Business record management or bookkeeping might be of low priority compared to other revenue generation activities, however regular record management not only makes business reports more sensible, but can prove a real stress relief during tax submission. Here’s what you can do to make record management easy:
1. Maintain separate accounts for business and personal provisions. It is very essential to differentiate the two and it is not simple. Verify and find out legitimate business expenses and which cannot be put under business expenses.
2. Get receipts or invoices for all business expenses and keep them in a monthly file – at the end of the month attach these to your bank statement, and make sure none are missing. Use this information to enter into you record keeping system or to give to your expert book keeper.
3. Use a separate credit card for business related expenses. It will be easier for management of records.
4. Maintain proper order and filing system for all records. It will be waste of time to hunt and search of document before the tax preparation season. Get organized before the start of fiscal year and keep year wise records of all financial and business relevant transactions.
5. Keep proper documentary record of assets purchased which might include vehicles, equipment, real estate etc relevant for business.
6. Maintain clear employee compensation records.
7. Keep your tax records year wise and up to date. It is easiest to keep these broken down by month, and file them in plastic sleeves in a ring binder or in manila folders.
8. Keep a log of your business travel in your vehicle. Note the kilometer reading on the odometer at the beginning of the financial year and then enter the kilometers by date each time you use the vehicle for a business purpose.
All of the above activities are required to avoid mistakes and penalties when preparing accounts. Set aside few hours every week to maintain systematic records. Like a lot of the administrative business related to running a business, they just require establishing good habits and persistence. But if you apply these rules of good record management now and follow through, it will create a positive difference during tax season and your accounting will be easier all year long.
If you are still very pressed for time, outsource bookkeeping work for as low as 15 to 20$ hourly charges to get the required back office support to get your business organized.
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Individuals and businesses who wish to get the services of bookkeepers have one common question in mind. How much do these bookkeepers charge? Will the charge be in an hourly basis or a monthly basis? What is the assurance that what they charge is what is really due them? What is the acceptable bookkeeping rate?
Bookkeeping Cost vs. Bookkeeping Quality
Bookkeeping rate really depends on the bookkeeper himself. Remember, you are dealing here with service business. That means time is equal money. The more time you indulge in one output would mean more money. Bookkeepers would usually lay down their normal rate, but the clients are still free to compromise.
Bookkeeping rate can be negotiable. The rates you gave your clients now can be different tomorrow, depending on how you ask them. Or the rates you give to one client can be different to others. Say, you give them a deal, you quote a $30 per hour job, the client will accept it but only for $15 per hour, you may go for it. Then proceed with additional negotiation. Like you do accept the $15 rate per hour, but the moment they are satisfied with your work, you can ask them to give you the original $30 per hour fee. Bookkeeping rate can be raised anytime, but make sure that you do your job right, or else prospects and clients could drop you anytime. Quality work, meaning giving a concise, complete, and on-time output, are good factors of good bookkeepers. And when you deliver them well, you will be assured of a fairly negotiated bookkeeping rate.
Bookkeeper's Experience Just like in any business, the bookkeepers experience in the industry is also influential in bookkeeping rate. The more experience a bookkeeper is, the higher charge he would give you. Our bookkeepers are highly recommended. Clients can attest to their work. Along with experience, bookkeepers are working hand in hand with a team and a supervisor who are all qualified, as well. Look for bookkeeping rate that suits you or your business. Our bookkeepers make sure that what they charge is worth it.
Analyze the Client The client has a big bearing in quoting bookkeeping rate. Individual clients have different needs and different concept of the need for bookkeeping. Clients may not fully recognize the importance of a bookkeeper. They should be made to understand what the work of a bookkeeper is, and why there is a need to get one. There are clients who do not even maintain a ledger account. If this is the case, then that would be a big effort for bookkeepers. All transactions have to be traced and worked back. There are some that even if they do have ledger account, they have not been kept well, or are disorganized, or worse, months or years behind in recording.
Bookkeeping rate will vary, depending on the client's set up. It will also depend on how big or how small a business is. For individuals, the bookkeeping rate will be based on the number of transactions they wish to include.
Many offshore bookkeeping firms offer good Bookkeeping Rate Amittabh heads one such reputed and experienced bookkeeping firm that offers attractive Bookkeeping Rate and caters to small and medium businesses and CPA Firms worldwide.
ArrowBooks Accounting Software, a new online offering from Grand Terra LLC, is designed to help small business owners efficiently handle their accounting and bookkeeping needs using web-based software. The concept behind ArrowBooks is to enable today's small business owners to spend more time focusing on their businesses instead of their books by removing the intimidation that usually goes along with self-managed accounting and bookkeeping programs.
