Tax time, so make things up as you go

LIFE may be what you make it, but when it comes to tax returns it is more a case of making it up. This is an important point to remember with a Tax Office that invents ways to charge you for things that you didn't do, but might have. Here are some words that might have meant something, but don't.

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10 Tax Tips for the Self-Employed

Technology and the ease of telecommunication have prompted more consultants, coaches, contractors and freelancers to take business matters into their own hands. Self-employment is no longer a means of making some extra money but a full-time career, and many such full-timers are punching their own time clocks and making excellent incomes.

The self-employed have unique tax concerns. Below are ten helpful tax tips to help lessen Uncle Sam's tax bite:

1. Keep very good records: Unlike a large company in which someone is hired to maintain records of all income and expenses, it is up to you to keep very good records, save all receipts and be able to support your deductions.
   
   
2. Office space: Whether you have a separate office facility or are using a portion of your basement or a converted den, you can deduct the percentage of your home used exclusively for business purposes. Take this percentage off of your mortgage or rent payments as well as your utilities. If you have a phone exclusively used for business, deduct those phone bills.
   
   
3. Don’t forget business expenses: Keep receipts and good records of business travel and other expenses including office supplies, postage and shipping costs, dues, subscriptions, and anything else business-related, including computer software for your business and upgrades to your system.
   
   
4. Deduct child care costs: There are allowable deductions for daycare, nanny care, babysitting and any other type of childcare provided while you are working. Take the deductions allowable.
   
   
5. Set up a retirement plan: You should consider setting up a self employed qualified retirement plan (i.e. SEP IRA) not only for tax purposes but for the same of saving money for your retirement years. If you wish to start with more than $2,000, you can opt for a Keogh plan, which allows you to put away more into tax-deferred savings for your retirement.
   
   
6. Employ family members: You can deduct medical expenses for your entire family by employing them legitimately.
   
   
7. Defer income if necessary: Being self-employed, you can alter your billing slightly to defer income if you see yourself heading into a higher tax bracket.
   
   
8. Get money back from FICA: Being self-employed, you pay both the employer and employee portions of Social Security tax. You can, however, deduct half of these payments on your 1040 form.
   
   
9. Increase expenses if necessary: Just as you can elect to defer income, if you see that your income is high, you can make many more year-end business purchases to add some tax deductions before December 31st.
   
   
10. Get the right help: Look for tax help from someone who is familiar with self- employment, since your needs will differ from those of a company.
    

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Chance to fix tax in the emerging world

WE have a magnificent opportunity to reform the tax system. Not simply to make it better in general terms, but to design it specifically for the world emerging in this new century.

Now it's always a dangerous vanity to assume you can predict the future. But it's not unreasonable to suggest that China and its economic growth are going to be front and centre of developments over the next decade or two.

All sorts of developments. Whether we are thinking China as the benefactor continuing to enrich the "Lucky Country", or as the planet-killer turning our coal and iron ore into carbon. In more ways than one, it might be said: I have seen the future, on my TV last night.

I'd suggest we've never previously had the opportunity to see quite so, if you'll pardon the word in this context, clearly into the future before. And certainly not at those points in our history of great tax change.

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Benefits of Outsourcing Payroll Against Payroll Software

The essentials element of payroll administration in the UK is to accurately calculate the income tax and national insurance contributions deducted from the employee each pay period, produce payslips for each employee and account to the tax office for the payroll deductions.

Running a payroll system is natural for medium and large companies who may employ specialist payroll staff to perform these functions. Many medium companies may still choose to outsource the payroll function leaving many of the technical issues that might be encountered to a specialist payroll service.

Small businesses may choose to outsource the payroll function because they are not familiar with the paye system although HMRC do run seminars to assist employers. The payroll system not only calculates the tax and national insurance deductions but also has to deal with tax code changes, new employees and changes to existing employees plus taxable benefits and allowances such as statutory payments for sickness and maternity leave, contracting out of the state pension scheme and student loans.

The main benefit of manually producing the employee payroll is the reduced cost although the time spent on the payroll function by the proprietor may be better spent running the business. The cost may not be the cheapest option if an employee is required to produce the payroll. Purchasing payroll software can save significant time and costs for the small business that chooses to prepare and control its own payroll function. Although time is more important as the payroll production cost is not usually a big issue.

Outsourcing payroll adds a small additional cost to running the business but would normally carry worthwhile benefits in reducing the time spent on the function and reduces the paye administrative burden.

Main benefits outsourcing the payroll function.

