Accounting Procedures And Methods
- Accrual Based Accounting: Is It the Right Choice for You?
- How can Accrual Based Accounting Help Manage Your Cash Flow?
- Four Ways to Reduce Your Fixed Expenses
- Reduce Expenses by Studying Your Profit and Loss Statement
- Get an Accurate Financial Snapshot with Cash Based Accounting
- Cash Based Accounting to Combat "Fear"
- Is An Accounting Audit Cause for Concern?
- Three Surprising Ways In-House Bookkeeping Can Cut Your Business Expenses
- Cutting Business Expenses Like an Outsider
- When Small Business Expenses Are Not Small, At All
- Understanding the Different Types of Business Expenses to Manage Expenses Better
- Questions to Ask When You Choose a Daily Bookkeeping Firm
- Three Reasons to Stick with a U.S.-based Firm for Daily Bookkeeping
- Can Deferred Tax Accounting Cut Your Variable Expenses?
- Accurate Daily Bookkeeping Procedures: The Key to Financial Success
- Can An Outside Accounting Firm Help You With Revenue Forecasting?
Accrual Based Accounting: Is It the Right Choice for You?
Accrual based accounting, where your business tracks daily, weekly, and monthly expenses when they are incurred and profits when they are earned (rather than when expenses are paid or received) has several tax benefits when it comes to accounting procedures.
What are some of the benefits of accrual based accounting?
Because you're dealing with projected income and actual expenses, accrual based accounting can get complicated for bookkeeping departments unaccustomed to the procedures.
Making the switch to accrual based accounting? A virtual accounting firm like OSI, with years of expertise in accrual based accounting, can help.
How can Accrual Based Accounting Help Manage Your Cash Flow?
"Net-30." "Net-60." "The check is in the mail." C-level executives and accounting departments in businesses of all sizes often hear these words — or use them frequently. Net-30 is desirable payment terms when you're paying for goods or services. Not so much when you're waiting for cash flow.
Accrual based accounting can help balance things in your company's favor by helping you manage cash flow — especially if you're a distributor or retailer managing the sale of goods to retailers or the public.
Accrual Based Accounting Gives You Fast Deductions, Slower Monthly Expenses
With strategic accrual based accounting, you can reduce your quarterly tax bills or schedule larger tax bills for times when you have better cash flow, keeping your business running smoothly 12 months out of the year.
Four Ways to Reduce Your Fixed Expenses
Think your fixed expenses are truly "fixed?" A careful cash flow analysis with an accurate profit and loss statement in your hands may reveal otherwise. Some areas of SMB or small business expenses that may be considered "fixed" are:
Let's look at some ways you can reduce those fixed expenses on your next profit and loss statement.
Reduce Expenses by Studying Your Profit and Loss Statement
The profit and loss statement may be something the bookkeeping department tosses on your desk quarterly, and you give it a cursory glance. Unless things aren't going well, you may not think about the numbers. But there's valuable information that could help you improve the bottom line. Knowing your profit and loss statement includes accurate, up-to-date figures is the first step in managing expenses.
Sometimes called an income statement, the profit and loss statement is an itemized list of your revenues minus expenses.
You can see:
Are you happy with the accuracy and frequency of your profit and loss statements from your bookkeeping staff? If not, a virtual accounting & bookkeeping firm can help straighten out your records and improve your bottom line. Best of all, the information will be available online in an easy-to-read format for you to access whenever it's convenient for you.
Get an Accurate Financial Snapshot with Cash Based Accounting
Since 1916, the Internal Revenue Service has permitted accrual based accounting for businesses. Businesses with gross revenue over $5 million are now required to use accrual based accounting. However, some corporations, even larger businesses, are eligible to use cash based accounting. There are several benefits to the cash based accounting method.
What Is Cash Based Accounting?
Benefit to Cash Based Accounting
Cash based accounting is a simple way to calculate daily, weekly and monthly expenses and income.
Cash Based Accounting to Combat "Fear"
In a recessionary economy, many people talk about "fear." It turns out, experts say the recession ended more than a year ago, but many businesses are still feeling the pinch. If you are a small- to medium-sized business that does less than $5 million in gross revenue per year, you can use cash based accounting to combat the fear you may be feeling over the future.
How does cash based accounting help? Cash based accounting gives business owners a clear picture of the financial future. Because you're not reporting income you haven't yet received — but you're looking at expenses you've already paid (even on credit or Net terms) — you can see the truth, for better or worse. (And hopefully, for you, it's looking better than it did this time two years ago, when we posted this article about fear and the recession. If not, you can make adjustments by reducing expenses — and see the results on paper right away.)
That's where a virtual accounting department like AccountingDepartment.com can help. A virtual accounting department has nothing at stake with your company — other than to make you happy by helping you manage your small business expenses or medium business expenses better. We can make suggestions from an objective viewpoint. And if business is down and you need to cut back, you won't be faced with the painful task of laying off in-house employees. We won't take it personally if you make adjustments to your accounting services. And when business starts booming for you, we have plenty of staff here at AccountingDepartment.com to provide help with your cash based accounting records and medium or small business expenses.
