‘It’s 28th today, shit man still a week to go before my salary gets credited!!’
Every working professional has been in this spot. And unarguably, the reason remains the same-’Poor Accounting’. Well, if you are wondering what has accounting to do with this then you are still in your learning stages. However, you may have witnessed either your mom or dad noting down all the monthly expenses and preparing a budget accordingly. Yes, this is also an accounting practice.
Accounting isn’t just a profession, it is a trait that every individual needs to inherit. Without proper accounting of your financials, you will always keep wondering, ‘Where exactly does all my money go?’
The same goes for businesses as well. Every business, irrespective of its size, needs efficient accounting practices to make sure they aren’t lagging behind their competitors and always wondering about managing their finances. This is where the need of certified Accountants and Accounting firms arises since, “An Accountant is someone who knows the cost of everything and the value of nothing.” However, hiring an Accountant isn’t as easy as it sounds. You have to take various factors into account.
So, if you are searching for an Accountant, here are a few tips that can be of help to you.
Identify your Accounting Needs
The first and most vital step when hiring an accountant is to make a note of your accounting needs. Accounting isn’t just one task, it is a collection of various processes and each process needs experience and expertise. Here are a few Accounting tasks to take into consideration before you hire an Accountant:
- Business advisory services
- Accounting and Bookkeeping
- Tax advice
- Financial analyst
It would be wise if you know what Accounting services are you exactly looking for instead of jumping straight in.
Post a job with the relevant keywords
In today’s digital world, keywords play a vital role both for the searcher as well as the publisher. Therefore, once you know exactly what you want, then comes the task of posting the job that includes the right keywords so that it can be found easily by the searcher. Use terms like Accounting, Bookkeeping, Bookkeeper, Accountant, Auditor, etc to increase its reach.
When posting an Accountant requirement job, make sure you mention your requirements and budget correctly since it all comes down to these 2 factors.
Leverage the power of Social Media
While you can advertise the job vacancy on various job portals, it is not necessary that you will get a response. In such cases, leveraging the potential of social media can come in handy. LinkedIN which is a social network is considered to be the largest platform where professionals from all around the world connect and share their experiences. It is also one of the best places to market your business as well as look for potential Accountants, when hiring.
It can help you build a professional network and/or find relevant referrals from other industry experts.
Conduct proper research
Accounting is a very crucial business process and you simply cannot handle all your financial data to someone just based on their online portfolio. Vetting candidates/ accounting firms before you make a decision is very important especially when in this digital era it isn’t hard enough to build a fake online reputation. Verify their work experience and qualifications that showcases their accounting skills.
Look for qualifications like CPA certification, their work experience with various accounting software, etc. Aso, go through online reviews and look for their genuinity before you move forward.
Shortlist according to your budget and requirements
Once you are through with the above processes, it comes down to shortlisting the best candidates according to your budget and accounting needs. While you may be looking for bookkeeping roles, an auditor may not be the perfect fit for the role. Therefore, before you invest time and money into hiring an accountant, make sure that they fall in the right category and fulfill your accounting needs.
Also Read – Common Accounting Challenges Faced by Accountants and How to Overcome?
Conduct an interview
Now since you have your best candidate shortlisted on paper, it’s time to conduct an interview and see if everything is for real. Try to focus on the overall personality of the accountant like his analytical and mathematical skills, attention to detail, working style, business acumen. After all, she is going to be handling your finances that will eventually reflect as your business growth.
The final onboarding stage concludes the hiring process. Make sure the new Accountant(firm) is welcomed and has all that they need to get started. Ensure that they are well-aware of your requirements, goals and objectives and are on the same page at the end of the day.
Hiring the right Accountant is very important after all you are going to hand over all your finances to the man. Follow the above steps and make sure you have employed the best man.
Preparing and filing taxes can be a real hustle to deal with. Not everyone enjoys preparing their taxes. But one can’t run away from the responsibilities of filing taxes. Every year the tax season arrives and with it comes the complexities of keeping up with the compliance’s along with the workload of handling lots and lots of paperwork.
