What You Need to Know About Accounting Firms

Many people choose to seek the help of accounting firms for the management of either their personal finances or their business finances. Accounting firms can ease the stress of making certain decisions in regards to your finances, and will give you access to excellent advice and advisory services. Working with a highly trained, professional accountant will no doubt result in cash savings, either in the way of cash flow increase or tax minimization. What a lot of people don’t understand when looking for an accounting firm, however, is that not all accounting practices offer the same services, and it might take a little bit of work to find the one that is right for you.

Many chartered accounting firms are not licensed or authorized to help their clients with investments. Rather, most focus on tax minimization, document preparation, and other tax planning services. Generally speaking, chartered accounting firms tend to provide services that revolve around taxes. There might be a few reasons for this, but it mostly comes down to what they are trained and certified to do. The professionals working at a chartered accounting firm have been trained in bookkeeping, as well as tax planning and minimization strategies. Though they might both be money related, tax management and investment management are vastly different disciplines that require vastly different skills, training, and certifications.

Accounting Firms

The good news is that some accounting firms employ investment experts who are trained and qualified to assist you in investing your money so that you can protect and grow your wealth. This allows you to get all of your financial services all in one place. Of course, many smaller accounting firms won’t have their own in-house investment team, but they will likely have other companies or individuals that they partner with in order to provide you with those services. Alternatively, if you have your own financial planner or investment advisor that you are already working with, most accountants will be willing to work with them on your tax planning strategies and tax preparation. It is very important that at some point you have your financial professionals work together or cross reference each other’s work, so that there won’t be any confusion or conflicting advice. Managing your money and growing your wealth is only possible through both wise investment and strategic tax minimization plans. If you don’t have one element or the other, your plans might become derailed and you will run the risk of losing money.

Working with an accounting firm is a great way to ensure that you are handling your money wisely. It is, however, important to remember that not all accounting firms offer the same services or a complete portfolio of services. Many people find that the combination of a chartered accounting firm to handle the tax planning and tax minimization strategies, as well as an investment advisor to handle investing your money, is the best way to guarantee that your finances will be secure and your wealth will continue to steadily grow.

The Short Guide to Choosing from Among the Multitude of Accounting Firms

No matter how many business owners and operators may try to avoid dealing with the accounting and bookkeeping part of things, it is unavoidable if your business is to have any chance at success. While it is true that you want to focus primarily on the areas where you find yourself most proficient (and where you can enjoy life), putting the accounting and bookkeeping on the backburner instead of taking it to an accounting firm is a harmful, short-sighted, and dangerous strategy that always ends badly.

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If you have considered hiring an in-house accountant and thought that such a position would not be required full-time or the year around, and thus would be a redundant burden on your budget far too often, your next option would be to look at an external accounting firm to whom you can turn for help. How does one choose the right accounting firm for your particular business? There is no short or universal answer.

Determine your needs

Perhaps the most important questions to consider when choosing from among the available accounting firms are: what it is you would require your external accountant to do? What are your needs? Would you require day to day invoicing, billing, payroll as well as long-term forecasting, planning, reporting and business taxes?

If so, the smaller accounting firms will not be up to the task. Managing both the daily work and the longer term vision at the same time is not something every professional accountant would be able to do. Thus, when choosing your service provider, make sure you know what it is you require so you can see for yourself—or their representative can inform you whether these needs are going to be met in the most cost-efficient and seamless manner possible.

Determine what the accounting firms can provide

Your next step in analyzing the accounting firms would be based on what it is these companies can provide to you for the fees advertised. Will they have industry specific knowledge that would be beneficial to your company? Have they dealt with the problems that you need them to solve before? What are their ratings, testimonials, credentials, success stories? How efficiently are the accounting firms in question using modern technology, such as cloud collaboration, automated data feeds, and integration with smartphones and tablet computers? All of this information would be crucial to you in making your decision.