Is An Accounting Audit Cause for Concern?
Often, the word "audit" strikes fear in the hearts of business owners. After all, honest people wind up in jail, or bankrupt, after audits. Don't they? An accounting audit is not something to fear, however. It's a system of checks and balances that will help your company truly examine and evaluate your bookkeeping and accounting methods and practices. You may come out of an audit with:
Sounds good, right?
That doesn't mean an accounting audit is something you want to face alone. An outside accounting agency — with no stake in your company other than to help you get the most from your bookkeeping and accounting records — can help.
The right virtual accounting department will take over your accounting and make sure you're following "Generally Accepted Accounting Principles" (GAAP). Even before the audit, your full-charge virtual bookkeeper and controller can make suggestions to help you streamline processes and cut expenses. When the time for your accounting audit rolls around, you'll be confident your records are in the best shape possible, giving you an opportunity to fine tune based on the auditor's suggestions.
Don't fear an accounting audit. Call AccountingDepartment.com for help.
Three Surprising Ways In-House Bookkeeping Can Cut Your Business Expenses
When you take an honest look at your business expenses, you might find that in-house employees are costing you more than you need to spend, especially when it comes to bookkeeping and accounting services.
Let's look at three ways you can cut business expenses with outsourced, virtual bookkeeping & accounting services.
1. No employee benefits, insurance and taxes to pay. Health insurance, unemployment insurance and employee taxes raise small business expenses more and more each year. Whether you have annual revenue of just over a million or closer to $30 million, chances are benefits are a big chunk of your business expenses. When you outsource your bookkeeping to an independent service, you can eliminate this business expense altogether — at least in one department of your company.
2. No overhead. When you have employees in your office — even if they are temps or freelancers — you have to provide them with office space, a computer, lighting, etc. With virtual bookkeepers, you don't have to provide them with a place to work — or even give them a slice of pizza when you treat the rest of the office on alternate Fridays.
3. An objective look at your business expenses. The accounting and bookkeeping staff at AccountingDepartment.com does more than just punch numbers for you (although we do that accurately and less expensively than you might think). We will help you evaluate your business expenses to create a better ROI. Additionally, with our daily, weekly or monthly reports, you can see at a glance, just where your money is going. This puts you in a much better position to make positive changes to your business expenses — and your bottom line.
Cutting Business Expenses Like an Outsider
Have you ever cleaned out your closets at the change of season? You may be thinking, "What does fashion and housekeeping have to do with accounting procedures," right? More than you might think.
Maybe you can't bear to part with that pair of Jordache jeans from your senior year in grad school. You perform calisthenics to pull them on and convince yourself they "still fit." It's only your wife who tells you otherwise.
When you hire an outside accounting & bookkeeping company, our staff will act as that loving wife, pinpointing the business expenses that are no longer a "good fit" for your company. You control the purse strings. The final call is always yours and you sign off on every check. But our staff can see what you may be too close to see. We'll offer honest cash flow analysis to see the areas you can really cut corners without hurting your commitment to quality or your bottom line.
Most importantly, with bookkeeping and accounting tasks out of the hands of your staff — not to mention the burden of training and managing bookkeepers, you'll be able to do your own cash flow analysis from a more long-term perspective. You won't be reacting to outside influences, but creating the future of your business by focusing on the projects that offer the best ROI.
You can hang on to those old Jordache jeans for a few more years if it makes you feel better. But now's the time to make that positive change in your business expenses.
When Small Business Expenses Are Not Small, At All
Do you consider yourself an SMB? You may have heard that term a lot, especially on the Internet, but what exactly does it mean? No one knows for sure. What it comes down to, really, is that if you consider your company an SMB (small- to medium-size business), it probably is. But even if you don't think of yourself as "small" or even mid-size, you may be, by the revenue standards of the top Fortune 500s.
The SBA (Small Business Administration) uses a 40+ page brochure to define the term "small business" or "SMB" in various industries. A general rule of thumb is that businesses with fewer than 500 employees are "small businesses" and businesses with fewer than 1,000 employees fall into the SMB classification.
However you define yourself, when you look at your cash flow analysis, we doubt you view your monthly "small business expenses" as small, by any means. Rent, utilities, employee salaries, professional dues — possibly even manufacturing equipment, maintenance ... plus sales and marketing costs and more. Where can you reduce your monthly expenses and still provide the same quality of service to your customer base?
Outsourcing certain departments, including your accounting and bookkeeping services, through a virtual firm is one way to reduce small business expenses. You'll save on:
Why not contact AccountingDepartment.com for a free price quote?
Understanding the Different Types of Business Expenses to Manage Expenses Better
You can cut costs significantly by evaluating your daily, weekly and monthly business expenses and finding ways to save money. Just as with your household budget, there could be areas you could spend less.
Here are some areas to consider when you evaluate your business expenses through a profit and loss analysis.