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This has led to many small businesses utilising a computerised accounting software package such as MYOB or Quickbooks to do the hackwork and present you with the necessary reports and if required even the BAS itself.
However, owning the software does not make you a bookkeeper, and whilst the software companies have done their best to make the packages easy to use, the operator still needs a basic understanding of bookkeeping.
We’ve helped many small business owners with book-keeping, and we can help you. By outsourcing your bookkeeping needs you can free up your time to do what you do best in working your business, while we do what we do best, working on the bookkeeping side of your business.
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As president of Connie's Bookkeeping, Butzow can provide a variety of services to small businesses and individuals.
"I've always wanted to have my own business at home. I can do accounts payable, accounts receivable and payroll. I can also do just payroll," she said. "I wanted to get into this business to help other small businesses with their daily transactions."
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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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The country's accounting industry continued its strong growth in 2006, Statistics Canada said yesterday. The federal agency said accounting operating revenues grew 12.1 per cent to $11.1 billion in 2006. That followed 13.7- per-cent growth the previous year. Most of the revenues in 2006 came from traditional accounting services such as auditing and assurance (30 per cent), taxation (25 per cent), and bookkeeping and payroll (11 per cent).
Source : http://www.canada.com/
- 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
The actual process of keeping your books is easy to understand when broken down into three steps.
- Keep receipts or other acceptable records of every payment to and every expenditure from your business.
- Summarize your income and expenditure records on some periodic basis (generally daily, weekly, or monthly).
- 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.
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/
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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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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Corresponding to figures from your financial statements, ratios make relationships in your business more understandable. A ratio is only a shorthand note: It shows you what's going on according to your books. If your books are accurate portrayals of your business, here are 10 checkpoints to think about.
Acid Test = Cash and Near Cash ÷ Current Liabilities
Measures ability to meet current debt, a stringent test since it discounts the value of inventories. The rule of thumb is 1-to-1. A lower ratio indicates illiquidity. A higher ratio may imply unused funds.
Current Ratio = Current Assets ÷ Current Liabilities
Another measure of ability to meet current obligations. Less accurate than the acid test for very near term, but probably better a measure for six months to a year out, since it contains receivables and inventories as well as cash and near cash. The rule of thumb is 2-to-1, though this will be affected by seasonality.
Receivables Turnover = Sales ÷ Receivables
Measures the effectiveness of credit and collection policies. If your ratio is going down, collection efforts may be improving, sales may be rising, or receivables are being reduced. If your ratio is going up, sales credit policies may be changing, collection efforts may be flagging, or sales may have taken a nosedive.
Caution: This ratio depends on when receivables are measured and the seasonality of the business. Careful bookkeeping is also essential. The same applies to inventory turnover: Make sure that the measures are comparable from month to month. Use average receivables (inventories) if you can.
Days Receivables = 30 ÷ Receivables Turnover
Another way of looking at receivables. Particularly useful in explaining graphically what changes in credit and collection operations do to a business.
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.
- Keep receipts or other acceptable records of every payment to and every expenditure from your business.
- Summarize your income and expenditure records on some periodic basis (generally daily, weekly, or monthly).
- 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.
The International Financial Reporting Standards (IFRS) that companies have to adopt from April 2010 require them to value the cost of employee stock options as per their fair value and charge for it over the service period. That is, if the share price moves above the price at which the employee is given a right to purchase, then the option value, multiplied by the number of shares, has to be shown in the company’s profit-and-loss account as a cost, explained PricewaterhouseCoopers partner Sunder Iyer. This has the potential to reduce the company’s profitability and earnings per share significantly, accounting experts said.
Companies now have the option to value their Esops as per their fair value, but most of them do not do that since they have the option not to. But once the IFRS becomes mandatory, they lose this option.
Although the right to purchase the share was given at a price close to the market price on that date, they did appreciate over a period of time. This appreciation has made the employee stay with the company. Although the company has not given any discount on the date when the employee has exercised the option, he did benefit from its appreciation.
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Adopting the new standard on financial instruments-AS 30-would allow companies to provide for future gains as well as losses on foreign currency derivatives as per their fair market value, while following the existing norm of accounting prudence-AS 1-will force them to provide for only losses and not gains. That is if they do not adopt the new standards, they will not have the flexibility to provide for future gains. Therefore, net profit may be lower. Corporate houses are expected to make their balance sheets this way even now, but many had doubts after ICAI recently brought in AS 30.
ICAI officials told reporters on Monday that it received queries from various quarters on whether corporate houses need to disclose their exposure to derivative instruments now since the accounting standard covering them need to be compulsorily followed only three years from now.
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