The ‘Bottom Line’, ‘Numbers’, ‘Sales’ are some entities that are self-explanatory in any business. Especially when it comes to real estate, the number of properties sold successfully and an impressive sales record are enough to reflect the business. But, all of this is true if their is uncompromising accuracy, vigilance and standardisation in the numbers presented and their credibility. Which is where experienced accounting comes in the picture. Showing a promising real estate practice on the basis of inaccurate books can be a bane for your business and can tarnish your image in the industry as well as with your clients.
In this blog, we will talk about the common real estate accounting mistakes that your business needs to avoid in order to get through the tax season seamlessly. If you are cautious to dodge these commonly encountered errors, then not only will your books be accurate, they will also be dependable and actionable.
Mistake No 1: Realigning Funds Before the Transaction is Complete
This is a very common business error, if we may say with property and real estate accounting. The entrepreneurs are seen to be disbursing the funds before the deal is closed. This not only is a malpractice, but at the time of doing the books, is an additional wastage of time for your bookkeeper, as they need to go back and check the completion and the authentication of each transaction that you have made. In accounting terms, a transaction is considered revenue and can thus be acted upon only when the chain is complete, in real estate terms, it is when the keys are finally exchanged.
It is important for real estate entrepreneurs to keep this in mind at all times while confirming a transaction to be a revenue or before its disbursement. So that, your Accounts Payable are accurately aligned with your Accounts Receivable.
Other Blog – IRS Tax Relaxation Deadlines for Covid-19 (With State Regulations)
Mistake No. 2: Tracking Commissions Additionally From an Accounting Software
When your brokerage is tracking commission additionally and alternatively from the main accounting software that you are using, then you are backing up on age-old data entry to pay those commissions. Honestly speaking, this redundant data entry puts you at a greater risk, with your books being rampaged with human error and threats.
Ideally, using accounting software or any accounting technology is a matter to make things simpler and more convenient. Therefore, you need to have a commission management system in place that can seamlessly integrate with your accounting system and help make things more convenient for you.
Mistake No. 3: Insufficient Training of the Accounting Software
If you have an in-house or a local accountant, who you are presuming will be on track with the technological developments and has a proficiency in the accounting software of your choice, then you might be going far-fetched. The idea is that you need to have someone who is an expert and a thorough professional when it comes with dealing with your accounting tools so that bookkeeping is an easier and more convenient feat. If you take it into consideration, having someone who is not-well versed and trained in these tools, will not be able to optimize the efficiency of the same and might make errors. Therefore, it is essential to have someone who is trained and has a smooth knowledge of state-of-the-art accounting tools and technology, especially the ones preferred for use by your business.
Mistake No. 4: Not Taking Backups
This is a mistake that cannot be stressed-on enough. If you are an entrepreneur, then you need to know gone are the days, when people had stacks of paperwork in physical form, that they could go back to and tally whenever needed. This was not only time consuming, but took a lot of space and was adept with errors on all levels. With the coming in of the right accounting technology, you need to save time, effort and error. Taking backups of your data is ever-important so that you have securely kept all your essential financials readily available whenever needed. Real estate businesses are generally seen to lack in this imperative feat.
Real Estate is an exhaustive and a challenging field. You need to constantly be at your alert-best and on your toes. But the accounting part of it, need not be that dreadful if done the right way. Being on the right road of accuracy, having a dependable team that backs your efforts and avoiding these common accounting mistakes can help you keep up with your books and also get through the year-end stress-free. We hope this blog will help you highlight some common errors, and avoid them in your future accounting journey.
Not everyone knows the nitty-gritties of Accounting for a Restaurant, and neither is that proficiency expected. Especially not with Restaurant managers. You already have your plate full literally with a lot! The pain of keeping your books updated and accounting should not be one of them. However, knowing the blueprint of the main things to keep in mind while taking care of your accounting or its basics, can really help you manage your money better and understand your operations more efficiently.
And, because it is so important, we have put together this list of accounting principles 101, which will help you get ahead with your restaurant’s books and financials. No matter the type of restaurant you are running, a takeaway, stand-alone or a chain, there is something in this for everyone. Whether you do it yourself or hire an outsourced bookkeeping service, keeping these points in mind will benefit you greatly!