Find the perfect match

Given the multitude of accounting firms out there, it should not be difficult for you to use quite strict criteria in order to eliminate the weak options from you short list. When you have narrowed down the options to just two or three best accounting firms available to you, go even further in depth in your negotiations with these companies to find the best fit. You should feel confident in your accountant’s abilities, adherence to the highest industry standards when it comes to privacy and confidentiality, knowledge of the best practices known to date, and the ability to switch to your account on short notice, so that you are never left waiting for your numbers to be updated. When you find this accountant, you have struck gold.

The Accountant vs. Accounting for Small Business Software

There should be no doubt that accounting for small business is vital to the continued success of running the company. Accounting is the only way to keep track of all incoming and outgoing money. There are two different ways that people choose to keep track of all of their records and accounting data; accountants and accounting software. So which of these should you choose for your small business?

Accounting Software

There are two different types of accounting for small business software. There are internet based software programs and locally installed software programs. Many small business owners choose to use accounting software because it is a cheaper option than hiring an accountant. The great thing about the software is that one person can enter in the data from invoices, receipts, and other financials. Many are confident in the promise that the software can take care of all the business accounting functions with little issue. While the software is going to prove to be an advantage for streamlining financial duties and reporting functions within the business, it will not replace the knowledge and attention of a professional accountant. Many think that without any accounting knowledge at all, they can efficiently depend on an accounting small business program and not have any issues or concerns, but this is a false assumption.

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Someone who is a professionally trained in accounting for small business can take care of all bookkeeping and accounting duties for your company. Although they are usually more expensive up front than simple accounting small business software, numerous owners may choose this route to ensure the least chance of mistakes or problems arising. Unlike computer software, a bookkeeper or accountant is able to make real time knowledgeable decisions, solve any problems, and make required adjustments based on the company’s needs, history, and circumstances.

An accounting for small business professional will be able to gather information about your business and industry to make recommendations that coincide with the laws and regulations of taxes that will help you to save money, get business credits, and qualify for additional deductions. It is unlikely that accounting software will always catch these minute details and observations that a real human being will catch. An accountant also has years of expertise and knowledge handling small business accounting details for many different companies, adding to the ins and outs and tips that they will be able to offer you to cut costs are your company and increase revenues.

There are benefits to selecting either an accounting for small business professional or software for the smooth financial operation and continued maintenance of your company financial info, but the best choice is to hire in the accountant. Some places do utilize both. While an average person can run your accounting software fairly easy, a trained accountant is able to provide sturdier advice about cutting expenses and raising profits. They are qualified to complete tax information correctly. They will work diligently throughout the year and during tax time to make sure you are getting the full credits and deductions possible within the legal guidelines.

Reasons Why Nonprofits Should Care About Accounting

Nonprofits do a lot of amazing things for people in our society. Nonprofits range from organizations such as charities, social service agencies, sports and arts programs, even nutrition and lunch programs. They are essentially a business that is dedicated to the public good and their primary vision is not to make a profit and expand for the enrichment of stakeholders. Since these businesses are about giving back to the community and not taking money from it, you can imagine that funding is a huge challenge for these organizations. This is why accounting and proper financial management is essential for nonprofits. They need to stay on top of this so they can accurately account for every dollar that comes through the organization. Here are some reasons why accounting is so important for nonprofits.

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Nonprofits Have Tax Entitlements

Nonprofits are usually entitled to a number of tax incentives and benefits for their service to the public good. This can include write offs for employee wages, materials and resources, and other operational expenditures. Many people who run non-profits may not be aware of the tax breaks they can enjoy because tax law can change annually. This is when the knowledge of an accountant can help. They know what these organizations can claim on their taxes to make sure that non-profits keep as much of their finding as possible to help their clientele.

Organization Equals More Money

Nonprofits are in the business of helping people without regard to making a profit. Obviously this requires an extremely strict budget and constant fundraising to help meet the needs of the people that use the services non-profits provide. Keeping your financial statements and bookkeeping organized and up-to-date can go a long way in keeping money in the business. Hiring professional accountant can ensure that your financials are in order and that your reconciliations are done monthly or quarterly. This will dramatically improve the financial health of a nonprofit.