1. Frees up time in calculating the payroll deductions and dealing with different and sometimes complex employee circumstances.
2. Using a professional outsourcing service to advise on potential payroll problems and difficulties.
3. The cost of outsourcing payroll should be compared against the cost of employing specialist in house payroll staff.
4. Payroll services use payroll software and are more likely to produce accurate tax and national insurance deductions and pay records reducing the prospect of problems with the tax authorities.
5. Payroll administration such as preparing the tax deductions schedules, dealing with starters and leavers, year end certificates for employees and the employer annual returns are normally all automated as part of the payroll service
6. The outsourced service company should also be responsible for producing employee payslips, advising tax and deductions liability and in larger businesses also provide a payroll analysis for accounting purposes.
   

Alternatives to outsourcing payroll functions.

Finding a suitable outsourced payroll service is not difficult. Local telephone directories or searching the internet would produce many potential payroll service providers.

Many accountancy firms offer payroll services to their clients and although the prices may struggle to be competitive price is always negotiable. Using the business accountant for the payroll has advantages since a substantial cost area for most businesses is already known to the accountant since they prepare the numbers.

Choosing payroll software.

The major alternative to outsourcing the payroll is for the business to acquire and use payroll software.

Larger companies require payroll software that has incorporated within it all the potential pay scenarios and also be capable of dealing with high numbers of employees. Large comprehensive packages can be complex to operate and require specialist wages staff.

Small business may choose simpler less complex payroll software packages that meet the basic needs of the business. It is important the person running the payroll within the wages function understands the payroll essentials and legal payroll administration requirements.

The advantages of choosing payroll software is basically the cost should save the business money against outsourcing the payroll, should retain control over the function and liabilities and ideally should take no more time that supplying employee details and gross wages to the payroll service.

If the business chooses to adopt a payroll software package then the complexity of the package should be considered and also the attributes and capabilities of the chosen software to produce all the payroll requirements in relation to pay and wage deductions, paye administration and employee payslips.

Terry Cartwright is a qualified accountant in the UK producing Accounting Software and Payroll Software packages for self employed and small limited companies. The payroll spreadsheets are suitable for up to 20 employees, produce the tax and insurance deductions, automate payslips and provide the employer with a full automated paye administration system

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Small business owners have many learning options

NEW YORK (AP) — An entrepreneur who's mystified by accounting or putting a marketing plan together can get some help, and soon, with the arrival of the fall semester. Schools, colleges and universities around the country offer a variety of courses aimed at small business owners, and many cost little or nothing.

Some of the courses are given on campus, while others are online, and in most cases, they aren't part of a degree program. And there are plenty of learning opportunities beyond higher education — chambers of commerce and trade associations may also offer classes, and Web sites aimed at small business owners can help owners get at least a grounding in a variety of business topics.

Many who take courses became entrepreneurs after working for someone else for years. They have a great deal of knowledge about the services or products that are the heart of a business, but someone who spent 10 years in information technology often knows little about marketing, and someone who worked in a public relations agency usually finds accounting to be almost a foreign language.

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Financial Accounting

Introduction

The purpose of accounting is to provide the information that is needed for sound economic decision making. The main purpose of financial accounting is to prepare financial reports that provide information about a firm's performance to external parties such as investors, creditors, and tax authorities. Managerial accounting contrasts with financial accounting in that managerial accounting is for internal decision making and does not have to follow any rules issued by standard-setting bodies. Financial accounting, on the other hand, is performed according to Generally Accepted Accounting Principles (GAAP) guidelines.


CPA's

The primary accounting professional association in the U.S. is the American Institute of Certified Public Accountants (AICPA). The AICPA prepares the Uniform CPA Examination, which must be completed in order to become a certified public accountant. To be eligible to become a CPA, one needs an undergraduate degree in any major with 150 credit hours of course work. Of these 150 credit hours, a minimum of 36 credit hours must be in accounting. Only about 10% of those taking the CPA exam pass it the first time.


Accounting Standards

In order that financial statements report financial performance fairly and consistently, they are prepared according to widely accepted accounting standards. These standards are referred to as Generally Accepted Accounting Principles, or simply GAAP. Generally Accepted Accounting Principles are those that have "substantial authoritative support".


Accrual vs. Cash Method

Many small businesses utilize an accounting system that recognizes revenue and expenses on a cash basis, meaning that neither revenue nor expenses are recognized until the cash associated with them actually is received. Most larger businesses, however, use the accrual method.

Under the accrual method, revenues and expenses are recorded according to when they are earned and incurred, not necessarily when the cash is received or paid. For example, under the accrual method revenue is recognized when customers are invoiced, regardless of when payment is received. Similarly, an expense is recognized when the bill is received, not when payment is made.