However, even after knowing that tax preparation isn’t an easy task, many small business owners and self-employed individuals prefer doing it all on their own. And why exactly? Only to save a few bucks. But what they don’t realise is that the value of their time is no less than the value of their money. They spent their valuable time preparing for tax filing. And the sooner they realise this the better. Instead of doing all the hustle and bustle by self, hiring an accountant can be a wise choice. After all, is it always wise to hand over the task to a professional or to make it more relevant, hire someone who does this for a living?
But is there a right time to hire an Accountant to do your taxes?
A question that usually comes up is “When Should You Hire an Accountant to Do Your Taxes?”
Well, let’s find out.
Hiring an Accountant to Do Your Taxes
Paying taxes on-time is every citizen’s responsibility. However, getting tax ready isn’t an easy nut to crack especially if you run a business or are earning more than $500,000 per year. In such cases, it is always wise to hire an accountant who does tax preparation for living. This way you can avoid the penalty of the IRS as well as save your precious hours to invest in your domain.
You’ve recently received an inheritance
There may be cases when you might get your hands on an inheritance. But it can add to your tax filing complexities. Owning an inheritance means you can owe estate tax, inheritance tax or capital gains tax. While you are dealing with the tax complexities of your new inheritance, considering to hire a professional accountant can ease your task. It would be a wise option to let the professional do his/her job.
Also Read About – What is Accounts Payable?
The IRS has contacted you recently:
Be it an individual taxpayer or a business owner filing taxes on behalf of his company, the IRS has the right to contact you in case they find any discrepancies or any other fraudulent activities in your filing. And with little or zero knowledge of the subject matter, such situations can put you in a tough spot. This is another situation where hiring an Accountant can be your best option. An accountant is well aware of the government policies and how they can help you to minimize the penalty in case of under- or over payment.
Planning for your retirement
Hiring personal Accountants can be a great idea to invest in if you are planning for your retirement. These professionals can be any of the following:
- Enrolled Agents (EAs),
- Certified Public Accountants (CPAs) and
- Registered Tax Return Preparers (RTRPs)
Figure out what your needs are and you want to invest and decide for yourself what’s best for your business. Each of the above highly-skilled professionals can offer you a wide variety of services and solve your various planning and tax return issues..
Consult for Accounting Services for Small Business
Over time, the job of an Accountant has always been important to businesses and has evolved into various branches. One such branch is where skilled Accountants can take over business advisory roles for you and help manage your finances with expertise. They can also offer valuable insights on your current financial position and help plan for the future accordingly.
Accountants affect our everyday lives each day. Millions of jobs depend on an Accountant’s honesty, integrity and professionalism. Therefore, hiring one in times of need is a wise choice and can save you hours of trouble as well as help you deal with the complexities that arise when filing a tax return.
Recording financial transactions are the top priority for all businesses. While every financial document has its own importance, a Balance sheet is one that defines the financial health of a business entity at a given point in time. The balance sheet of business contains enough financial data of an organisation to determine the growth of the company as well as predict its future expansion plans.
However, accounting mistakes can lead to discrepancies in the balance sheet that can prove to be costly for businesses. Here we will be discussing some common balance sheet mistakes that even professional Accountants and Bookkeepers can make and to avoid them.
Avoiding Balance Sheet mistakes:
Before we hop on to the discussion straight away, here’s a basic understanding of the formula that a Balance sheet operates upon and how each entity contributes:
- Assets – Anything that the business owns and has monetary value
- Liabilities – It includes the debts a company owes to others
- Shareholder’s Capital or Equity- This includes the total amount invested by the Shareholders
You May Also Read – What is Business Continuity Plan?
It is a common balance sheet mistake to miss out on recording transactions like personal expenses, inventory, or any other financial transaction. Even professionals can face this situation where a transaction just slips out of their mind.
Recording transactions incorrectly
Mistakes are inevitable and a core part of human nature. Many times, business owners and accountants can be in a spot where they unknowingly record a transaction wrong. Don’t worry you aren’t suffering from Dyslexia if you record 71 as 17. It is a common transposition error and can be rectified easily if you double-check the balance sheet. This is why many business owners prefer cross-checking the entries of their bookkeepers.
