Accounting

One of the important requirements for business is profit. Profitability is a top concern for all business owners. In the financial statement reporting, revenue is always on top of the list so owners can immediately view the profitability of a certain business. Nevertheless, revenue is not the net income since various expenses are deducted from the revenue which leads to net income. Another item that cannot be included in the declaration of the revenue is the sales tax. A sales tax is generally known as a tax that is imposed either by the state or the local government. Sales tax is often a percentage of the sales price .For example, VAT or value added tax is a form of sales tax. When one buys a pack of chocolates for $30, then a VAT of 10% is imposed The 10% which is equivalent to $3 is remitted to the government. When recording sales tax into a company’s books, two different approaches can be applied. First, it is possible to reflect it as Sales Tax payable.

The second approach is to put it under Sales Revenue which can be transferred later to Sales Tax Payable. No matter what approach the bookkeeper records the sales tax, the important thing is that the amount is remitted to the government on time. Computation for sales tax is part of the training of an accountant although this task can be complicated for companies that have many types of products which have varying sales tax. Another issue to consider when computing for sales tax is the fact that there are numerous updates for tax rates, tax returns as well as tax law that even a tax specialist would devote much time and effort to compute for sales tax. Imagine utilizing a whole department of accountants working tirelessly just for sales tax computation. A highly advisable solution is to outsource accounting for sales tax computations to firms that specialize in this services.

There are many private firms that offer comprehensive range of services such as Sales and Use Tax compliance, Tax Compliance Overview, Manufacturing Tax Compliance and Tax Rating. Moreover, the service offered is bundled with a corresponding software that can be installed in a company’s system. The software even contains a module that subscribes to the current tax rates of different states to keep the company updated. Indeed, accounting for sales tax should not be a burden when specialists are sourced out.

There are many accounting services that growing companies need so they can focus on the core competence of their business. A manufacturing company can attend to its operations and administration if they are not burdened by their accounting nitty-gritty. For this reason, it would be beneficial to resort to accounting outsourcing. Accounting outsourcing is a type of business product outsourcing wherein the services needed ( in this case accounting ) is given to another company to perform such activities. If a manufacturing company is too overwhelmed by accounting services, then it can outsource to another firm which can do the following: bookkeeping, auditing, tax services, and external audit. There are many benefits to accounting outsourcing which can enhance the efficiency of a business no matter what size it is. One of the advantage of accounting outsourcing is that the company would be able to save on labor costs since there is no need for a whole accounting department to do the record keeping, posting of journal entries, transactions, and recording vouchers. This also translates to lesser taxes that the company has to pay since it would not be hiring its own employees for such section.

Another advantage is that there is no need for overhead expenses since the workers are virtual. Less office space means less consumption of electricity that is really cost-efficient. In a way, the operations would be much efficient since the owners can focus on more important tasks such as planning and administration. In addition to this, the human resources would have lesser tasks to perform since they just need to supply the accounting service pertinent personnel information. Along with accounting outsourcing, it is also possible to include in the package payroll processing. Most online companies lead to accounting sourcing since all they want is to deal with customers on the front-end. The back-end would be handled by accounting services so that customers can be given full attention. There are thousands of firms offering accounting outsourcing services at reasonable packages suited to the needs of a certain business. Sometimes the package depends also in the volume of records that would be processed by the firm. Generally, accounting outsourcing can handle the basic bookkeeping to the more complex external auditing required by the firm.

Nevertheless, the most important benefit of accounting outsourcing is not just cutting costs but focusing on the core competence of the firm. By doing so, customers are satisfied and profitability increases.

If there is one department or division of business that always have its hands full of work, it would be the accounting section. Large volume of transactions is conducted daily in this department as payroll, payments, billing, and other financial services are processed repetitively. This translates to hiring more people just to do simple bookkeeping and paying for additional man hours. At the same time, a bigger space is needed to keep an inventory of all documents pertaining or related to accounting transactions. Most business get trapped into devoting time and effort to these tasks that they lose track of other more important concerns such as operations, administration, marketing and sales. Unless your business is financial in nature, there is no need to be burdened by accounting transactions. There are companies that offer accounting services which can aid a company in sticking to its knitting. In the US, close than half of businesses get their accounting services from accounting providers that are very professional. As an overview, business owners need to be good in getting an accurate picture of the financial statement. This statement can make the owner realize many things such as what part of the operations is becoming too costly or if the company would be profitable enough to make it. In fact, components of the financial statement are reflections of accounting transactions. Accounting services also differ in categories depending upon the needs of a business.