Under accrual accounting, even though employees may be paid in the next accounting period for work performed near the end of the present accounting period, the expense still is recorded in the current period since the current period is when the expense was incurred.

Underlying Assumptions, Principles, and Conventions

Financial accounting relies on the following underlying concepts:

• Assumptions: Separate entity assumption, going-concern assumption, stable monetary unit assumption, fixed time period assumption.

• Principles: Historical cost principle, matching principle, revenue recognition principle, full disclosure principle.

• Modifying conventions: Materiality, cost-benefit, conservatism convention, industry practices convention.

Financial Statements

Businesses have two primary objectives:

• Earn a profit
• Remain solvent

Solvency represents the ability of the business to pay its bills and service its debt.

The four financial statements are reports that allow interested parties to evaluate the profitability and solvency of a business. These reports include the following financial statements:

• Balance Sheet
• Income Statement
• Statement of Owner's Equity
• Statement of Cash Flows

These four financial statements are the final product of the accountant's analysis of the transactions of a business. A large amount of effort goes into the preparation of the financial statements. The process begins with bookkeeping, which is just one step in the accounting process. Bookkeeping is the actual recording of the company's transactions, without any analysis of the information. Accountants evaluate and analyze the information, making sense out of the numbers.

For the reports to be useful, they must be:

• Understandable
• Timely
• Relevant
• Fair and Objective (free from bias)

Double Entry Accounting

Financial accounting is based on double-entry bookkeeping procedures in which each transaction is recorded in opposite columns of the accounts affected by the exchange. Double entry accounting is a significant improvement over simple and more error-prone single-entry bookkeeping systems.

Fundamental Accounting Model

The balance sheet is based on the following fundamental accounting equation :

Assets = Liabilities + Equity

This model has been used since the 18th century. It essentially states that a business owes all of its assets to either creditors or owners, where the assets of a business are its resources, and the creditors and owners are the sources of those resources.


Transactions

To record transactions, one must:

1. Identify an event that affects the entity financially.

2. Measure the event in monetary terms.

3. Determine which accounts the transaction affects.

4. Determine whether the transaction increases or decreases the balances in those accounts.

5. Record the transaction in the ledgers.

Most larger business accounting systems utilize the double entry method. Under double entry, instead of recording a transaction in only a single account, the transaction is recorded in two accounts.

The Accounting Process

Once a business transaction occurs, a sequence of activities begins to identify and analyze the transaction, make the journal entries, etc. Because this process repeats over transactions and accounting periods, it is referred to as the accounting cycle.

Accounting Outsourcing : Let your Business go Places

All successful business owners understand the significance of a proper accounting system and for this reason only, they ensure to employ the most efficient accounting team in their organization. It is undoubtedly true that in order to procure a good, well managed accounting system, a great deal of time as well as endeavor is needed.

Accounting is basically a collective task of various day to day jobs and transactions, where every business transaction and financial record keeping task should be performed in an appropriate manner because, even a single mistake is enough to disturb the entire accounting management.

However, unfortunately, not all business organizations are well equipped with latest accounting software and heavy accounting staff due to cost effectiveness or unavailability of experienced accountants. But fortunately, as every problem comes with a set solution, even this problem is settled with an easy option of accounting outsourcing.

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TOPICS IN ACCOUNTING

Topics in accounting

See list of accounting topics for complete listing.

Auditing
Assurance services
Audit
Information technology audit
Internal audit

Accountancy methods and fields
Lean accounting
Cost accounting
Cash-basis and accrual-basis accounting
Financial accountancy
Fund Accounting
Internal and external accountancy
Management accounting
Project accounting
Positive accounting
Environmental accounting
Tax accounting

Accounting Principles

Accounting principles, rules of conduct and action are described by various terms such as concepts, conventions, tenets, assumptions, axioms and postulates.

Accounting concepts
Entity concept
Dual aspect concept
Going concern concept
Accounting period concept
Money measurement concept
Historical Cost concept
Realization concept
Accounting methods (includes a discussion on the concept of accruals)
Understandability
Relevance
Reliability
Comparability
Accrual (also known as Matching principle)
Unified Ledger Accounting

Accounting conventions
Convention of disclosure
Convention of materiality
Convention of consistency
Convention of conservatism

Tools for accounting
Accounting software
Online accounting

SBDC hosts seminar called 'Basics of Bookkeeping'

The ASU Small Business Development Center is holding a seminar, "The Basics of Bookkeeping." The seminar will be from 6 p.m. to 8:30 p.m. Tuesday, Aug. 12, in Conference Room 100 of the Rassman Building on the ASU campus. Cost is $10 per person.