This is where we get the Chart of Accounts into the picture. Your primary goal should be to get this order. These are the buckets that are used to describe the funds that are flowing in and out of the business. This includes everything- assets, liabilities, expenses, revenue, etc. Now, you need to complete the chart by outlining the sub-categories in it as well. From marketing, to inventory, etc. All these items should accurately be recorded in your Chart of Accounts.
This is important as this is what is used for drafting any business financial statements and reports. These blueprints help you get the insights necessary for understanding where your restaurant is currently standing and where it is headed to.
Cost of Goods Sold
Cost of Goods Sold (COGS) refers to the total cost that goes into making the product or services that someone is selling. In your restaurant, it would basically mean the cost of all the ingredients that go into making your restaurant’s menu. The efficient way to calculate your total COGS is when you take your weekly restaurant inventory in terms of your beginning inventory and subtract your ending inventory, you get the cost of goods sold for your restaurant. But it is important to make certain that your cost of goods sold does not include any utilities and labour costs added to it. It should only have the cost of the actual ingredients that go into making your menu. The essence of doing this all, is to keep a tab on the cost of each plate of food that is sold at your restaurant, so that you can make a healthy profit and excel better.
Keeping a tab of the Labor Cost, Occupancy Expenses And Operating Expenses
The Cost of Goods we spoke about earlier, does not include the labour costs or added utility expenses. But in order to know the accurate financials for your business, it is important to know each detail of your restaurant’s expenses correctly to be able to take the right steps and make beneficial decisions. Your operational costs like- labour costs, occupancy expenses, etc. all need to be divided into different categories. It is important to know that every restaurant differs in its operational costs. Therefore, keeping a close check on them will help you to work towards more rewarding profits in the business. It is necessary to also add the payroll taxes and employment benefits to this category.
Another part to add are the occupancy expenses like rent and property insurance also need to be accounted for. Knowing the difference between operating costs and occupancy costs are important.
More Blog – Building Trust From In-House To Virtual Bookkeeping!
Get Acknowledged with the Prime Costs
Your prime costs are what you get by adding your Costs of Goods Sold with the labour costs. This primarily includes Accounting for Restaurant primary expenses. Therefore you need to pay extra attention so as to avoid any mistakes or inaccuracies that may creep in these records.
Also, it is difficult to cut back on costs other than the prime costs, if you work effectively on these, you can also save on funds.
The fact is that to know the exact status of your finances, it is important to take it into account with other factors. No financial indicator, no matter how crucial it is can help you completely understand the financial space your business is standing in and where it is headed to. Out of common sense, you can imagine that if you are looking at a large restaurant, it will have more prime costs in comparison to a small restaurant that has a lower prime cost. But then this can’t help you come to a final consensus, up until you compare it with the sales in each.
Therefore to understand where your business is currently and where it is headed to, it is important to take into account the cost-to-sales ratio.
This is important as it allows you to compare your business with other businesses’ keeping in mind complete accuracy.
You No More Have To Worry About Restaurant Accounting
Restaurant Accounting does not have to become gibberish and a deterrent in running your restaurant effectively. If you have your accounts in place, are managing your costs effectively. In addition to that, if you have your accounts outsourced to a bookkeeper, then you can save on time, added costs and can focus on the core operations of your business.So that you get reliable data, actionable financials and all that you need to run your business with better insights.
The financial tasks of a business are handled both by bookkeepers and accountants, yet, when we are required to outline the differences between the two, it generally is a hard one. The fact is, that their goals and ambitions for the business are the same, but the way they achieve them are different. In a simple sense, bookkeeping is primarily concerned with transactions while accounting deals with the insights that are drawn on the basis of the information obtained through bookkeeping.
If you are a small business owner and are wondering, “how exactly are the two different?” and what is the right choice for your business, then you have come to the right place! In this blog we will outline all the differences between an accountant and a bookkeeper and how each benefits and adds to your business.
What is Bookkeeping?
Bookkeeping as a Financial task in a business, records the daily transactions that occur in a business in a standardised and regularised manner. It forms the base for any other financial function of an organization. Their tasks include:
- Recording Financial Transactions
- Assessing the Debits and Credits of a business
- Generating invoices and handling a business’ receivable funds
- Maintaining the General Ledger
- Organizing and administering payroll
Out of all the tasks mentioned above, maintaining the general ledger is of the prime importance. This is where all the transactions are recorded. How dynamic and complex an organization’s bookkeeping is, is primarily dependent on the size and stage of operations that business has.