Categorically, the four types are: accounting tax services, accounting auditing services, accounting bookkeeping services and internal auditors. Some companies or entrepreneurs only need the tax services for the preparation and submission of tax forms. The auditing services is required by public companies for they need to be transparent in their financial statements. Small business owners can be aided by bookkeeping services so records would be organized since once the business grew bigger, it would be hard to audit the company if the records are disorganized. Lost receipts, vouchers, misplaced documents cannot be included in the audit. Expenses would be unaccounted for and the owner is at a loss of where the capital went. As for auditing services, this is type of accounting service is good for confirming the accuracy of internal records and transactions. Even small business owners need to conduct audit at least every two years. The important thing to remember is that a business must analyze first what type of service would really benefit the company since not all business are the same.

Nowadays, companies are busier due to the numerous transactions it has to accomplish in an 8 hour period. Employees, specifically those who process payroll, can be overburdened due to the large volume of salaries that must be computed. Timely submission of payroll costs to the finance department is crucial in releasing the salary in time. Late salary is de-motivating to workers and affects productivity. Even small business owners with few employees need to establish a good payroll system since many details such as overtime can be overlooked. For this reason, many companies nowadays procure an accounting software that eases the burden of preparing the payroll. This type of software is not complicated to use since it is already an application like excel spreadsheets. It is considered an information system, a type of database that also executes functions like computing. There is no need to learn a programming language, just a quick orientation on how to use the software. Normally, accounting software can record normal transactions such as payroll (salaries, taxes, wages, deductions), accounts payable, accounts receivable and trial balance. By using an accounting software, daily transactions become more efficient since the billing statements, checks, vouchers, purchase orders, and receipts are automated. The only thing that must be ensured is the input of accurate figures which already depends on the user. Aside from enhanced efficiency in transactions, an accounting software can also enhance record keeping by getting rid of manually preparing journal entries to be posted in the general ledger since these are automatically updated upon inputting information from related reports like purchases, sales, payment of expenses and the like. Another benefit of using this software is that man hours can be reduced thereby cutting costs on overtime which brings less labor costs.

The accountant can focus on more important tasks such as reports and updates on bank statements. There are many types of accounting software that can be prepared according to the business requirements; however, most software covers basic accounting transactions needed even by large business. This accounting software can be developed in-house by programmers which is tailored fit to the unique transactions of a corporation. For smaller business, several brands of accounting software can be purchased. It is also possible to modify third-party software to better suit the needs of a small business. In this age of technology, products such as these software help business owners make time for more important tasks.

The accounting industry is dynamic even with the occurrence of economic downturns in some parts of the world. This can be said since new businesses are being established everyday requiring the services of an accounting professional. There have been projections for an increased demand for accounting professionals such as bookkeepers, auditors, accountants and tax specialists in the next 3 to 5 years. So much is the demand that an additional 20% on top of the existing practitioners would be needed.

Annually, accounting trends vary as brought about by government regulations, advanced technology, new laws, tax season and new business that are set-up. Numerous accounting software makes tasks more bearable for bookkeepers but there is still a need for different accounting professionals. First, tax issues are important to a business and there is always a need for a tax specialist. Filing of IRS and other tax reports must always comply with the latest state and federal regulations. Also, accountants that are knowledgeable in advance accounting software are needed since technology adds efficiency to the mundane and routine tasks in accounting. One of the current trends in accounting today is the availability of online services that can handle multiple transactions for a company. There is also the trend of doing home accounting so one can keep track of expenses incurred by a household. Different software for personal or home accounting can be bought in the market which helps income earners to be more cost-efficient. Firms prefer accounting professionals who are familiar with enterprise resource planning and posses soft skills in negotiating and interpersonal communication. Gone are the days that accountants are huddled in one corner doing paperwork. The new breed of accountants are not only figure savvy but also good in making presentations. Another accounting trend that must be considered is the changing landscape of hiring global workers.

Business process outsourcing had become so popular since a company can save on costs by hiring virtual workers in the global marketplace. The basic requirement for those who want to get projects is to update one’s self with different accounting procedures such as GAAP or IFRS to adopt to the country that needs such reports. The trend is leaning towards IFRS which has been adopted by more countries nowadays including India and China. In addition to this, an accountant that possess good skills in the use of spreadsheet applications for accounting has a definite advantage.