Nonprofits Ned to Track All Expenses

Accurate expense tracking is extremely important for nonprofit organizations. It’s almost more important than in for profit businesses because of the tight budget under which nonprofits have to operate. In the zeal of the mission to aid others, nonprofits have tended to have less than optimal tracking procedures for expenses. An accountant can help a company to set up and maintain an effective system for tracking funds and expenditures in a nonprofit atmosphere.

Accounting Procedures Matter to Donors and Investors

Responsible financial reporting is not only good for saving money and for tax purposes; it is also increasingly becoming more of a factor that people consider when they decide to donate and give funds to a nonprofit. You have to remember that transparency is the key to winning trust. Wouldn’t it impress your potential donors if you can give them a past, current and projected vision of your organization’s finances? This will give them the confidence that their money will go to a worthy cause and will be used wisely. That will result in more donations for your nonprofit that can be put to use in the community you serve.

Accurate Accounting Helps You Make Decisions

Although nonprofits hope for smooth sailing, the reality is there may be a crisis that occurs in their community that will over extend the resources that you have to offer. Accountants can help you become prepared for this eventuality through allocating savings. They can also help nonprofits make quick financial decisions when they need to. This helps to avoid slow reaction and bureaucratic red tape when an emergency happens and a nonprofit’s services are needed the most.

Nonprofits are essential in our society (marketdone.com/so-how-do-non-profits-benefit-society). They provide many life enriching services for people who are in need. This is why accounting is so important for these organizations. Their cash flow can be limited and they may be operating with a small staff and resources. Accountants can help to save nonprofit money by taking advantage of tax exemptions, proper financial organization and expense reporting. They also help by adding a level of legitimacy and transparency that can put potential donors at ease. Knowing the financials can also give a nonprofit quicker turnaround time with decision making as well. All of these are reasons to hire an accounting firm to improve your nonprofit’s financial strength.

What’s New in Accounting Outsourcing?

For today’s businesses, accounting outsourcing is the new trend. More companies are using it, and more are using it for an increasing amount of services. The best reason for this is because no matter how big or small your firm, administrative duties take staff time that could be better used elsewhere. Accounting outsourcing is here to stay.

Efficiency

The fact is that accounting and administration is a very important part of all businesses, despite those services not being the main bread and butter of the business. Accounting outsourcing gives your company the ability to get rid of those parts of your business, without failing to do them. Outsourcing is more efficient, and the drive for efficiency is a key strategic need of all of today’s businesses.

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What services can be outsourced?

In the past, services commonly outsourced in the accounting department were payroll, accounts receivable and accounts payable. However, all areas involved in accounting can be done via accounting outsourcing, including financial statement preparation, internal auditing, and account reconciliations. Even the CFO’s job can be outsourced. Some companies choose to outsource everything, and others just do it partially.

Why outsourcing?

Efficiency was already mentioned. The main reason it is more efficient is because it frees up staff time to do other things, like concentrate on making the business more competitive and more innovative. Another reason is that accounting outsourcing saves on training and recruiting costs, and it saves the cost of maintaining an accounting department.

Training and retraining costs are high because of the constant flux in accounting regulations. An outsourced firm has the time to be up on the latest changes and use the latest tools.

Greater control

One concern that companies have with accounting outsourcing is that they believe that all the financial aspects of the business will be in the hands of someone else. They worry about losing control. In fact, it has been found that companies take the accounting more seriously, and become more involved in it, when it is outsourced. This is because they tend to pay more attention when they are working with someone else, but mostly because they have someone who will advise them and help them with what is, for most of us, a necessary chore.  Another reason is that the information is clearer, showing measurable, useful outcomes when professionals take charge. It becomes easier to see what is needed to improve operations for the good of the company.

No matter what kind of company you are, unless you are an accounting company, accounting is not your prime concern. You want to get on with running the business better than it was before, and you no longer have to choose. A small business owner used to have to do the work by him or herself, taking valuable time. A large business needed a separate, staffed department. Today, you can run a better business by getting someone else to do it. Outsourcing accounting is becoming more and more a thing of the future.