What is Accounting?
This is the advanced financial task that works on the information and insights provided by a bookkeeper. This information is then used to draw future budgets and forecasts and other such financial models. Some of the tasks that are primarily typical to accounting include:
- Reconciling and entries that are mistakenly omitted.
- Financial Preparation statements, records and reports.
- Analyzing operational costs
- Completing, preparing and filing tax returns
- Draw the financial blueprint of a business.
It is an accountant that draws the key financial indicators of a business and determines an analysis of the cash flow.
Therefore, it is an accountant that takes the information in the General Ledger provided by the bookkeeper and takes it forward to the larger insights drawn through those recordings. Where bookkeeping ends, accounting begins.
Accountant vs Bookkeeper
The work of an accountant and a bookkeeper are often seen to be overlapping. In fact, some can say that bookkeeping is a sub-task of accounting only. The only difference is that bookkeeping is a financial operation that needs to be undertaken on a daily basis and is regularized. Therefore, it is imperative to do it in its regularized manner. Only, when this is done accurately, can an accountant work on the information provided by the bookkeeper.
Records the financial transactions that occur in the business.
Work on the financial transactions recorded to provide broader insights.
Recording the debits and credits of a business.
Curates the financial statements, records and reports.
Generates invoices, sends them ahead and tracks payments.
Prepares taxes and files them.
Maintains the general ledger.
Uses the general ledger to prepare financial analysis and strategy to support the business.
Administering Tax strategies
Determines where a business is standing.
Determines where a business is headed to.
Financial record keeping in a business
Financial forecasting and overall financial administration of a business.
What Do You Need For Your Business?
Now comes the burning question. What do you need for your business? An accountant or a bookkeeper? Before you ask yourself that, try assessing answers to the following questions:
- What industry is your business in?
- How large are your operations?
- How many employees does your company currently have?
- What is your business’ goal?
Why these questions are necessary is to make you understand where your business is currently standing and where it is headed to in the future. Now, the fact of the matter is that a bookkeeper and an accountant are co-dependent and cannot exist without one another. Additionally, it is always a perk to have a team that can handle both. Not only does it help save costs, but it also leads to better accuracy, more coordination and an overall synchronization of timely deliveries and compliances.
Another lucrative option that businesses have these days, is the option to seamlessly integrate the tasks of an accountant and a bookkeeper, by outsourcing these activities to a bookkeeping service provider. What your business thus gets, is:
- A team of expert bookkeepers and accountants.
- Someone who can handle both administrative tasks like payroll and financial tasks like taxing effectively.
- Increased cost and time savings.
- Savings on overhead and operational costs.
- State-of-the-art accounting technology and tools.
Now is the time to get better control of your business’ financials by outsourcing it and gaining the expertise of industry leaders. No matter the stage and size of your business, it is never too late to have the professional support of ace bookkeepers and accountants on your side.
No one ever said that running a business would be easy. In fact, it is one thing to run a business, and it is a different thing to be able to keep up with the changing times and by responding to it with scaling up and evolving your business. A business is only as good as the efficiency it is run with. The time you put in it, the resources you foster it with and the team that is behind making it a success.
A profitable business is always the one that has impeccable logistics and operations. Because when you are able to micro-manage your business well, then you are able to take care of the larger picture of making profits and expanding operations.
When talking about bringing efficiency in logistics, what comes on top of the list is accountancy and bookkeeping operations. When your business is small, it is easier to manage its finances. But as it starts to grow, you are caught up in handling the sales, marketing, expansions and slowly the financial management starts being a hassle and ends up being ignored.
This is where virtual accounting comes in the picture. Their team of expert professionals help take off the load of your operations and prioritise your tasks.
How Virtual Accountant Helps Your Business?
Virtual Accountant is the game-changer when it comes to streamlining and organizing your business logistics better. Here are some of the benefits that your business can avail by choosing virtual accounting services:
Get Your Financial Reports When You Need Them:
The most important part of knowing where your business is situated at present and where it is headed to in the future are through financial documents. It is important to have updated, accurate and consistent documents. A virtual accounting firm, will help you in formulating updated financial documents to help you take care of the daily operations of your business and to run it efficiently at the tip of your fingers.