Everyday millions of families buy food, go shopping, avail of services such (salon, massage, entertainment) , eat out – which can be summarized by one activity: spend money. While it is true that most families have dual breadwinners still there is always shortage of money. Could it be that the income is not enough? Probably but even families with high-income complain of not having enough. The problem then is not the income but the budget. Generally, a budget is a plan which is reflected in value (money). A homemaker (who usually manages the budget) spends money as soon as she receives it from the husband’s salary. The money received can be considered receivables. The first thing that is usually done is pay bills, utilities, credit cards, insurance and other payables. It seems a routine task but what happens actually is the process of home accounting. The terms may be different in general accounting since there are no vouchers nor entries at home but there are definitely receivables, payables and budget. In the past few years, more people (especially the breadwinners) have utilized the advantage learning home accounting. It is not really a scientific procedure but rather a more objective way of seeing how money gets spent in a household. Home accounting involves preparing a budget, listing down all payables as well as receivables, and recording all transactions made.These transactions can be in the form of paying bills or even purchasing items in a grocery.

Indeed, home accounting tracks down exactly where all the money went including the pennies. This might seem rigorous at first but it definitely pays back in the long run. First, planning a budget makes the members of the household get conscious about their spending habits. Once a budget is set, there is not much room for a splurge on some luxury items since it will affect other expenses. People who would do home accounting for the first time would be surprised how money is spent unwisely on sale items that were not even used. Second, the value of delaying gratification will be instilled in family members. There would be a deeper appreciation of the value of money aside from just being a commodity.

Lastly, one can make decisions about the future since there is an concrete overview of resources available. Indeed, home accounting benefits not only the planner but the whole family as well.

The majority of health professionals today have very little time to get involved with business concerns due to the numerous responsibilities towards patients .However, it cannot be denied that being a doctor or a hospital administrator, there are business skills that must be learned such as medical accounting. Generally, accounting matters such as bills to pay, payments that are to be received, accounts due and even signing of checks must be dealt with even by a medical professional. A doctor must be on top of his own finances lest all hard-earned money would just be lost since no transactions were recorded. Unfortunately, doctors and other health care professionals need to be more focused on delivering health services to their patients; however, they must not also neglect their administrative duties over a clinic, hospital or just their own finances. One of the possible solution for this situation is to get a copy of the Accounting Handbook for Medical Practices which gives a comprehensive overview of accounting procedures suited for a medical professional. This manual provides a wealth of examples of charts, accounting formulas, and forms that enables doctors to grasp the fundamentals of accounting. Moreover, the handbook covers basic information such as general rules in accounting, sample case studies, tax issues, auditing and even breakdown of financial statements. Knowledge in such matters equip health professionals such as doctors, hospital administrators, hospital or clinic personnel and medical accountants to make them more responsive to their daily transactions.

Another option that is convenient and time- saving is to outsource medical accounting to private firms that offer medical office management. Such firms have specialized in medical accounting procedures and are well-oriented in taxation for medical professionals. Firms offering these services have one goal in mind: to furnish reports and analysis to health professionals about their financial health. Since doctors are busy most of the time, they could not trace anymore their spending. By consulting with medical accounting services, concerns such as tax planning, bookkeeping, cash flow, and IRS representations are already handled well. Moreover, these firms also provide medical accounting software that can be easily installed. The medical accounting software can be purchased and directly installed in offices so medical billing is made easy especially when there is a huge volume of transactions daily in clinics /hospitals. Moreover, the software also contains medical records which makes record keeping a breeze for personnel.

All over the world, different countries vary in their general accounting procedures since each nation has its own financial framework. Although there had been an agreed GAAP – Generally Accepted Accounting Procedures, each country requires a certain type of financial reporting from accountants. Some countries follow GAAP but more developed countries prefer International Accounting standards (IAS).Each country has a unique political and social climate which affects the government. The government is mainly responsible for issuing regulatory policies that would provide guidelines for accounting reports and practices. International accounting exists because the financial transactions of a developed country is more complicated than that of developing nations. Some set of information for one country may not be relevant or applicable in another country’s finances. For example, Japan has developed an intricate accounting framework that is not easily understood by accounting practitioners from some parts of the world. History may also influence the accounting procedures of a nation as countries like US adopted some of its practices from Germany as a result of the war. Nevertheless, there is a need for countries to have a clear guideline for accounting reports that is why the International Accounting Standards have been established. The IAS contains a set of standards that states how some accounting transactions should be reported and reflected in financial statements. This helps companies such as multi-nationals and trans- nationals that deals with different countries for their products to consolidate different types of accounting reports. Also, countries that meet and discuss business regulations can establish and analyze financial transactions coming from one point.

