By Jeremy Tweddle
Wednesday, February 28, 2018
Whether you will be starting a small or large venture, one of the important tasks that you have you do is to set up a business bank account. Although you may think this is just an additional task that will eat up your time and may even be unnecessary (since you have a personal account you can use), having a business bank account can be really advantageous, especially for your start-up company.
One of the important reasons why your company should have its own account is that even if your venture is a sole proprietorship, an official business bank account makes it easier for you to keep your business expenses separate from your personal ones. Also, having a separate account will make it easier for you (or your accountant) to compute and pay the necessary taxes for your business. Lastly, a business bank account can help make your company look more like a genuine, professional business as opposed to a small and possibly untrustworthy operation.
If it's your first time to open a business bank account, below is a guide and some helpful tips that can help you with the whole process:
1. Be on the lookout for any specials or promos offered by banks, both local and commercial ones. There are many banks today that offer cash bonuses, fee-free credit card transactions, and other incentives to attract new business customers. Take advantage of these offers so that you'll gain greater flexibility and save more money that you can use to invest in the operation of your business.
2. If you already have a personal checking and savings account, visit your bank. Ask the representatives about the business bank accounts they offer. You may be able to get a better deal by keeping both your personal and business accounts at the same bank
3. Ask the bank representative for a rate sheet that shows the current interest rate on business checking and savings accounts. If you plan on keeping a huge balance in your business bank account, earning some interest will be a really nice perk.
4. Select a business account that meets your requirements. Choose an account that won't charge you maintenance fees or per-check charges. In addition, make sure that you will be able to meet the minimum balance requirement to avoid incurring service charges.
5. Once you have opened your business bank account, wait a few days for the funds to settle in your new account. Check the balance to be sure that your initial deposit has been credited. Get in touch with the bank if there are any discrepancies with the initial deposit or if you have not received any account paperwork within a week of opening the account.
Read more tips about opening a business bank account here.
By Jeremy Tweddle
Saturday, February 24, 2018
Balance sheet, or Statement of Financial Position, forms one of the financial statements (the others being Income Statement, Statement of Cash Flows, and Statement of Stockholders' Equity with Notes accompanying them) that shows the position of business at one particular point of time its assets and liabilities as well as the capital. It gives the figures for assets including current and fixed assets, liabilities including current and fixed, and equity or the amount contributed by shareholders plus retained earnings (or losses, as the case may be).
Unlike income statement, another of financial statements, which shows the fiscal performance over a period of time, balance sheet, is a picture of one particular period of time. While both can be prepared for any duration (or for any time), normally they are made at the end of the financial year. It is obligatory to do so as decreed by legal requirements, including submission to tax authorities. Accounting standards also require that balance sheet is prepared that accurately reflects the financial position of the business.
The balance sheet is the last of the statements to be made; the steps in accounting after this are its interpretation by the management. While this alone does not suffice, information's, ranging from the addition of (or reduction of) working capital - in case current assets is lower than current liabilities (or vice versa), knowing the net worth of the business, determining future sustainability, calculating dividends to be distributed to the shareholders. Employees can also be adjusted according to the decision generated.
It has other users in addition to tax authorities and the management; public as well as investors and creditors who have no other document to rely on, can assess the health of the business, its liquidity through its perusal. They can see whether the business can meet its obligations by what it owns. The issue of to or not to invest in the business can be solved with a look into it.
Of course, there are notes accompanying the financial statements. Moreover, these too should be consulted in case there are any financial information relevant to existing and prospective investors, as well as lenders, and other creditors to help decide about resources of the entity. Accounting applications help in making balance sheet. The process follows from the earlier stages of journal entries that are made, a ledger that is prepared and trial balance that is tallied. In all the stages, the accuracy of entry is ensured so that there is no hassle while preparing it. This also helps in reducing employees needed to prepare it, thus freeing the manpower to do other important issues.
Management can see the financial position of business without having to wait for the end of the financial year thanks to a feature in apps that can swiftly show the state of business at an instance of time with some giving option of the real-time balance sheet. Comparison of past years' (or past period) record is also made easier when using applications.
By Jack T Parker
Wednesday, February 21, 2018
1. Money Habits
Do you pay 10% into your IRA and 401K as the first thing you do when income arrives? Or do you pay the debt collector first before any other consideration? Do you spend all of your money trying to make your small business profitable as the only priority?
