Accountants, Accounting, Accounting Services, Bookkeeping, Bookkeeping Services, Real Estate Accounting, Small Business
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.
Accountants, Accounting, Small Business
Accounting in the year 2020 is more than just crunching the numbers and availing maximum tax benefits. It is about going ahead and overcoming the major challenges faced by accountants that are hindering you from achieving your goals. The failure to see these and acting on them promptly, not only affect your profits, but derail you from your path of efficiency.
This blog is a round-up of all the challenges and industry forecasts for the year 2020, and how you can act on them today, and secure your accounting practices with a clear and promising future.
Accounting Challenges Faced by Accountants Today:
-
Keeping Up With the Changes in Tax Regulations:
Tax compliance and maximising client benefits is the base task for any tax accountant. But the constant changes in taxation are making the need to keep up with the updates, more important than ever. Whether it is to do with regulations, client benefits, revenue generation, etc. or more complex changes, failing to abide by which can lead to errors and monetary fines. It is very important to be up-to-date with the current tax regulations and constantly be updated with any changes occurring during the financial year.
-
Repetitive Tasks Everyday:
As an accountant, there are chances that your daily task sheet almost always involves the same tasks in a clock-work manner. The excitement of variety or differing accounting challenges in your job is absent as an accountant. Additionally, when there is a monotony of tasks then there are chances for lack of interest and soon the creeping in of errors.
On an average an accountant works an average of 80 hours a week. And when it is the year-end, this work time almost always escalates. This leads to an exhaustive work-life balance, where you are almost always bundled under a pile of files. Not missing the need to still be innovative, vigilant and active for each of your clients. It is imperative to have a reliable back-end team as an accountant, with whom you can delegate your tasks effectively and reduce your work stress.
-
Increasing Competitiveness by the Day:
Accountancy is a swelling field with new entrants coming in each quarter. Now, with more candidates comes more competition. No matter your certifications and qualifications, each accountant is having to compete and race with an exceeding number of competitors in the field. Therefore, the need to have a typical niche and an edge that makes you more competent and different from your competitors is the need of the hour.
Also Read – Different Branches of Accounting: What Are They and How They Work
-
The Training is Never Over:
The reality of being an accountant is that you never really finish your training. There are always more certifications, qualifications and the unending need to be updated with changes in tax regulations. As an accountant, you almost always continue to train yourself in the span of your career. It is important to always be updated with refreshed knowledge and continuously evolving with new techniques and the software support in your field.
Accounting is a career that is bound by dates and timelines. Missing one by error, snowballs into multiple adverse effects, fines and troubles. Not to miss, the loss of your integrity, market value and your valuable clients. Therefore, as an accountant it is of utmost importance to understand the importance of these deadlines, abide by them and organize your work in a way that you are always ahead of your schedule. It is important to have a strong back-end team that can either ease this organization for you or come on-board and share your swelling responsibilities to ease you down.
-
Automation and AI Taking Over Traditional Accounting:
In the wake of increasing business competition, accountants are now having to compete head to head with holistic accounting softwares and AI support. It has not only brought convenience for your potential clients, but has also led to the recurrent need to understand and ace these software. The only way to get over this challenge, is to be able to understand and gain expertise on these innovations or have a team of individuals who can aid you in this field. So that you will be able to get more support and increased client satisfaction in your career.
Wrapping Up
Accounting forms the base task for effectively running any business. It is an omnipresent need of any organization, no matter how big or small it is. But behind all these truths, is the ultimate fact that accounting as a profession is not a cakewalk. There are multiple accounting challenges, problems and recurrent issues that are faced by accountants on a daily basis.
However, proper management, meticulous planning, and the right team can get you ahead of these problems and make life easier for you. Meticulous streamlining of your profession and having the right strategization can help you in taking charge of your business better. It’s time to pull up your socks and get ahead in your business with the right knowledge like never before!