Also Read – Management Accounts for a vendor operating several stores
You Will Not Need to Hire and Train a Team:
When you have a team of dedicated and expert virtual accountants, then you no more have to find a team of qualified accountants, or train them. Because, virtual bookkeepers only hire the best in the business. Adept with all the highest certifications and qualifications. This helps you save time on finding the personnel that will fit the bill for your business.
Get Balanced and Updated Books Everytime:
You will no more have to face the wrath of the year-end stress, as your team of virtual accountants will make sure that you have accurate, updated and error-free books throughout the year. Your records will be reconciled and available in an understandable fashion at all times.
Help Your Business Get Better Work Management:
When you have time savings from not having to handle accounting tasks for your business, you will be able to delegate that for the betterment of the management and expansion of your operations. You will be able to take care of your business and run it efficiently.
Save Upto 50% Off Your Annual Accounting Budget:
With virtual accounting you will be able to save on the overhead charges of having an in-house accountant. Your cumulative savings on salaries, tax benefits, rentals and the added opportunity costs will help catapult other areas of your business. As with virtual accounting you only pay for the services that you avail for.
Gain Convenience and Flexibility:
The convenience of having a team of expert professionals available to your business around the clock will give you added flexibility. Because a growing business is dynamic and its needs can arise at any time, therefore, having a virtual accounting service will help you with your financial needs 24×7. Also, they grow as you grow and help in scaling up their services as you scale up.
Virtual accounting services is a one-way ticket to increased profit and for added peace of mind. With the evolution of how businesses are done, virtual accounting is the way to an organized future for your business. No matter the size and stage of your organization, virtual accounting will help you ace every sphere of your business’ logistics and operations.
We hope that through this blog, you will be able to find one of the many ways in which virtual accounting can help benefit your business. Get on with financial trend of the future, opt for virtual accounting services.
No matter the field of business you are in, the challenges and competition are at an ever-high. With the changing dynamics of the market, it is important to have a clear strategy for your business management, accounting advisory and bookkeeping schedule. If you do Dental Practices, and are looking for ways to organize your accounting and bookkeeping practices, then you have come to the right place.
Healthcare is a growing industry and Dental Practices form a core of that. Being a part of this complicated business environment thus requires impeccable accounting and bookkeeping patterns, so that you can benefit from the accurate and dependable numbers to sustain and expand your business in an informed manner.
Here are some of the essential tips and tricks that can make your dental accounting practices shine!
Tip No. 1: Introduce Cost Cutting
Now, there is no rocket science to how this as a step in itself makes your profit margins fatter! It is important that you sit down with your accountant and assess the areas that are dispensable and where you can optimize your costing. Cutting these extra expenses will help you organize your actual required costs much better.
Doing it yourself, is not the way to go! Having a professional who can assess these arenas see where there can be a deduction of taxes, or reduction in equipment & medical costs can be done.
Tip No. 2: Ensure that You Know Your Accounting Basics
As we said in the tip above, bookkeeping is not a task that you should reserve for yourself in your busy dental practice.. But having said that, it is still necessary for you to have a basic knowledge of accounting terms and practices, so that you are not completely detached from what is happening with your books and can absorb accounting advice fully. A simple thing like knowing the difference between profit and cash flow is important. Where lack of cash can lead to a deficit in funds to undertake your daily operations, your profits are the excess of funds left, after you have met with all your expenses. When you have a proper knowledge of terms like these, you are able to avoid confusion and losses.
Tip No. 3: Seek Assistance from an Accounting Software
Accounting has become more streamlined and organized with the accounting softwares that are there to make the job easier. Having the right accounting software for your business, can help you and your bookkeeper communicate in a transparent manner, help you keep all the financial information you need in one place, and make the loss or theft of data impossible. Save time and gain efficiency by having the right balance of a modern accounting software and a bookkeeping team that knows the industry accounting needs of your business.
Also Read – 10 Ways Your Bookkeeper Can Help You Through Covid-19
Tip No. 4: Have and Accountant Who Knows Your Business
Accounting is a universal knowledge, its basics remain the same wherever you go and whatever you do. But what does change, is the way you apply its principles to maximize your client’s benefits. Especially in a dental practice, where no matter you have a stand-alone practice or a chain of clinics, having an accountant who knows your business and its industrial needs to the ‘T’ is necessary. This significantly reduces the chances of errors and is successfully able to handle your business efficiently.