The seminar will focus on the importance of adequate record-keeping for business survival and will explore the two main uses of financial data, the nine requirements of a record-keeping system, and a detailed explanation of the basic steps in the accounting cycle.

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Five Guidelines In Selecting Your Outsourcing Bookkeeping Partner

Outsourcing refers to the practice of transferring day to day process of a business to some external service provider. It rose to prominence as a business strategy in the early 1980's when some European airline companies began transferring part of their back office function to New Delhi. The guiding force behind such a strategy then was to reduce labor costs. Outsourcing in today's context is however, necessitated not only by cost consideration but also other specific advantages like flexibility and scalability of operations etc. And as more and more companies join the fray, it is natural that there has been exceptional increase in the number of vendors undertaking such services.

It therefore becomes very important that outsource of critical functions like accounting be done with utmost care The most important point in this regard is identifying the right outsourcing partner. Policies and practices that the outsourcing partner follow, impact the companies business directly. Therefore extreme caution should be practiced by the companies while deciding on their outsourcing partners. Never should such a decision be taken in a rush.

The following pointers should be taken into consideration while selecting your partner:

1. Company's experience is direct pointer to its capabilities. Information relating to their total client base and kind of projects handled by them can give a clear idea of their real standing in the market. It is always prudent to check on the references provided by the company.
2. To have a clear idea of the people running the business it is always advisable to ask for a profile of its director, the key persons etc. Also their qualifications should be taken into consideration to judge the level of professionalism that can be expected.
3. The best way to judge the capability and genuineness of a company is by checking whether the company measure in expectations of its clients. It is thus the best way to gauge the company's credentials.
4. To get an idea of outsourcing partner's abilities in bookkeeping, it is always advisable to test him on files that have been already completed. This way their skills can be directly tested.
5. Once credibility about the competencies of the outsourcing partner has been established, assessment should be made about their capabilities, factors like proper infrastructure facility, number of staff etc that are directly involved with completion of the project should be checked. Here once again client reference plays an important role.
   

Once the credentials and capabilities of the vendor are established, it is necessary to establish that the outsourcing partner shares the same business objective as that of the company. This is important because communication becomes really easy once the objectives and strategies of the outsourcing company are shared by the outsourced vendor.

Bookkeeping is an important business function. Outsourcing such a key function is a decision that can have huge implications on the business. Both the outsourcing company and the vendor company will be venturing into a strategic relationship that affects both their businesses directly. But the element of risk lies more for the company that undertakes to outsource its books of accounts. It should therefore make the most informed decision to minimize the risk and benefit from it.

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Advantages Of Payroll Services

If your company has employees other than you, payroll is one of the most critical areas of your financial record keeping. It's also the area most commonly botched by small business owners, so get professional advice on how to properly set up and maintain your payroll system.

You might consider using a payroll service to save yourself a lot of administrative time and hassle. A payroll service ensures your government reporting and payroll tax remittances are always accurate and up-to-date. This benefit alone can be well worth the cost of the service, as late-payment penalties for payroll remittances tend to be some of the biggest and most severe penalties that the government levies.

Other advantages of using a payroll service:

The payroll service is always up to date on the tax code, whether it be changes in Canada Pension Plan rules, revised Employment Insurance guidelines or new tax rates.
The payroll service automatically handles the creation of accurate T4 slips for your employees at year-end.
With a payroll service, you can offer your employees direct deposit of their paycheque. This is a perk that most employees appreciate.

While there are many good reasons to use a payroll service, you should also be aware that such a service takes all associated government remittances out of your company account each payday, even if those remittances are not actually due for another few weeks. This can create a cash flow problem unless you are prepared for it.

Fern Gordon is the owner of The Profit Line. Making sound business decisions means having a clear picture of your financial situation in front of you at all times - yet the daily demands of running a small enterprise can be overwhelming. As a result, financial record keeping and reporting often don't get the attention they truly deserve.

The Profit Line changes all that. We are your bookkeeping partner, helping you stay on top of your finances so you can make better, more informed business decisions.

In addition to taking paperwork off your plate, we also pinpoint the key numbers critical to the performance of your specific enterprise, and make sure you have them in hand whenever you need them.

Source : The Profit Line

VAnetworking Presents Seminar on Virtual Bookkeeping

VAnetworking Presents Seminar on Virtual Bookkeeping: Leveraging Today’s Technology to Grow Your Business.