Bookkeeping, Bookkeeping Services, Small Business
Bookkeeping can be an intimidating and a time consuming task for a majority of entrepreneurs, it is majorly for this reason that it is pushed behind on the task sheet, and that is when the problems begin to creep in. Another important factor is that as your business grows, your bookkeeping needs have to be more organized, streamlined and updated. With expansion comes the need to spend more time handling the core operations of your business, and less time on administration and financial logistics. This is where the need to outsource your business’ bookkeeping issues and accounting needs come into the picture.
There are various Bookkeeping issues that can be solved just by outsourcing it to the right Bookkeeping Service providers. Here are the key issues of any business’ bookkeeping, that can be solved by outsourcing it:
Bookkeeping Issues Solved by Outsourcing Experts:
-
Making the Tax Filing Process Easier:
Filing taxes is one of the most intricate and challenging tasks in a business’ financial calendar. Being tax compliant is ever important. Outsourcing Bookkeeping tasks helps you prepare accurate statements and reports as well as being timely and scheduled with its submission. These experts know detailed tax laws and regulations be it on the federal or the state level and help you gain the maximum benefits and savings during the tax season. Not to miss, you also get to be free of the stress that the tax season brings with itself.
-
Scale Your Bookkeeping Effectively:
Business’ are dynamic in nature and are ever-evolving with time. Therefore your operations also need to be of the type where they adapt to the changing times and keep scaling. Outsourcing bookkeeping can help with these scalability needs. It helps you transition seamlessly into enterprise-level systems by updating the software infrastructure, daily tasks and consequent reporting that can help you in your expansion. Get ahead in your business, with outsourcing your bookkeeping operations to experienced professionals who can handle your business at every stage and status of operations.
It is very well known that if you are running a business, there is never enough time to do everything effectively. Therefore, finding strategies to maximize the time at hand is more important than ever. Bookkeeping, as said before, is one of the most common tasks that is sidelined at the time of delegating time for an entrepreneur. But, this leads to future issues and confusions. Therefore, by outsourcing your bookkeeping tasks to the right professionals can help you take off an average of 4 hours every week, to delegate to the core operations of your business like sales, production, marketing, etc. With more time at hand, and less points to stress about you will always be ahead of your schedule while running your business.
-
Access to Key Information:
With outsourced bookkeepers, you do not have to swim through pages and pages of unending financial data to do your business, instead these experts give you comprehensive reports, actionable financials and accurate financial statements that can help you with the key indicators that are of importance to your business, they organize it into blocks of the most relevant information that is essential for you to run your business effectively. This helps you make better sense of where your business is currently standing and where it is headed to in the future.
-
Gain Access to Updated Financials:
The most important factor to be kept in consideration while bookkeeping is to have books that are updated, accurate and error-free. Additionally, there are new advances in the bookkeeping industry, accounting software and regulations. Being abreast with them all, is a challenge in itself. By outsourcing your bookkeeping operations to experts, you get updated, accurate and relevant financial information that helps your business keep up with the times better. Not just that, you are able to be a step ahead with state-of-the art accounting technology and tools that help you gain better control over your bookkeeping and accounting operations.
Wrapping Up
Outsourcing Bookkeeping is the way ahead in the financial market. Running a business is becoming a strenuous and all-inclusive job that requires an entrepreneurs complete dedication 24×7 365 days a year. Therefore, having a team that makes running your business easier and adds the necessary value base to all that you do is key to the success of your business and increasing your financial health multifold.
Finance, Small Business
In the light of the current COVID-19 pandemic, the federal government has given a breather to all small business owners in the US with the Economic Injury Disaster Loan (EIDL). It is designed to give relief to business owners who have been impacted by a loss of revenue in this time and therefore is offering an advance of $10,000. The borrowers will not have to repay this advance loan amount.
What is the SBA Disaster Loan Program?
The SBA disaster loan program is a relief program by the US government to support small business owners who have been affected by COVID-19 and incurred losses in revenue. This relief is extended to proprietors, independent contractors and all small businesses, etc.
The maximum limit of loan dispersal is $2 Million if you have been hit by the pandemic majorly. The interest rate for the loan is at 3.75% on qualification for businesses and 2.75% for non-profit organizations. These loans have long terms ranging from 15-30 years, so that they are accessible and viable to everyone.