2. Money Mindset
Do you focus on increasing your assets and your return on investments through smart strategies, in addition to earning a good income? Or are you hyper focused on improving your FICO score and keeping the debt collectors happy? Or do you spend most of your time and money networking in local meetings and attending marketing seminars to try and drum up more business?
3. Plan for Escaping the Rat Race and Living the Rich Life
Have you adopted the Thrive Budget, Modern Portfolio Theory, easy-as-a-pie-chart nest egg strategies and the 3-Ingredient Recipe for Cooking Up Profits? Or are you clinging onto investments that have lost value, praying for a Hail Mary miracle that erases your losses and achieves unbelievable gains, and borrowing money to stay afloat in the meantime? Are you so afraid of the idea of investing that you invest only in yourself and your business, but get tempted to buy gold because that's what everyone else is doing?
4. Health, Health Insurance and Health Savings Accounts
Do you have a high deductible with health savings account that you manage for 10% ROI? Or, are you stressed out all of the time, worried about your health, angry at all of the ways you are being eaten alive by bills, and paying an arm and a leg for health insurance because you have to? Or, do you spend most of your "extra" money on fun and pleasure instead of health insurance? Are you uninsured?
5. Outlook on Business
Do you work hard, course correct, adopt best business practices and keep work and family and home life separate? Or are you so worried about your finances that you are crabby with your family and draining your life savings to try and hang onto everything, including a failing business or investment? Have you borrowed from family and friends to buy another self-help seminar or online marketing course?
6. Outlook on Life
Do you take responsibility for your fiscal health? Or do you feel like a victim? Or are you just perplexed as to why all of your Law of Attraction seminars ended up costing you so much money, instead of bringing the riches they promised?
Once you understand how your thinking has trapped you in a cycle of over-spending and debt, you can start planning and acting more like an investor who is taking ownership of her life and is determined to get financially free. You will shift out of debt consciousness and into prosperity and abundance. Out of victim mentality and into ownership. Out of trying to appease the credit card companies, banks, debt collectors and others who hound you for a payment, and into a workable Debt Management Plan that allows you to contribute to your own Retirement Plan and basic needs, while you pay off debt on the best possible terms. You will transform out of depression, disgust, rage and/or helplessness into being a conscious creator of your world and our world at large.
When you a business owner and struggle with papers, try ginstr business apps and save time and money.
By Tom Kucharski
Saturday, February 17, 2018
The Canadian Balance Sheet shows the financial position of an entity which is why this statement is commonly referred to as 'The Statement of Financial Position." The first key point to note is that the balance sheet is prepared to show the company's position at a specified single point in time (Example, as of December 31st, 20xx) whereas other financial statements such as the Income Statement are reported to show the company's operational performance for a specified length of time such as, "for the year ended December 31st, 20xx." In this example, the income statement is said to cover an entire year from January 1st - December 31st which is also known as a calendar year-end.
Furthermore, the balance sheet consists of three important elements to consider. It reports the balances of all assets, liabilities and equity accounts for the company. It is critical to understand the fundamental accounting equation in the preparation and presentation of the balance sheet where Assets = Liabilities + Equity.
- Assets: contains all resources that the company owns at the balance sheet date. This includes both current and non-current assets that the company utilizes in order to generate future economic benefits. The most common current assets listed on the balance sheet includes cash, accounts receivable and inventory which are resources that are anticipated by management to be converted into cash within a year or the entity's operating cycle, whichever is longer. Accounts receivable is simply the amount of money owed to the company by its customers which is generated from the sale of goods and services on account. Non-current assets, therefore, contains all resources owned by the company that have a useful life of more than one year. These assets are often referred to as Capital Assets which include equipment, buildings and land. Notice that all assets mentioned thus far whether current or non-current can be classified as Tangible Assets which contain physical substance. However, the balance sheet also presents Intangible Assets which are reported as non-current capital assets as well, since they have a useful life of more than one year but do not have any physical substance such as goodwill and patents. The sum of the current and non-current assets will equate to and be reported on the balance sheet as Total Assets of the company.
