complete a minimum of 4 hours of board approved ethics every 2 years.

Selecting a CPA

It’s critical for individuals to choose a CPA that they trust, since the professional will have access to personal and sensitive information. The CPA should also have expertise and experience in the client’s particular industry. It can be helpful to ask family, friends and peers for recommendations based on their personal experiences. The IRS also maintains a directory of credentialed professionals. CPAs are financial professionals and are available to answer any questions that may arise. Individuals need to feel comfortable taking any financial matter to their CPA.

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 (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

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Accounting Tips for Entrepreneurs

Most people hear the term entrepreneur and immediately envision a startup company in the tech industry or similar field The truth is that there are millions of entrepreneurs, many of whom are operating businesses in the gig industry. Whether an individual is a first-time business owner or a serial entrepreneur, there are some essential accounting tips they need to know.

Expenses

Create a budget. Cash flow is the life blood for an entrepreneur. Cash flow issues are the primary cause of business failure. It’s essential to keep careful watch over expenses. Use bookkeeping software to make the process easier.

Cash or Accrual

A cash-based accounting model records expenses and revenue when the money is paid. It’s good for small businesses, those that offer professional services, and businesses that don’t maintain an inventory. An accrual model records revenue when it’s earned instead of actually received. It’s a better solution for larger companies, those that are more complex in nature, and businesses that keep inventory.

Write-Offs and Deductions

Maintaining receipts ensures entrepreneurs receive all the write-offs and deductions to which they’re entitled on their taxes. That can include vendors, transportation, and monthly bills associated with operating the business. Be sure to categorize expenses.

Credit

Don’t rely too heavily on credit cards It’s easy to use credit as a means of supporting the business, but entrepreneurs can easily find themselves so far in debt they’re unable to even make minimum monthly payments on their card.

Predict the Future

Keep an eye on financial trends. A realistic financial forecast is essential to plan for future sales, expenses and income.

Separate Accounts

Never combine personal and business accounts. Its easier to monitor business health and prevents entrepreneurs from being responsible for business-related debts.

It’s the Law

Entrepreneurs need to know and understand the law regarding the type of business they have. Anyone in business for themselves will have tax responsibilities and expenses that hourly or salaried employees don’t. Hiring an accountant is a smart strategy. Individuals can benefit from an accountant’s experience, knowledge, and the professional can help keep a new business on track for success.

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 (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

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