Tips to Avoid Income Tax Extension Complications

It is that time of the year where you are sincerely collecting all your financial documents to file your taxes. But while doing so, you realize that there is some crucial information that you are missing out on. You feel that it would be nice to have some grace time, so that you can collect all required information before you file your taxes. Don’t panic! The IRS (Internal Revenue Services) provides you with an opportunity to file for an extension.

You might feel that filing for a tax extension is another complication that you would invite. But this is a myth. Read on to find out how you can avoid tax extension complications.

1.  Remember the Tax day: If you start to collect all your information on the day of your taxes, it is too late. Remember that the IRS expects you to file for your tax extension before the Tax day. So, it’s advised that you file for your extension as soon as you realize that you would require more time to gather your required financial information. Also, if you have planned tours or vacation during the tax season, remember to plan this ahead and apply for a tax extension. Remember that if you do not file your tax extension before the tax day, the IRS puts your name into the tax defaulters. All penalties that are applicable for not filing your taxes on time will be applicable if you do not file for tax extension before this D day.

2.  Fill in your details correctly: Your tax extension plea can get rejected if the IRS finds that any information that you fill in the form is not valid. So you need to be doubly sure of the details that go into the form. Make sure that you fill in your name, address and SSN (Social security Number) correctly. The IRS holds all authority to reject your tax plea if the information you provide does not match with the details it holds. Once all these details are filled in correctly and the form is submitted, you will be automatically granted an extension of six months to file your income tax.

3.  Form 4868 for personal tax extension: For all your personal finance related stuff, you need to fill form 4868. This is called the Automatic Extension of Taxes form. This means that once you fill in your details in this form and submit it to the IRS; you can be rest assured that your tax extension time will be granted automatically. After this you can use this extra time to gather your personal finance related information.

4.  Form 7004 for business tax extension: If you are running a business and you want to file for a tax extension for your taxes related to your business, do not use form 4868. You need to file your business tax extension using form 7004. You need to mention the details of your business, business type, partners involved and the location in which you are running your business. This form is also an automatic tax extension form (biztaxlaw.about.com/od/businesstaxseason/tp/2011-Tax-Extension-Forms-And-Filing.htm), meaning that you can get your tax extension of five or six months automatically depending on the type of the business that you are running.

5.  Keep No dues: The IRS can reject your plea if you owe a huge amount of money to the IRS from your previous tax years. And the last point you need to beware of is; reasons like procrastination should not be used to file for tax extension. Filing for IRS tax extension takes the same time as filing for your actual taxes. So if you have your documents in place, it’s better to file your taxes instead of applying for a tax extension.

How to Hire an Accounting Firm that is Right for You and Your Business

Your start-up company has begun to grow and it’s now become abundantly clear that you can no longer manage the administrative/accounting side of things on your own. Thus you’ve decided to hire an accountant and/or an accounting firm to assist you in transforming your business from a start-up into a force in your local marketplace.

Reap the Rewards

Choosing the right people to work with in developing a financial strategy can be a challenge. Because of this fear of not being able to find the right person for their business needs, many entrepreneurs choose to forego hiring an accounting firm and make the attempt at managing their tax returns themselves with some form of computer software or online service. Simply put, an entrepreneur and active business owner could be missing out on tax credits and major money by doing it themselves. An accounting firm can help ensure that your business keeps as much of its’ profit as possible.

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Qualities to Consider

What you want in an accounting firm is firstly experience with starting and/or running a small business. If they aren’t able to communicate a well-informed viewpoint to your business then it’s worth finding another firm to help you with your work. You want your accounting firm to fall somewhere between financially conservative and liberal. Ask them how they would treat certain kinds of deductions or income and note their answer. What you want is someone who is willing to be flexible and creative with their financial tax solutions but who won’t go completely off the cliff with risk.