Missing out on recording inventory changes
Have you forgotten to record inventory changes?
Take it easy, it’s a common balance sheet mistake. At times even the easiest tasks are prone to mistakes. Make sure that you are doing your books on a regular basis since too much work can make Jack a dull boy and he can make such mistakes.
Classifying data incorrectly
As discussed earlier, the Balance sheet works on 3 primary entities(assets, liabilities, and equity). Inaccurately classifying your transactions can disrupt the balance sheet formula that it works on and can result in major errors. However, this is one mistake that professionals won’t make generally but in any case, the proper classification of business transactions is imperative to avoid such errors.
Business owners who do their books on their own should re-verify the classification of their transactions with an accountant.
How to avoid balance sheet mistakes
The above-discussed mistakes are pretty common and can create data irregularities within the balance sheet. Here’s how you can avoid them:
- Conduct a trial balance before creating your balance sheet
- Review and update balance sheet transactions regularly and double-check them for common errors discussed above
- Keep your financial documents well-organized to avoid any hassle
- It is always advisable to seek professional help
From obtaining a business loan to better understand your business performance and liquidity position, a balance sheet is a crucial business asset and its importance shouldn’t be overlooked.
Hire a Professional Bookkeeper of LedgerBench and let the professionals do their job while you do the job you’re best at!!
“Ethics is knowing the difference between what you have a right to do and what is right to do.”- Potter Stewart
Ethics is an integral part of an individual that defines his/her professional ethics. And accounting is one such profession that affects the lives of millions of people each day which makes ethical accounting practices even more important. An accountant’s one mistake (be it intentional or unintentional) can wreak havoc in people’s life.
Enron scandal of 2001 is one such example that is cited as the biggest audit failure and left the Accounting profession questionable.
Therefore, ethical accounting practices are very important as businesses are counting on them to be fair and also it influences the lives of ordinary people to a great extent. Here’s what Ethical Accounting incorporates:
You May Also Read – Why you need a Virtual Accountant for your Business in Year 2020?
Ethical Accounting and How to Practice it:
We are living in a globalized marketplace where Accounting services can be carried out from all around the world. Fair and transparent accounting practices define the honesty and integrity of an Accountant and make sure that they are positively affecting the lives of others. Here are a few reasons to practice Accounting:
- Accounting deals with sensitive financial information
- Accounting mistakes can affect many and can prove to be very costly
- Ethical Accounting ensures healthy and long-term business relationships with your clients
- It allows you to build a reputation and grow your professional network
- Practising Ethical Accounting will help you avoid any legal repercussions
Here the 5 common Ethical Accounting codes
There have been examples in the past where the Accounting profession can be driven by illicit gains, however, integrity towards the profession is a must to keep the profession ethical. Accounting firms and accountants should feel morally obliged to keep their reporting accurate and transparent.
Practising confidentiality restricts Accounting firms to share sensitive information with third-parties including unauthorized personnel of the organization. Sharing information either intentionally or unintentionally is against the ethical accounting code. However, if any information that goes against the public interest should be shared after seeking a professional lawyer’s help.
Also Read – 5 Bookkeeping Issues That are Solved By Outsourcing it to Experts
Independence and objectivity
Objectivity is an ethical code that concerns an individual accountant’s whereas Independence is an Accounting attribute. Objectivity is an accountant’s mental state to be unbiased in his/her judgment and shouldn’t be driven by personal gains or someone else’s influence. Independence is what defines the objectivity of the Accounting profession as a whole.
Accounting firms and accountants should be well-aware of the latest technology trends while they adopt the best industry practices by continuously upskilling. Accounting professionals should be trained well to keep up with the industry norms and carry out their responsibilities while following the ethical code of competence.
No profession is ever complete without the commitment to practice professional behavior while respecting the profession and complying up with the laws and regulations of their profession. Accounting Services need to ensure that they don’t negatively impact the profession.
Accounting profession is a sophisticated profession where mistakes can be costly. Also, professionals might get distracted to move up the ladder quickly by practicing illegal means, however, following ethical accounting is always the right way to be successful in the long-run while you don’t put your reputation at stake.
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.