On Wednesday, 7/2/2008, 2008 at 6:00 p.m. EST, Kristin Callan will present Virtual Bookkeeping: Leveraging Today’s Technology to Grow Your Business.

Kristin Callan is the Director of Sales and Client services for Swizznet Online Accounting Solutions and is an expert in developing and implementing online accounting systems and strategies. Kristin has more than seven years experience in the accounting and finance industry and has helped accountants and bookkeepers implement strategic systems to increase productivity and grow their business. Kristin works with accountants and bookkeepers to conceptualize and implement innovative solutions to maximize return on investment and help grow their businesses. Kristin can help streamline the accounting process and can make offering virtual accounting services easy. Visit Kristin’s website, www.swizznet.com, for more information on the Swizznet Online Accounting System. Contact Kristin Callan at 206.408.7774 or kcallan@swizznet.com.This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

- Implement a virtual bookkeeping system that is easy for you and your clients - Market your services and attract new bookkeeping business - Add value and improve customer service for your existing clients. Get practical tips and easy to Implement solutions that leverage free and low-cost technology to save time and grow your virtual accounting business.

Please join them at VAnetworking.com on Wednesday, 7/2/2008 at 6:00 p.m. (EST). In this eSeminar you will learn how to take advantage of today’s technology.

VAnetworking is the largest business network for aspiring and successful Virtual Assistants and Virtual Achievers to share, learn, and succeed. At VAnetworking, industry experts and Virtual Assistant newbies mix it up to uncover all things new and exciting in the world of Virtual Assistance, while supporting one another and striving to promote the Virtual Assistant industry.

So join the fun and stop by the VAnetworking Forum today at http://www.vanetworking.com or just go ahead and upgrade to this exciting new VAinsider membership at http://www.vanetworking.com/vainsider/index.htm. You’ll see just how much better your business can become and also have a great time doing it. And for those looking for a VA, you won’t be able to beat the professionals you’ll find here.

Accounting firms can't help on tax

If policymakers think the big auditors are going to help them roll back tax avoidance, they may have a long wait

Don't let the fox guard the henhouse." It may be an old proverb, but many involved in financial regulation do not appear to be aware of it. Blinkered policymakers think that major accounting firms are somehow going to help them to stem the tide of tax avoidance. Such aspirations have little chance of becoming reality until major accounting firms are forced to put their own houses in order.

Earlier this year, Christian Aid (pdf) reported that big accounting firms are at the heart of a global tax avoidance industry. It showed how depriving governments of vital revenues for investment in social infrastructure can cause death and misery for millions. Big accounting firms are protected by a cocoon of secrecy and confidentiality laws, but some evidence of their activities is publicly available.

KPMG has been the subject of what the US justice department described as the "largest criminal tax case ever filed".

KPMG admitted that it engaged in fraudulent practices that enabled its clients to generate phoney losses. The firm collected huge fees and the tax authorities lost billions of dollars in tax revenues. The firm paid $456m in fines, but escaped closure. A number of its partners may face prosecutions.

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Tax managers focus more on compliance than planning

Chennai: Tax managers of corporates, who are supposed to look at strategic tax planning, are spending more of their time looking after the tacatical issues of tax compliance. The taxman has perhaps made these people behave differently?

One can look at the situation from two sides. Either, compliance standards have been put very high which require more resources, or corporates have been ignoring compliance issues. There is a third side too, the role of authorities enforcing compliance. What’s the solution? “A customised tax compliance solution to organisations based in India,” says Mr Bharat Parmar, Vice President (Business Development), BMR Managed Services, New Delhi.

But isn’t financial management and accounting in most large organisations managed though the specific modules of ERP systems, Business Line asked. Mr Parmar explained the shortcomings of the system. “Typically these systems are also leveraged by the organisations to help the tax team compute the tax liabilities and extract relevant information but since these applications are primarily financial and accounting solutions, they are not intrinsically capable and aligned when it pertains to the Indian tax compliance requirements.” To incorporate all of the requirements becomes complicated and cost-ineffective in the present systems, he added.

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Basic Tax Tips Anyone Can Follow: Save Money, Pay Less Tax

Tax Tips For Single People

If there are going to be tax cuts in the next financial year, make sure you prepay membership fees for unions & professional associations and make any charitable donations before the end of this financial year (June 30)

If you have a few $1000 in spare cash, don’t leave it in your transaction bank account earning no interest, instead put it in an Online Savings Account with a High Interest Rate and No Bank fees
If you’re single and going to earn more than $100,000/year (from July 2008-June 2009) make sure you take out a basic private health insurance plan (with an Excess of $500 or less) or your Medicare levy will rise from 1.5% to 2.5%.