If you can understand your accounting firm and they speak the same business language as you then you know they’re worth the consideration. There are two ways to treat your accounting firm; they simply handle the administrative side of things and that’s it OR you take them on as a partner and consultant in support of your entrepreneurial dreams. It’s important to define, in that first meeting, what you’re looking for in a firm and if they aren’t able to meet your standard then discard them. You want to dread meeting with your accountant.

Get Specialized

Ultimately what you want is a person and/or a team that can offer strategies to contribute to the overall health of your business.  If your accounting firm isn’t invested in you and your business on an intellectual level then they’re not the right fit. Many accounting firms will specialize in a handful of areas in order to be able to accommodate their own niche and many are aimed towards attracting either larger corporate clients or smaller businesses. It’s important to find a partnership with a team that is right for you and right for your business.

Do your research. If you have friends that are involved with similar business inquire as to who they used and try to obtain references if you can from each accounting firm. Find a firm that you have a personal connection with on a conversational level, someone that you trust with your tax information, and someone who is able to meet the requirements in accordance with the financial state of your business.

How to Make Accounting for a Small Business More Effective

Your company’s accounting firm could be the answer to expanding your company, as well as optimizing profit. If you are an owner or manager of a small business, you should know that you will require timely and accurate financial information in order to succeed. One way of doing this is by using cloud-based technology for accounting for a small business. This type of technology will offer you accurate, real-time, financial information that is tailored to your company’s needs.

Why Should Your Company Use It?

Cloud-based accounting requires less data entry and paperwork than traditional systems. You will also be able to receive training for your accounting for a small business staff to keep your financial information functional. It will help you make better business decisions, keep administrative costs down, and allow you to put more time and effort into growing your business.

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Some Benefits

There is no need to worry about security issues with cloud computing. You will be able to use highly secure servers that use a web browser and internet connection. This will enable you to access all of your financial information for your accounting for a small business from a mobile device at any time. In addition, cloud-based systems also reduce administrative costs, because you will no longer need to host, support and maintain on-site software. Moreover, all of these services are available in “real-time”, which will allow you to keep track of all of your transactions as soon as they happen.

It is also possible to work with your accounting division to make it run more smoothly. For example, you should ensure there are financial statements that are tailored to industry-specific standards. You should also ensure that you have accurate billings, accounts receivable aging, and accounts payable bills that are approved at specific times. This will aid in cash flow analysis and management for your accounting for a small business. In addition, you will receive help with payroll and related tax filing, as well as account reconciliations and general ledger maintenance.

Some things You Should know

According to the Gene Marks Forbes article, “Are Cloud Based Accounting Apps Ready for Prime Time? 5 Things You Should Know,” you will have protection at the user level, and most of the applications will also have further protection against users who will attempt to export your data. In addition, the article explains that because cloud-based technology is relatively new, accounting for small business firms will noticed that there are generally few features with this technology.

There are four main areas you should look for to make your accounting for a small business more effective. First of all, you should look for operational efficiency. You can use your financial budgeting and reports to be used in making future business decisions. Secondly, you should look at ways to compare your business’s performance to industry benchmarks as a way to understand the competition. In addition, you should also look for financial integrity, which means having financial and accounting records that are in good shape. Lastly, you should employ a temporary or part-time chief financial officer.

Even though this type of technology is still relatively new, it is still suitable to complete accounting for a small business. Having this system put into place will turn your business into a functioning, effective workplace.

Education for International Accounting

Recently, the IAESB (International Accounting Education Standards Board) released an exposure draft of its 2014-2016 Strategy and Work Plan. The plan states “the IAESB is proposing to provide implementation guidance, engage in advocacy, and contribute to capacity building within the accounting profession. This scope of work is intended to enhance the public confidence in the competence and judgment of accounting professionals.”  The IAESB is the “independent standard-setting body” under the International federation of Accountants (IFC) that “develops education standards, guidance, and information papers for use by IFC member bodies and other stakeholders.” With all the legislative changes on the horizon, it is a good thing that the IAESB is looking at implementing new strategies for education in international accounting.