- Liabilities: represents the claims against the company's assets that have not been paid at the balance sheet date. Therefore, they are obligations to the company's creditors. Just like assets, liabilities are subdivided into current and non-current. Accounts Payable is a frequent account that can be seen on the balance sheet and is essentially the direct opposite of the accounts receivable balance. While accounts receivable are amounts owed to the company from a customer sale on account, accounts payable are amounts owed by the company to its creditors arising from purchases on account both of which are either expected to be collected or paid typically within 30 days. Non-current liabilities represent obligations that will not be settled for more than one year or the company's operating cycle, whichever is longer. Long-term liabilities (non-current) found on the balance sheet include long-term bank loans and notes payable. The creditor's claims against the assets can be seen by examining the fundamental accounting equation stated above where the entity's assets equal the creditors' claim which represents liabilities plus the owner's claim of the assets representing the company's equity.
- Equity: according to the fundamental accounting equation if we rearrange this to solve for equity, one can conclude that Equity = Assets - Liabilities. Upon closer examination, it can be clearly seen that equity represents the value of a business after liabilities have been reduced from the company's assets. Often equity is referred to as the residual interest of a company. Also, it is important to note that the creditors' claims to the assets are always settled first before the owner's claim can be realized.
Presentation Example for the Statement of Financial Position
ABC Company (COMPANY NAME)
Statement of Financial Position
As at December 31st, 20xx
Accounts Receivable 1,000
Total Current assets $7,000
Total Non-Current assets $82,000
TOTAL ASSETS $89,000
Accounts Payable $3,000
Wages Payable 1,500
Total Current Liabilities $4,500
Lease liability 1,000
TOTAL LIABILITIES $5,500
OWNER'S NAME, Capital 83,5000
TOTAL LIABILITIES AND $89,000
The above illustrated example for the statement of financial position shows various key features. The heading indicates the name of the company, clearly indicates what type of financial statement is shown and what period it is covering. Furthermore, the statement of financial position is visual a representation of the fundamental accounting equation. The left side of the statement represents assets which is also the left side of the equation. The right side of the statement represents liabilities and owner's equity which in turn captures the right side of the equation. As a result, the statement of financial position is perfectly balanced only when total assets equals total liabilities and owner's equity.
After examining the above illustrated equity section of the balance sheet and noting the name of the company reporting the statement, it is important to recognize that the form of organization in this example is that of a proprietorship and not a corporation. The difference in the balance sheet reported by a proprietorship and by a corporation lies primarily within the equity section. In a proprietorship, the owner's capital includes the initial investment in the business, net income (profits) or net loss (losses) and is reduced by any drawings (withdrawals made by the owner for personal use). However, in a corporation, these amounts are split up into two common accounts: Contributed Capital and Retained Earnings. Contributed capital also known as share capital represents the investments made by the shareholders' of the corporation. Retained Earnings is the cumulative income/loss amounts of the corporation since inception and also includes all dividends paid out to the shareholders. Dividends are similar to drawings in that they both reduce the equity account since they are distribution of equity payments to the shareholders' or the owner respectively.
Wednesday, February 14, 2018
When it comes time to completing your tax returns, you may find yourself in a cold sweat and not knowing what to do. Maybe you have heard of tax accountants, but aren't sure exactly what they do or whether you will actually benefit from making use of their services to help you or your company manage your tax year after year.
Most tax accountants will work with private individuals and companies of all sizes. While the outcome remains the same to help their clients manage their tax effectively, how they handle the two clients is completely different and requires different solutions to ensure their clients always meet deadlines with accurate returns that the client can rely on and trust.
Most tax accountants are independent contractors, so they don't work for your company or for you personally, but when you need their services you can call on them. The benefit to this is that you only pay for the service as and when you need it. In most instances you will be charged an hourly rate, so having your paperwork in order and ensuring you provide the tax accountant with everything they need, can reduce how much time they need to spend on your particular tax job, which can help reduce your costs moving forward.
One of the things a tax accountant will do for you is to manage your tax preparations. They will collect all the relevant information they need from bank statement to income reports to expenditure receipts and more. They will collect the information, capturing it into a system, so that they can provide the tax office with accurate information, so you only pay the tax you need to pay.
The tax account will focus on lowering your tax obligations. They will look for information and data which can reduce the amount of tax you pay. Ensure you keep every receipt, this way they can prove your expenditure and income and work on ways to reduce your obligations now and in the future.
