Bookkeeping Hints

Whether you are keeping the business' books yourself or hiring a bookkeeper to take care of them, here are some tips from our bookkeeping experts to help save you time and money.

1. Maintain Daily Records. Allocate 15 minutes everyday to do a little bookkeeping each day. This is one of the most basic rules. If you don't have accurate records, you don't have an accurate picture of your business. There is no right or wrong record-keeping system. What matters most is that you have a record-keeping system and you use it.
2. Bank account statements. Always request a statement with a month-end cut-off date. This will make it easier for you to reconcile your statement and track expenses.
3. Keep an audit trail.The goal here is to be able to quickly and easily retrace your company's financial activities. Record all of your invoices and cheques in numerical order. Never skip numbers.
4. Be consistent. Consistency is the key to successful bookkeeping. Most of us tend to make things harder than they need to be. Keep filing simple and use consistent wording in ledgers and in software files. This will save you and your accountant time at year-end when you are preparing statements and reports.
5. Use a computer. Bookkeeping software makes it easy to track income and expenses, prepare tax documents and summaries your company's financial activities. Make sure that you are trained in the basics, even if you are outsourcing. Take the time to set up your financial accounts correctly from the start. Always ensure that records are backed up for safekeeping.
6. Cash or Accrual. Choose the right accounting system for your business. Cash accounting is much simpler - you count income when you receive it and expenses when you pay them. In the accrual method you count expenses when they happen, not when you receive or pay them.
   

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Hiring a Bookkeeper

Hiring a bookkeeper? You'd think it would be easier to find bookkeepers. Where are they, and when you do find them, how do you hire the best bookkeeper for your business?

Keeping track of your company's financial data is vital. In fact, it's so important that you can't just leave it to chance.

You need someone in charge of your books who has the training and experience to get the job done right. But finding a quality bookkeeper can be a challenge - unless you know what to look for.

How to Hire a Bookkeeper

To begin with, you need to understand that bookkeepers are not necessarily the same as accountants. While an accountant's job is to provide financial advice and recommendations, a bookkeeper's job entails things like recording income and expenses, reconciling bank statements, processing invoices, and administering payroll.

If that sounds like the kind of person you need, then it's time to start shopping around for someone to fill the position. Bookkeepers can be hired on a part-time, full-time, or even contact basis depending on the needs of the business. But no matter what kind of arrangement you decide to go with, your bookkeeper needs to meet certain basic qualifications.

Bookkeeper Training & Education

A qualified bookkeeper may or may not have a degree in accounting. Some of the best bookkeepers you'll find don't. But they should have completed some formal coursework in bookkeeping through a community college or other accredited institution. For information about the kind of coursework you should be looking for, you might consider contacting the American Institute of Professional Bookkeepers.

Bookkeeper Experience

Although education and training are important, there is no substitute for experience. Hiring a bookkeeper with only a couple of courses under their belt and no actual bookkeeping experience is a recipe for disaster.

It's not uncommon for bookkeepers to operate on a contractual basis, so potential candidates should be able to provide you with a list of satisfied clients you can contact for a reference. You should also plan to check out references of previous employers if the individual has staff experience on either a full- or part-time basis.

Detail-oriented Personality

Bookkeepers live and die in the details. Therefore, it is absolutely critical for them to have detail-oriented personalities. If the person seems frazzled or disorganized at the interview, that's a good sign that they may not be the right person for the job. On the other hand, if the candidate shows up with multiple copies of a well-organized resume and a color-coded Day Planner, you may be on the right track.

Technological Awareness

The art of bookkeeping has come a long way in recent years. Nowadays, most bookkeeping is done in a computerized fashion. Potential candidates should be familiar with - if not proficient in - the record keeping software your business uses on a daily basis.

Costs for Bookkeepers

How much should you pay a bookkeeper? That depends largely on how much you want them to do. If you're planning to outsource your bookkeeping needs, expect to pay between $20 - $50 per hour depending on the complexity and volume of work your business requires.

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How Much Do You Make: Taking A Critical Look At Finances

How Much Does A Small Business Owner Make: Taking A Critical Look At Finances

How Much Does A Small Business Owner Really Make?