International accounting is becoming an ever more complex area of specialization, with its own standards and regulations to comply with, and it is up to the next generation of accounting students to learn to adapt to the ever evolving global marketplace. Many universities and accounting schools are creating specialized coursework in international accounting practices and standards. The IAESB is rightly looking into improving the standards of education across the board; this includes the creation of educational benchmarks, promoting the adoption of IAESB standards worldwide and advocating for the “provision, promotion and harmonization of accounting education standards that seek to: (a) Improve the quality of professional accounting education worldwide to enhance the competence and judgment of professional accountants; and (b) Contribute to the development of the accountancy profession worldwide by assisting in building human capacity in accounting.” While over 100 bodies worldwide have already adopted IFC and IAESB standards, increasing compliance across the globe can only benefit businesses and countries all over.

Individuals and businesses engaged in the global business markets must have confidence that their international accountant is cognizant of the challenges before them and can ensure compliance to international standards. Acknowledging what they call “the trend towards global convergence and the increasing mobility of professional accountants,” the IAESB is openly encouraging the broad-spectrum adoption of international accounting standards in education.  This also includes engaging stakeholders such as policy-makers, educators, regional organizations, and other professional accounting organizations in the development of global accounting standards.

With organizations such as the IAESB actively advocating for the adoption of educational benchmarks and global standards across the financial spectrum, confidence in international accounting can only go up.  Comments on the Plan from the general public and stakeholders are encouraged up until October 4, 2013. Those interested in commenting can submit their comments directly at the IAESB website, and all comments must be in both PDF and Word formats. The Plan is expected to be implemented in early 2014 and will be in effect until December 2016.

International accounting is increasingly becoming a complex and challenging area and professionals, policymakers, and the general public must feel confident that students are being trained well enough and to high enough standards as to not become a liability to the companies and individuals they are meant to be serving.

Becoming More Profitable with Better Accounting for Law Firms

Is your law firm making enough profit? Probably not, but that’s not because you are not working hard; it’s very likely because you are not working on profit management; you are working for your clients. Turning a profit requires strict attention to the money making side of things, and that is one place where you may need to consider outsourcing instead of downsizing to turn a profit. Better accounting for law firms can help you.

Have a financial plan

Unless you have made a plan to make your business profitable, you will have a hard time of doing so. You need a financial plan to determine how your firm’s performance can measure against the income and expenses. Accounting for law firms will be able to help you create projections based on your performance to date. This kind of plan makes everyone in the firm responsible for billing and collections, and can review actual monthly occurrences so that more of the firms focus is on the financial side.

Be clear about fees

Let people know about costs upfront to avoid disputes later. This is another place where it can be very useful to hire from outside to help you manage your billings and set your fees. Accounting for law firms can help you avoid fee disputes, write-offs and unpaid bills by setting up clear plans and policies in advance. This is something that the legal team is too busy to be concerned with, so why not outsource? It will definitely improve profits.

Set up billing and collection methods

Many law firms are suffering from a poor inflow of earnings because they are often slow to bill. Deferring billing until after all the work is completed can be too much time between work done and work billed, making people reluctant to pay. Billing and collecting means that you have enough operating capital to keep working for the client. If this is a problem, then hiring accounting for law firms will help you set up a regular schedule. Sending out bills more often, and in less jaw-dropping amounts, can help the bills be paid more regularly.

Charge a reasonable fee

You need to be sure that your charges reflect the amount of money that your firm needs to become profitable, but that they also reflect what the market can pay. Accounting for law firm services can help you become aware of what others are charging for similar services and help you set up a set of standard contract for things done regularly, and more open contracts for other services.

Hire outside help

If you are having trouble managing the money coming into the firm because of lack of time to work on accounting aspects, then hire someone to do this work for you. Hiring a professional accountant can help you turn the profits in your firm around and put you in a better financial position. Set up billing procedures and have everyone in the firm follow them. An expert specializing in accounting for law firms can help you. You will find this more effective than having the partners in the firm trying to manage it individually.