If you earn less than $28,980 … and contribute $1000 cash to your super fund … than at the end of the year the ATO will deposit an extra $1500 in your super account, more details at Turn $1000 into $2500 with Super Co Contributions

If you were lucky enough to sell assets like shares and made a large profit you’ll have a lot of potential capital gains. Check out your list of assets and see if there are any that have made losses and you were going to sell them soon anyway.

If you do sell them this generates a capital loss you can claim against capital gains from the assets which made a profit when sold.

This also frees up some money to invest in assets that have a hope of rising in value.

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Using Excel for Accounts and Bookkeeping

The great thing about MS Excel (and others say it’s greatest downfall) is that it is so adaptable and because it normally comes bundled with the PC you bought for your business, it’s cheaper than buying accounting software.

For start ups and possibly for the sole trader or small limited company, it’s a very easy way of keeping track of essential accounting information, especially if you have no intention of getting involved in double-entry bookkeeping (which will be the subject of a future post).

Excel also has very powerful capabilities, a whole range of financial and statistical functions, the ability to chart your data and analyse it in all manner of ways. For that reason, accountants (depending on their sector and job function) make very extensive use of excel.

Of course, Excel is also used where other applications would be better. As a business grows, it will (hopefully) outgrow the use of Excel for bookkeeping. Depending on the business, this could happen quite early on. Also, if your primary requirements are data storage, Access, being a database, handles data storage and retrieval much better than Excel.


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Governments misuse corporate tax policies, think tank says

Quebec among those singled out. Fast-growing, leading-edge sectors face undue burden because of micromanagement

Canadian governments are "whittling away" the gains to be had from recently reduced corporate taxes because of an attempt to micromanage their economies, and shift an undue amount of the business tax burden on fast-growing, leading-edge sectors, says a latest analysis of the country's tax policies.

The C.D. Howe Institute's latest report on Canadian tax policies, released yesterday, issued a stark warning to governments that pursue tax initiatives aimed at boosting the fortunes of "structurally declining industries," such as manufacturing and forestry. The provinces singled out for advocating such measures in their most recent budgets were Ontario, Manitoba and Quebec - which are among the highest-tax jurisdictions in the country, the think tank said.

These tax policies - such as accelerated writeoffs of capital equipment and sector-specific capital tax reductions - has led to what the think tank said was a "larger" distortion in the corporate tax system. As a result, fast-growing, knowledge-based industries, which are seen as key to future economic growth, face much higher taxes on business investment than elsewhere and compared with other industrial sectors.

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Italy energy firms banned from passing on new tax

ROME, June 25 (Reuters) - The Italian government has banned energy firms from passing on a new tax to their customers, the text of the law showed on Wednesday.

Economy Minister Giulio Tremonti has dubbed his hiking of the main tax on company profits (IRES) to 33 percent from 27.5 percent as a "Robin Hood" tax as the extra revenues will be taken from wealthy companies and spent on the needy.

Energy companies initially protested but have since played down the impact of the tax. Fulvio Conti, chief executive of power utility Enel (ENEI.MI: Quote, Profile, Research) said the tax would be "easily absorbed" by his group.

Media had speculated that the tax on oil, gas and electricity companies, would mean an extra burden to consumers already facing higher costs due to rising oil prices.

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Why we need symmetrical rules on accounting

Sir, The main problem with the constructive proposal by Jean-François Lepetit, Etienne Boris and Didier Marteau on "how to arrive at fair value during a crisis" (Comment, July 29) is that it is still "pro-cyclical". Offering accounting forbearance to banks when asset prices plummet, but not in the boom when roaring prices contribute to excessive lending, will strengthen the incentives for excess that lead to crises in the first place.

If adjustments to mark-to-market accounting are justified on the downside, they need to be done on the upside. To avoid succumbing to political pressure, the accounting regulator would need symmetrical rules to determine when to adjust mark-to-market accounting.

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DTI sets seminar on accounting

The Department of Trade and Industry in Negros Occidental will hold a Seminar on Bookkeeping cum Accounting for Non-Accountants under its One Town, One Product program on August 5 to 6 at the NOTLDC (formerly KADIWA Center) at Gatuslao Street in Bacolod City, a press release from the agency said.

Organized by the DTI with the Association of Negros Occidental Food Processors Inc., the seminar seeks to provide the participants with basic knowledge on Bookkeeping and Accounting as important tools in managing business in real scene.