If you are a small business owner, you probably have a financial target in mind. This target is the amount of money that you would like to make. However, meeting that goal can be harder than you think. The reason is that much of your money will be swallowed up by the business overhead. Many small business owners do not fully understand the financial side of business ownership, so provided here is a guide to determining how much money you actually have.

How Much Do You Bring In?

In order to start figuring out how much you make, you will first need to figure out how much you bring in. If you have a good bookkeeping system, this should be fairly easy. However, if your bookkeeping system needs work, you may not have a clear idea exactly how much money the company brings in each month.

If your books are out of control, consider hiring outside help. A Virtual Assistant firm such as IAC Professionals can get your bookkeeping back on track. Your VA can also handle a variety of other paperwork tasks, and can be used only when needed.

Once you have determined how much money your business brings in, you will need to determine how much the company spends each month.

How Much Do You Spend?

At this point, you should focus only on your business-related expenses. Your personal expenses should come out of your pay, just as they would if you worked for someone else. Office rent, your company vehicle, software, business phone calls and memberships in professional organizations are just a few of the costs of running a business. You also need to subtract insurance costs, including liability, health and life insurance.

Freshbooks

Once your bookkeeping records are well-organized, it should be fairly easy to determine your set monthly business expenses. Your next step is to subtract your expenses from your income. In theory, the result is your monthly personal income. However, it is not quite that simple. If you are still building your business, you will want to invest a certain amount of your profits back into the company. From software upgrades to building improvements, most small businesses have a backlog of projects that are awaiting funding. Determine how much, in either percentage or hard dollar amount format, you want to reinvest each month.

Determine Your Goal

Only by going through the above steps will you begin to develop a clear picture of how much money you make. Of course, the best you will be able to come up with is an estimate, as most small businesses experience rapid fluctuations in income. Over time, however, you will be able to see patterns and averages. At this point, you can set realistic financial goals and begin working to achieve them.

If you have any questions about how much a small business owner really makes, contact us today.

IAC Professionals is a single source for contracting qualified professionals to assist you with your most critical business needs. They offer a wide range of outsourcing solution which include Accounting, Bookkeeping, Virtual Assistants, Company Formation and Business Consulting.

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IAC Professionals 1-786-214-6046 1.877 MY-IAC-VA IAC Professionals.

Accounting software is vital

Many Australian businesses don’t have adequate financial systems. Michael Rich discusses the most common questions around accounting sofware.

More than 300,000 Australian and New Zealand businesses are using out-of-date accounting software, resulting in a deficiency of vital information that is needed to perform core business activities, according to Michael Rich, managing director, Attaché Software.

This issue is particularly relevant considering we are moving from one financial year to another.

There are opportunities for resellers to advise their clients if their financial software is out-of-date and help them source an alternative solution.

Rich explained that as the economy slows the risks increase so it is more essential than ever for businesses to update their accounting software.

This is to ensure business owners and managers are in better control of basic business procedures including vital business lifelines such as cash flow and stock control.

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Accounting vs. Technology - Who’s At Fault

Did technology play a role in the financial services meltdown?

A columnist for a major IT publication documented his positions on the role of IT in the current financial services meltdown. He asked questions such as “Were the internal IT groups in these firms working on projects that were misaligned with the financial services firms’ business strategy?” The article attempted to place blame where it does not belong.

At the heart of a these spectacular business failures rests a complex and intentionally opaque maze of documents that were designed to obscure anyone’s understanding of the true risk involved in the financial instruments being sold. These instruments wrapped up a mix of high, medium and low risk mortgages into prepackaged bundles that few people could understand. Fewer still understood that these mortgage portfolios would be so vulnerable to a drop in housing values nationwide. Over time, we will probably learn that this obfuscation was absolutely intentional. The firms that created these documents and the financial instruments that went with them were built them in a way that few people could ever understand.

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Accounting and financial reporting are like scorekeeping

Chennai: All of a sudden, conferences and seminars on IFRS (the International Financial Reporting Standards) are the in-thing, where you can find accounting professionals busy taking notes and asking questions, so that they are ready for the 2011 deadline when India will be converging with IFRS.