They will fill in your tax return for you. While you may think a tax return cannot be complicated, you want to ensure it is filled in accurately with absolutely no errors. It is so easy to make a mistake on these forms and it doesn't matter where you are in the world. A tax accountant has completed thousands, if not millions, of tax returns, they know how to fill them in, which reduces the risk of human error, ensuring the information you supply is accurate and up to date.
The tax accountant will ensure your tax returns are submitted on time and without delay. This reduces the risk of you being fined any penalties for late submission. This can give you peace of mind, help you relax and know that your tax is taken care of. You can concentrate on other elements of your life or business, not having to diarise the dreaded tax return submission date.
For companies, the tax accountant is also responsible for preparing your ledgers to ensure that they are accurate and up to date. When you have accounting employees in-house it is easy for errors to take place, we are all human. The accountant will go through the ledger, look for mistakes and ensure that they are accurately completed to make your tax return a quick and easy process.
The final thing you will find a tax accountant can provide is that they will offer essential advice. They will help you reduce your tax obligations now and moving forward.
Balanced Business Accounting is a dedicated team of professionals providing assistance and monitoring customer's financial positions. This well-established Brisbane based company offers innovative accounting solutions to customers throughout Australia on a daily basis. The company are members of the Institute of Chartered Accountants and have structured their business to provide their customers with superior service and support at all times. Balanced Business Accounting offer a host of business services from financial planning to taxation and audit services to online software solutions and so much more. To find out more about BBA, visit....
By Matthew M James
Saturday, February 10, 2018
A bank is one of the most reliable partners any business can have. Regardless of its size, any organization will benefit greatly from many of the services and solutions provided by banks such as loans, letters of credits, guarantee letters, etc.
The advantages you can experience from a bank though will depend greatly on the financial institution you will choose. This is because aside from the benefits they offer, some banks will have features that will also help businesses in various ways.
Below are some of the important banking features you should look for when opening a business bank account:
Online banking. Online banking is a key feature that all business owners should look for. Busy small business owners can save a lot of time by using online banking for paying bills, doing bank transfers, checking balances, and even accepting payments. They or they employees won't have to spend time going to the bank and waiting in line for doing these. Most banks today offer this solution for free and when opening an account, just make sure the institution offers a safe and secure online banking service. Its website should not suffer from regular glitches and has a good and reliable loading speed.
They have little to no monthly fees. If you make the mistake of opening a business bank account that come with monthly fees, a portion of your hard-earned money will simply go to paying for these fees. To make sure you will enjoy this service, find out what this free banking offer includes. Check if each transaction is free no matter what the balance in your account may be or if there a minimum balance requirement. You would also do well to find out if printed checks for the account, cash deposits, and cashing checks are also free. Don't forget to ask about ATM fees, debit cards and bill payments as well, especially if these are services your business needs. Choose a bank and an account that includes all of these for free.
The authority of the local branch to grant loans. Lastly, most businesses need some extra funds from time to time to keep things flowing smoothly. You can plan for any unexpected credit needs by choosing a bank that allows branch personnel to make credit decisions in the local branch instead of always referring to their main office. This is a free feature that can be a really valuable convenience for business owners who may need money in a hurry. With this feature, you won't have to wait for weeks to receive the approval of an emergency loan you applied for which your business really needs.
Read more about opening a business bank account here.
Wednesday, February 7, 2018
Cash is the lifeblood of a business. No business owner wants to see their business struggling because of lack of funds or in debt due to mismanaged finances. What they want to see is a regular flow of profit but this is easier said than done.
With many years of experience as chartered accountants and business experts, we've seen many financial mistakes that business owners make. Here are some of the most common mistakes and how to avoid them:
Not having a business plan including clear financial goals
Business planning is very important. If you want to be successful in your business, you need a roadmap. It is also important to set clear goals and targets. In particular, you need to have financial goals that will help you measure how well your business is doing. Furthermore, your financial goal should be clear and realistic. Goals should be phased - weekly, monthly, quarterly or yearly. You also need to involve your whole organisation in your business strategy. Give your team goals to aim for.
With these plans and goals in place, you will have a clear view of how your business is performing which will eventually help you make important financial and growth-management decisions.