Expected to attend are owners of micro, small and medium enterprises, OTOP beneficiaries, and technology and livelihood coordinators, the press release said.

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Regulators should conform to new global accounting standards

International Financial Reporting Standards (IFRS) is gathering storm and most countries barring the US and a few others have either adopted IFRS or their national generally accepted accounting principles (GAAP) are converging to IFRS.

Australia, New Zealand, China, Singapore, Japan, Middle East, Africa & European Union have either adopted or are converging to IFRS. The eminent status to IFRS came about after EU made it mandatory for all its listed companies starting 2005. Consequently, more than 8,000 EU-listed companies adopted IFRS in one go. US capital markets are losing their attractiveness as a result of what many view as excessive regulation. As a consequence, many believe that the predominance of US GAAP as a standard may be coming to an end. This could make large companies look at other capital markets, and in many of those capital markets IFRS are accepted.

More than 1,100 Chinese companies have recently switched over to new accounting standards bringing their books in line with international norms. India follows Indian GAAP, which is inspired by International Accounting Standards (IAS).

However, Indian GAAP has not kept pace with the changes that followed IAS’ metamorphosis to IFRS. The most important change in IFRS is the application of fair valuation principles. Key standards based on fair valuation principles that have not yet been rolled out under Indian GAAP relate to business combinations, financial instruments and investment properties. There are also several areas where there are critical differences between Indian GAAP and IFRS.

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Accountability or accounting?

When Nicolas Sarkozy’s government spokesperson announced that each minister’s performance would be assessed according to criteria set by a private auditing firm, he probably did not expect to elicit a fierce response. But he should have

When Nicolas Sarkozy’s government spokesperson announced that each minister’s performance would be assessed according to criteria set by a private auditing firm, he probably did not expect to elicit a fierce response. But he should have. The opposition quickly attacked the move as a “dangerous gimmick” and a “smokescreen.” One pundit asked, “Will the time soon come when ministers are hired by head-hunters?” And a young MP declared that “France cannot be managed like a bolt factory.”

But what is so absurd about establishing standards by which to assess the fulfilment of Sarkozy’s campaign promises? As soon as they were appointed in June 2007, Sarkozy’s ministers were given a clear set of objectives in the form of a letter of intent. Isn’t it normal to create some means of holding ministers accountable?

A culture of “results” has become central to economic modernisation in France, so shouldn’t the same be true of French governments, with their entrenched inclination toward passivity and aloofness? And the issue of setting measurable standards for government operations is not confined to France. British Prime Minister Gordon Brown has made such quantifiable goals a hallmark of his leadership ever since he was Chancellor of the Exchequer.

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Accounting firm says Omaha has competitive taxes

A new study from a major accounting firm says Omaha offers businesses a lower tax burden than other mid-sized cities in America.

The study from KPMG International says Omaha's total tax index is 5.8% lower than the national average. That was the best rating for cities with populations between 500,000 and 2 million in their metropolitan areas.

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'India Inc not ready for global accounting'

NEW DELHI: Corporate India is not fully prepared to handle the new accounting regime that comes in force from April 2011 with the adoption of International Financial Reporting Standards (IFRS), an accounting process recognized by over 100 countries that would replace the Indian GAAP (Generally Accepted Accounting Standards), global consultancy major KPMG said.

Richard Rekhy, COO for KPMG in India, told TOI that Indian accounting professionals are yet to be exposed to the intricacies and methods that would come along with new standards, which recognize fair value accounting against the existing historic accounting model.

"It is an alarming situation that we still do not have enough trained people on IFRS. And with no previous experience with new standards, most of the current lot of accounting professionals will be redundant with important changes in IFRS," Rekhy said.

While corporate India currently follows the standards proposed by the Institute of Chartered Accountants of India (ICAI) and enforced by National Advisory Committee on Accounting Standards (NACAS), from April 2011 they need to switch over to IFRS, issued by the International Accounting Standard Board, a London-based independent body. Firms like KPMG and Ernst & Young have pitched for advisory and consultancy services as the transition means big business opportunity for them.

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Can’t tax way to prosperity

While government-to-the-rescue programs may ease some of today’s problems, they may worsen the situation in the long run, particularly when lawmakers raise taxes to pay for the programs.

The Conference Boards Consumer Confidence Index declined in June to just 50 percent, its lowest level in 16 years and about half of what it was a year ago. That’s not surprising given rising food costs, skyrocketing oil prices and home mortgage troubles.

It’s tempting in such situations for voters to demand action from Washington. And the pols usually are only too willing to oblige. Even now Congress is debating a $300 billion housing bill to bail out Americans unable to make their mortgage payments.