But why should we be focussing on the IFRS now? When posed that query, Dr Kamal Gupta, former Technical Director of the Institute of Chartered Accountants of India (ICAI), asks in response, "Can India be isolated, if more than 100 countries already adopt IFRS, and more than 150 will adopt it by 2011?"

Even in the US, with a prime GAAP, something epoch-making has happened - subject to certain conditions, the domestic US companies will be moving towards IFRS, he adds. "If the US does it, the UK does it, Brazil, China, Russia… how can India be left."

Most of our companies have global kind of links, be it for exports, imports, shareholding, and so on, reminds Dr Gupta during an evening interaction with Business Line recently. "Therefore, we must do our accounting in a manner that the world understands. So I think more than ever, there is a need for it. The Institute, the Government, the industry recognise it."

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Banking and financial services sector driving the outsourcing industry

The outsourcing industry has given impetus to inflow of foreign exchange and creating job opportunities in India. The financial services sector has emerged as a key domain for outsourcing.

Work Flow and Growth Prospects

Banking, financial services and insurance (BFSI) comprise 38 per cent of the outsourcing industry in India (worth $47.8 billion in 2007). Most of the work outsourced comes from the US followed by Europe.

According to a report by Mckinsey and Nasscom, India has the potential to process 30 per cent of the banking transactions in the US by the year 2010. Outsourcing by the BFSI to India is expected to grow at an annualised rate of 30 - 35 per cent.

Outsourced services from the BFSI domain include customer support, software and solutions required for core banking, various banking processes like mortgage loan processing, application processing, verifications etc, and other services like market analysis, financial statement analysis etc.

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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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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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China urges financial institutions to extend service in rural areas

China's banking regulators have urged financial institutions to speed up innovations and mechanism reform in rural areas to make credit more accessible to farmers.

The country had made progress at extending financial services in rural areas, including the establishment of new types of financial institutions and development of micro loans, chairman of China Banking Regulatory Commission (CBRC) Liu Mingkang said.

The country had 50 new-type rural financial institutions so far, including county- and village-level financial organs, credit companies and capital mutual aid organizations.

Credit from these new type of rural financial institutions mainly went to farm households and small-sized enterprises in rural areas.

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Survey finds shortage of accounting, finance workers

A majority of employers say they're having trouble finding qualified accounting and finance professionals for the second year in a row, according to a recent survey by Robert Half International.

Fifty six percent of finance and human resource managers surveyed reported shortages in those fields.

A greater number of those surveyed -- 73 percent versus 46 percent in 2007 -- said they're concerned about losing top performers to other opportunities.

More than 4,000 finance and human resources managers in 20 countries participated in the survey.

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UK accounting and finance professionals shortage less pronounced than rest of world

The UK is the only major economy not to have experienced an increase in the shortage of skilled accounting and finance professionals, a new survey has found.

However, 43 per cent of hiring managers in Britain are still finding it difficult to recruit experienced staff in this field, according to the Robert Half Global Financial Employment Monitor.

Online Recruitment reports that this is down from 53 per cent last year.

Of the 20 countries surveyed, an average of 56 per cent of employers admitted to struggling to find qualified professionals. In addition, 58 per cent raised concerns about retention of staff.

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Another bad week for finance companies

Finance company investors endured another stretch of rocky road this week, with more losses, some companies failing to comply with listing rules and a director fighting to hang on to his money.

Restructured Geneva Finance ended its debut week on the sharemarket with its shares at less than a third of their issue value.

The shares were untraded on their first day on the NZAX board on Tuesday, but closed at 13c on Wednesday and slumped 23 per cent on Thursday to just under 10c.

The stock ended the week at 11c, valuing the company at just under $7.7 million.

Investors had agreed to convert 15 per cent of the $98.4 million in debenture funds and $11.5 million owed to note holders into new shares at a rate of one share for 36.49c. Geneva would repay the balance of the money by instalments over 4 1/2 years for debenture holders and 5 1/2 years for note holders.

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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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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.

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New accounting norms to hit dole-happy cos

Companies giving stock options to their employees to retain them are expected to see a drop in their profits as they adopt international accounting standards.

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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