The IAS was formerly issued by the Board of the International Accounting Standards Committee (IASC). Later on, a more updated set of standards was released in 2001 and this is now recognized as the international financial reporting standards. It must be emphasized that IASC provides guidelines for its member countries but cannot impose members to comply with the set standards. It is just an agreement between countries to report in accordance to what has been set by IAS for publicly-traded companies. A better understanding of international accounting can gained by reading books that covers introduction to international accounting. By reading such books, one is guided properly in learning why countries differ in accounting practices and the extent of government regulations in establishing financial reports. International accounting standards and its benefits over GAAP is also explained so readers can compare the advantages of both procedures.

Payroll Accounting is a type of accounting that mainly focus on recording payroll transactions which every employer should be knowledgeable of. All companies have people that work for them; thus, these people get paid for rendering service to the company. Generally, payroll is defined as the amount of money that employers need to pay their workers set a certain period of time Aside from salary or wages, payroll accounting is concerned with fringe benefits and taxes. Payroll accounts are reflected in the report of the incomes statement since payroll is considered a cost. Payroll costs covers the amount of actual cash paid given to the employees and the amounts withheld such as taxes and health contributions that are voluntary. Salary computation includes overtime pay as well as bonuses and commissions to workers specifically those who conduct sales and promotions. Payroll accounting also covers the computation of taxes and other costs such as state income tax, federal income tax, Medicare (or other voluntary healthcare contributions), and Social Security. In addition to this, most regular employees are entitled to vacation leave, sick leave, insurance (dental , disability , life) , retirement plans, and profit-sharing plan as stated on the company contract. The company can also have voluntary withholdings such as union dues, charitable contributions, 401 (k) contributions and payments that the employee owes to the company for buying a company item. It is also possible that court ordered withholdings be deducted from an employee’s salary (i.e. child support).

The payroll master must be in touch with human resources manager so record the various benefits a certain employee might have; besides, personnel records are source of information for the payroll processor. Payroll professionals are also required to be organized in their record –keeping since there is numerous information about an employee that must be recorded. This is quite a big task since corporations have as much as a thousand employees. In such cases, a whole payroll department takes care of payroll accounting. It must be emphasized that payroll accountants be constantly updated with the latest state or federal regulations regarding taxation. There are also withholding tax exemptions that can be factored in payroll accounting when computing for salaries and wages. Indeed, payroll accounting covers a lot of aspects for business owners. Simple solutions can be in the form of outsourcing the payroll or purchasing a payroll software that would make payroll accounting easier and more efficient.

Daily, thousands of businesses around the world are set-up in the hope that these business would make profit and deliver services to the market. Entrepreneurs get involved in all aspects of the business set-up such as getting a license, registering the business name, promotions, networking, and even hiring employees. Most owners get so excited by the image of their business that they spend more time on creating an image, designing a logo or even doing a door-to-door campaign in the community. Although these activities contribute to the start-up, they are not as important as setting up an accounting system for the business. Why is small business accounting important? There are many good reasons why an entrepreneur must pay attention to this aspect of the operations because for the first obvious reason: money is the medium of exchange.

No matter what service or product a small business offers, there is a need to transact with money either through buying or selling. Even if one’s signage or business card is impressive, an entrepreneur without a concrete understanding of small business accounting would not survive the competition. It must be remembered that the first requirement of a business is profit since without it, the business would die. Having a business no matter how small has its expenses such as utilities, salaries, and even promotions. It is highly advisable then to learn small business accounting which is actually very basic in order to keep your business running and growing. A good entrepreneur would take time to sit down and crunch numbers. There is a need to draw a budget, which is actually a plan in quantitative format. It is basic in small business accounting to distinguish which type of accounting method one would use for the business. One can choose accrual or cash accounting.

According to Investopedia cash accounting is recording the receipts once a sale is received. This is a simple way of updating records. On the contrary, accrual accounting is recording only revenues or expenses once they are incurred. Some state regulations suggest the accrual method since this type can give you an overview of the financial health of the business. Another important skill that must be learned in small business accounting is bookkeeping – that is recording transactions. If the owner can afford to hire, this service would be efficiently done by a bookkeeper. Following the aforementioned steps would help a new business gain solid ground.