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Bookkeeping and Accounting Basics

Bookkeeping and accounting share two basic goals:

• to keep track of your income and expenses, thereby improving your chances of making a profit
• to collect the necessary financial information about your business to file your various tax returns and local tax registration papers
  

Sounds pretty simple, doesn't it? And it can be, especially if you remind yourself of these two goals whenever you feel overwhelmed by the details of keeping your financial records. Hopefully you will also be reassured to know that there is no requirement that your records be kept in any particular way. (There is a requirement, however, that some businesses use a certain method of crediting their accounts. See " Cash vs. Accrual Accounting.") In other words, there's no official "right" way to organize your books. As long as your records accurately reflect your business's income and expenses, the IRS will find them acceptable.

The actual process of keeping your books is easy to understand when broken down into three steps.

1. Keep receipts or other acceptable records of every payment to and every expenditure from your business.
2. Summarize your income and expenditure records on some periodic basis (generally daily, weekly, or monthly).
3. Use your summaries to create financial reports that will tell you specific information about your business, such as how much monthly profit you're making or how much your business is worth at a specific point in time.
   

Whether you do your accounting by hand on ledger sheets or use accounting software, these principles are exactly the same.

Step 1: Keeping Your Receipts
Comprehensive summaries of your business's income and expenses are the heart of the accounting process. But they can't legally be created in a vacuum. Each of your business's sales and purchases must be backed by some type of record containing the amount, the date, and other relevant information about that sale. This is true whether your accounting is done by computer or on hand-posted ledgers.

From a legal point of view, your method of keeping receipts can range from slips kept in a cigar box to a sophisticated cash register hooked into a computer system. Practically, you'll want to choose a system that fits your business needs. For example, a small service business that handles only relatively few jobs may get by with a bare-bones approach. But the more sales and expenditures your business makes, the better your receipt filing system needs to be. The bottom line is to choose or adapt one to suit your needs.

Step 2: Setting Up and Posting Ledgers
A completed ledger is really nothing more than a summary of revenues, expenditures, and whatever else you're keeping track of (entered from your receipts according to category and date). Later, you'll use these summaries to answer specific financial questions about your business such as whether you're making a profit, and if so, how much.

You'll start with a blank ledger page (a sheet with lines) or, more often these days, a computer file of empty rows and columns. On some regular basis like every day, once a week, or at least once a month, you should transfer the amounts from your receipts for sales and purchases into your ledger. Called "posting," how often you do this depends on how many sales and expenditures your business makes and how detailed you want your books to be.

Generally speaking, the more sales you do, the more often you should post to your ledger. A retail store, for instance, that does hundreds of sales amounting to thousands or tens of thousands of dollars every day should probably post daily. With that volume of sales, it's important to see what's happening every day and not to fall behind with the paperwork. To do this, the busy retailer should use a cash register that totals and posts the day's sales to a computerized bookkeeping system at the push of a button. A slower business, however, or one with just a few large transactions per month, such as a small Web site design shop, dog-sitting service, or swimming pool repair company, would probably be fine if it posted weekly or even monthly.

To get started on a hand-entry system, get ledger pads from any office supply store. Alternatively, you can purchase an accounting software program that will generate its own ledgers as you enter your information. All but the tiniest new businesses are well advised to use an accounting software package to help keep their books (and micro-businesses can get by with personal finance software such as Quicken). That's because once you've entered your daily, weekly, or monthly numbers, accounting software makes preparing monthly and yearly financial reports incredibly easy.

Step 3: Creating Basic Financial Reports
Financial reports are important because they bring together several key pieces of financial information about your business. Think of it this way -- while your income ledger may tell you that your business brought in a lot of money during the year, you may have no way of knowing whether you turned a profit without measuring your income against your total expenses. And even comparing your monthly totals of income and expenses won't tell you whether your credit customers are paying fast enough to keep adequate cash flowing through your business to pay your bills on time. That's why you need financial reports: to combine data from your ledgers and sculpt it into a shape that shows you the big picture of your business.

Source : http://www.inc.com/

Accounting course a huge draw

MANAMA: A Labour Fund-Ernst & Young training programme is proving to be a big success. The initiative, launched in October last year, is being inundated with applications from Bahraini men and women who want to seize a unique opportunity to gain world-class credentials in finance and accounting.

The BD1.6 million project to train 700 Bahrainis over five years was expected to attract 190 applicants by August this year. Instead, training providers Ernst & Young have already received nearly 800 applications with women dominating every course, with female candidates applying for more than 55 per cent of the available places in all programmes.

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