10 Ways Your Bookkeeper Can Help You Through Covid-19
Who Can Apply for the Loan?
Any small business, across the different states of the United States can apply for the SBA loan. But, due to the current lack of funding, the loan applications have temporarily been closed and are available only to the agricultural industry for fresh applications.
Currently the major preference is on a first come first serve basis and the upper hand is being given to business’ in the agricultural sector. Those applications had been closed by April 15 and were in the process of being under consideration.
Although, with a fresh round of funding from the Congress, the process has been resumed once again. Here are some of the key points that you ought to know:
- Agricultural businesses that are engaged in the production of food and fiber, ranching, and raising of livestock, agriculture, and all other farming and agricultural related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)).
- SBA is encouraging all eligible agricultural businesses with 500 or fewer employees wishing to apply to begin preparing their business financial information needed for their application.
How to Apply for an SBA Loan?
You can go to the SBA’s Disaster loan portal (simply click here). There are no submission of forms that are required at this time, and can also get an EIDL emergency grant of $10,000 within 3 days of application. (As stated above, you are not required to repay this initial grant, irrespective of whether you are able to qualify for the SBA loan eventually or not.)
Upon application, your credit rating is assessed, and your income and tax statements are checked to see the extent of your need for the loan. For loans above $200,000 the lender can expect you to submit a collateral. For loans under $200,000 there is no need to necessarily submit a collateral to the lender, unless you feel you want to wilfully increase the chances of getting the loan.
A very important point to note, that if you submit enough collateral, you will get the SBA loan, but it is dependent on how much the assessor feels you are in need of and can thus be levied to you.
Steps to File the SBA Loan Application:
- Complete the initial application online.
- Gather all the necessary documents required hereon.
- Once the SBA assesses your credit, it asks you for additional documents.
- Let us now look at the detailed steps to file the form:
Section 1: Disclosures:
Select the type of business you are applying for, and check off all the eligibility requirements as given there.
Section 2: Business Information:
Filling this will require you to have your income statement as of January 31, 2020 with you.
- Add your legal name (as on your tax return)
- Your business phone number
- Gross Revenues for the 12 months before date of disaster (January 31, 2020)
- Cost of goods for the 12 months prior to date of disaster (January 31, 2020)
- Any grants received.
- The sections marked with a red star, need to be filed only if they apply to your business.
Section 3: Business Owners Information
First, mention if your business is owned by another business. If it is owned by individuals, you need to fill out owner sections for each member owning more than 20% or more of your business.
The following personal information needs to be added:
- Social Security Number
- Date of Birth
- Place of Birth
- Citizenship
- Residential Street Address
Section 4: Additional Information
- Mention if anyone has been involved in any criminal charges.
- Fill out the section in blue, if you have hired someone to file the application for you. (Including an employee.)
- Select the box to select the advance payment of $10,000
- Check your banking information
Wrapping Up
Currently the SBA disaster loan is open only to agricultural businesses, but we hope that soon this opens up for the larger majority and all businesses alike are able to make out of this pandemic smoothly. The SBA disaster loan is the federal government’s attempt to help businesses gain security, protection and safety during the pandemic.
Accounting, Bookkeeping, Bookkeeping Services, Finance, Small Business
In the wake of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the United States has conferred an additional $310 billion funding to the Paycheck Protection Program (PPP) that was almost running out of funds in April. The importance of PPP is ever-important in these times of economic uncertainty as PPP is one of the few opportunities that small businesses have to obtain forgivable loans to sustain employees on the Payroll.
But, there are so many questions that are yet to be answered and cleared for entrepreneurs, especially in the light of the forgivable nature of the PPP loans.
Another burning issue here is the grey area, where many public companies confessed to having taken the PPP loan which was truly meant for small businesses with employees less than 500.
To contain such malpractices, the federal government has come out with the briefing that the authorities will audit any company that levies for loans more than $ 2 Million.
This blog will provide answers to all the commonly asked questions and queries related to the PPP loan and how it can benefit your business.
Question 1: What costs are eligible for forgiveness under the PPP?