Tip No. 5: Organize Purchase Costs
Dental Practices are required to stay modern and up-do-date with the latest medical technology that is there in the market. By default, it makes the largest cost bracket of your practices, therefore you need to pay extreme attention to it. Sitting with your accounting and analyzing these expenses to understand how you can optimize them and maximize the benefits from your expenses is a must!
Tip No. 6: Check for Internal Issues
If you are to take care of your business, and there are some people in your organization who punch in daily transactions before it goes to your bookkeeper, chances are that there can be errors, or potential frauds. It is important for you and your bookkeeper to keep a vigilant eye on all such practices, so that you can be safeguarded from any such financial threat and malpractice.
Dental practices are ever-important and one of the leading professions globally. With the volume of work it has, keeping up with its bookkeeping and accounting needs is also necessary. Keeping a tab on necessary accounting principles and the primary do’s and don’ts help you assess your business model better and make necessary alterations for increased profits and decreased errors. Having the right accounting team who understands the needs of your industry is the first step in that direction of accounting efficiency and an enhanced financial health.
Read estate becomes doubly complicated as a business when you add the intricacies of property accounting to it. Being unmistakably accurate is important as a single mistake can tarnish your long-standing reputation. If you know what to look for, then chances are you will be able to avoid those mistakes right from the start.
Let us look into all the common property accounting problems that you can face, and their solutions to help undo any deterrents in your accurate and updated bookkeeping.
Problem No 1. Separate Business and Personal Records
A common property accounting mistake, which also a generic accounting error, is the mixing of your business and personal accounts into one. This causes immense financial confusion and is not good for the financial health of your business. Also at the time of filing taxes, differentiating between the two can be hard. To avoid such a confusion and to be able to get through your taxes smoothly, it is important to differentiate between the two right from the starting.
Problem No 2. Not Waiting For a Transaction to Complete
In real estate transactions it is common that the disbursement of trust or escrowing deposits before the transactions are completed in real estate. Doing so may cause your brokerage to being non-compliant with the governing body. The main reason for the same as that funds are not considered earned and as revenue, until the deal is closed, the transaction is complete and the property is sold completely. In case this protocol is not followed in the above given manner, then all these transactions need to be revisited by your bookkeeper, which in turn wastes time and effort additionally.
You May Also Read – Top 5 Things You Need to Know Regarding PPP Loans Amidst Covid-19
Problem No 3. Not Having the Right Professional Staff
If you have a team backing your financials who are not experienced professionals then all the hard work that you are putting in your books goes to waste. An inexperienced staff will not be able to successfully handle your account management as they will not be able to understand the industry requirements of your organization and the several federal and state compliances that apply. Therefore, the most important thing is to have a team of accounting advisors and bookkeepers who are aware of the nitty-gritties of your industry and therefore can come up with the best strategic bookkeeping plans for your business.
Problem No 4. Not Taking Taxes Diligently
The tax filing process and its preparation is equally important as doing all the work that goes into it prior to it. Therefore, a common mistake made in property accounting is not following the right filing process and compliance protocols that later have grave consequences. By regulations, you can either use the accrual or the cash method to file your taxes, but this should be attempted to be followed diligently each year. Once you have come to that consensus, you should attempt to stick to it. In such a manner, you will not only be able to reduce your tax burden at the end of the financial year, but you will also get a lot of extra time at hand due to the increased organization.
Problem No 5. Not Taking Backups of Your Files and Data
This is a generic accounting mistake that can affect any business. Gone are the days when businesses used to carry bulks of files and paperwork with them. Now, with the efficiency of cloud-based accounting and digital backups, you can store all the necessary information on virtual interfaces, without having to pay the overhead charges of storing it. You also are able to maintain the safety and protection of this data much better. Additionally, you might lose on some essential information and records, if you have not backed them up effectively. Therefore, it is ever-important to have regularized and standardized backups of all your accounting information from time to time.
Running a business has its complexities, but taking care of your accounting need not be one of them. With the right accounting strategy, a team of professionals and an untiring concern to avoid common bookkeeping mistakes, you can avoid all accounting hindrances and ace the tax season!