Not keeping proper financial records
This is one of the most common mistakes of business owners and also the most crucial. Most business owners are so busy focusing on managing their business that they neglect the importance of financial record keeping. If you don't have time to update your financial records, hire an expert to do it for you, such as a Chartered Accountant. They can set you up with proper systems and help process your transactions accurately.
Combining business capital and personal finances
Some business owners, especially those who are struggling with their business capital or finances tend to merge their personal savings with the business. Business owners should avoid doing this, as it will only make it more difficult to track how much money the business is making. Also, it complicates IRD and tax obligations.
Starting too big
Starting a business can be overwhelming. You put everything in that you have before you actually start. You may rent an office or other space and hire employees thinking about the future. You want to start big. But you have to understand that starting big doesn't necessarily ensure your future success. It may put undue pressure on you and your business. The best thing to do is to start small and once your business becomes financially stable, you may then consider expanding. Make sure that your expansion can be justified by your profits.
Not having an expert to assist you with your finances
Accounting, bookkeeping and tax compliance - these are just some of the financial responsibilities that you need to take care of when you start a business. These are critical and timely business processes. But some business owners are so busy managing their business that they often neglect these. You don't have to stress yourself in thinking and doing everything. You can hire experts to do it for you.
Some business owners are hesitant to hire experts to do these things for them and only realise they need help when it is too late. So hire a trusted Chartered Accountant to help you with your finances so you can focus on your business, as well as having more time to relax.
These are just some of the common financial mistakes that business owners make. Make sure to avoid these financial horrors to ensure the success of your venture.
By Paul Martin
Saturday, February 3, 2018
Healthy working capital flow is of paramount importance to all businesses. This is especially true for small to medium sized businesses. Accounts payable, when properly managed, can be an effective strategy to free up and protect working capital. Here are ten best practices for accounts payable management:
1. Develop a written accounts payable policy and procedures document. A written policy: (a) facilitates employee training, (b) helps to establish a consistent response to routine situations and, (c) may create a framework for appropriate delegation of responsibilities.
2. Identify incompatible duties and implement appropriate segregation of these duties. For example, employees who authorize invoices for payment should not have the ability to edit vendor master files, so too, employees who can edit vendor master files should not be allowed to process vendor invoices. Where possible appoint someone, not otherwise involved in the accounts payable process, to monitor changes to vendor master files.
3. Where possible make purchases from pre-approved vendors only. This could help negotiate more favorable terms.
4. When new vendors are added to the system, be sure to send a new vendor welcome letter. The letter should detail where invoices must be sent and any information necessary to process vendor invoices such as the completed w-9 forms, which are needed for the annual preparation of form 1099. There are hefty fines for non-compliance with 1099 reporting.
5. Have all vendor invoices sent to the accounts payable department, where they should be logged, before they are sent for approvals. This procedure reduces the incidence of lost and missing invoices.
6. Do not enter vendor invoices as a batch. Instead, enter each invoice separately as this facilitates the resolution of variances and provide a better audit trail.
7. Establish a specific procedures for processing vendor invoices, including the assignment of invoice numbers, (where vendor invoices are unnumbered or in the case of internal documents such as employee expense reimbursements) and entering invoice numbers.
8. The invoice amount should be entered as billed. Debit memos and adjustments should be posted as separate transactions as this facilitates account reconciliation and resolution of variances.
9. Define the default general distribution codes, where possible, as a part of new vendor set up procedures. Code all vendor invoices with applicable general ledger codes before posting. Both of these procedures reduce the possibility of errors.
10. Pay vendor invoices timely and take advantage of any discounts available. Discounts can add up to significant cash savings, and consistently paying invoices timely can help avoid the outlay of cash for late fees and interest and, set the basis for the negotiation of better vendor terms.
Debra 'CAS' Findlay, CPA CGMA the Principal of My CPAS Online. Ms. Findlay has been in the accounting profession for more than 25 years.
My CPAS Online provides services designed to allow small business owners to focus on the gorwth and operation of their businesses. Our services include, bookkeeping, bill payment and other business management services, payroll and payroll taxes, financial statements preparation and income tax preparation.
My CPAS Online serves numerous industries including food and beverage, not-for profits, retail and distribution, start-ups and professional services. Ms. Findlay can be reached by email:firstname.lastname@example.org, or visit our website: https://www.mycpasonline.com
By Debra C Findlay