Answer: The actual forgivable part of the PPP is dependent on certain factors. These are based on the payments made and the costs incurred during the COVID-19. These are the costs that are eligible for forgiveness in the PPP loans:
- Salary and wages or other similar payroll compensations.
- Payments that have been made in the light of sick leaves.
- Allowance for separation.
- Payments made for group health care benefits, including insurance premiums.
- Retirement benefits
- State or federal payroll taxes
- Please note that cash compensations that exceed $100,000 are exempted from this excuse. Additionally, the employer’s share of the federal payroll taxes is also exempted from being forgiven under the PPP.
Question 2: What costs are not eligible for forgiveness under the PPP?
Answer: Although the PPP loan is a breath of fresh air for businesses who are trying hard to genuinely retain their employees, there are still certain costs that are exempt from being forgiven under the PPP loan. These are:
- Payments made to independent contractors.
- Under the Family First Coronavirus Response Act, there are qualified sick leaves and parental leave wages. These, therefore, are exempt from the forgiveness under the PPP.
- If we take February 15, 2020, as the benchmark date; then any interest payments on personal property, rent payments under agreements in existence, and utility payments like electricity bills, etc. are also not permitted for forgiveness under the PPP loan.
You May Also Read – 10 Ways Your Bookkeeper Can Help You Through Covid-19
Question 3: What are the limitations of loan forgiveness?
Answer: There certainly are limits to forgiveness in the PPP loans. The first is that not more than 25% of the loan forgiveness can be linked to non-payroll costs. Additionally, proceeds directed towards advance up to $10,000 on Economic Injury Disaster Loan will also be deducted from the loan forgiveness amount.
There are two formulas to determine the forgiveness amount in the loan deduction. The FTE Method and the reduction in wages.
The loan forgiveness amount is subject to reduction by multiplying it by the following fraction. These are as follows: (This is known as the FTE method)
- The numerator of which is the average number of FTE employees per month employed by the borrower during the covered period.
- The denomination of which, as elected by the borrower is:
-
- The average number of FTE employees per month (from Feb 15, 2019, to June 30, 2019)
- The average number of FTE employees per month (Jan 1, 2020, to Feb 29, 2020)
The second is the reduction of wages method. This method is applicable as follows:
- Identify employees who did not receive the salary at an annualized rate of more than $ 100,000 for a single day in 2019.
- Compare each covered employee’s wages during the period to his/her salary during the first quarter of 2020.
- For an employee who is covered, the salary is reduced by more than 25%, then you need to apply the following formula:
-
- Multiply the first-quarter wages by .75
- Subtract the result from the covered period wages
- The aggregated dollar amount will reduce the loan forgiveness amount.
Question 4: What are the documents that you need to apply for forgiveness?
Answer: To receive the loan forgiveness, you need to comprehensively submit accurate copies of the following documents, complete and updated:
- Documentation to verify the number of FTE employees on the payroll. This also includes the payroll tax filings.
- Canceled checks, payment receipts, and transcripts of accounts verifying payments of mortgages, rent and utility payments.
- You also need to submit an authentication certificate from a representative of the business that certifies that the information and documents submitted are accurate and the amount that is requested for forgiveness, will help retain employees.
- In addition to these, the SBA can also ask you to submit additional documents to solidify and authenticate your case.
Question 5: Are large businesses with adequate sources of liquidity qualify for a PPP loan?
Answer: No, the essence of PPP loans was to help small businesses, retain employees, and sail through these financially crunching times of COVID-19 smoothly. If larger businesses, who have enough sources of liquidity take this PPP loan, then the small businesses will be crushed under undue competition. Hence, as per the federal laws, for any business that takes up a loan above $ 2 Million dollars, will have to undergo a complete audit.
What Does Your Business Need?
The essential element in COVID-19 is to sail through with as little damage as possible. With the PPP loan and the secure ability to seek forgiveness on the loan is a boon in these times. You need to seek spaces where you can seek the maximum benefits and forgiveness on the PPP loans. We hope that your essential queries were answered and cleared through this blog. For any additional query and query on the PPP loans and how it affects your business, please click here.