Be careful when you spend time looking for ways to cut business expenses not to be "penny-wise and pound-foolish." Does it pay to shop around for the best prices on office supplies when you're throwing away thousands of dollars on magazine advertising that's not showing any ROI?
A careful profit and loss analysis will show you ways you can really cut business expenses, without hurting your bottom line or having your employees feel as if they have to beg for sticky notes.
Questions to Ask When You Choose a Daily Bookkeeping Firm
Are you looking for an outside bookkeeping firm to handle your daily bookkeeping & controller needs? Has your company grown so rapidly you don't have the time to train new monthly bookkeeping staff — or the space to hold them?
A virtual accounting & bookkeeping firm that provides daily bookkeeping & controller services could be the answer. But how do you find a reputable company? Here are some questions to investigate.
These are just a few of the questions to ask before you hire a daily or monthly bookkeeping service.
Three Reasons to Stick with a U.S.-based Firm for Daily Bookkeeping
When many people hear the word "outsourcing," they think of virtual services (like virtual assistants) who operate from other countries — often countries where the U.S. dollar goes a lot further than it does here. Some businesses hire a virtual assistant from another continent for $200 for an entire month to answer their emails. But that's email — not daily bookkeeping, profit and loss statements, or tax information.
Here are three reasons to stick with a U.S.-based daily firm, who hires trained bookkeepers and certified accountants knowledgeable about GAAP and U.S. tax laws, to manage your company's daily and monthly bookkeeping tasks.
Can Deferred Tax Accounting Cut Your Variable Expenses?
There are many ways to cut your company's variable expenses with careful budgeting. One variable expense is your quarterly taxes. Deferred tax accounting is a commonly accepted practice, recognized under GAAP, to reduce your tax liability within a quarter.
To accurately calculate and report deferred taxes, your daily bookkeeping records must be accurate and up to date. If you've faced challenges in your current accounting department with high turnover rates, long learning curves when it comes to bookkeeper training, or simply an overworked bookkeeping staff, a virtual bookkeeping service can help.
If you're using deferred tax accounting to minimize your tax liability and reduce variable expenses, a virtual bookkeeping firm will work with your tax preparer or individual auditor to ensure the data is presented correctly.
Because AccountingDepartment.com uses an Application Service Provider (ASP), all your bookkeeping data is stored securely on servers. This helps create a "paperless office" where bookkeeping data, including all the information necessary for deferred tax accounting, is readily available for authorized personnel to access at any time, from any computer with Internet access. In addition to the enhanced security of cloud computer, there's no chance that sensitive files will be left on a desk for unauthorized personnel to see, or thrown in the garbage where they could open your company up to risks of theft and identity fraud.
Deferred tax accounting requires accurate, easily accessible financial records. If this has been a challenge for your business in the past, AccountingDepartment.com can help.
Accurate Daily Bookkeeping Procedures: The Key to Financial Success
How accurate are your current daily bookkeeping procedures? How did your company do on its last accounting audit? If your bookkeeping staff is overworked or underqualified — or if you have frequent turnaround that causing you to waste time hiring and training employees, a virtual bookkeeping firm may be able to help.
One thing it's important to understand: the key to effective daily bookkeeping procedures is based in accurate daily bookkeeping. Accurate bookkeeping records on a daily basis make it easy for your bookkeeping staff to generate monthly reports.
A virtual bookkeeping service offers several advantages when it comes to daily bookkeeping procedures:
When you hire a virtual bookkeeping service, what should you expect in terms of daily bookkeeping procedures? A daily bookkeeping service will handle:
When you use a virtual bookkeeping service for your daily bookkeeping procedures, you'll have access, via fax, mail or email, to all your relevant records, including bank statements, payroll statements, credit card statements, invoices, and any other material you specify.
Can a virtual bookkeeping firm help you streamline your daily bookkeeping procedures and save your company money?
Can An Outside Accounting Firm Help You With Revenue Forecasting?
Revenue forecasting includes complicated formulas that take into account a number of factors in your business, including:
In many cases, you might think revenue forecasting is wholly the domain of your bookkeeping and accounting departments, but by taking an active role in this process, you'll be in a better position to make better marketing decisions for the company, guide your sales team to greater success, and even determine which products or services should be cut from your offerings. Additionally, you can set more active sales goals, based on reality. Your sales team will see the possibilities for achievement and it may even give them the drive to help the company surpass those goals.
Virtual Bookkeeping Services Can Help with Revenue Forecasting
Accessing that information easily may be another challenge you face in your current accounting structure. The virtual bookkeeping services at AccountingDepartment.com puts all the up to date information, including monthly expenses, profit and loss statements, and projections, in an easy-to-read format, online, for you to access 24/7 from any computer with Internet access.
You can also easily extract and share specific information with relevant personnel to help in creating a marketing plan, evaluating sales goals, or simply motivating key management team members.
If you've never had a virtual bookkeeping firm help with your revenue forecasting, now may be the time