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Accounting

Accounting

I want to talk about how to keep track of the money in a company. That is called accounting and we’re going start with the basics of accounting.

Accounting is keeping track of the money in a company. It’s critical to keep good books and CPA for a business, no matter how small it is. I’m not going to lay out exactly how to do that, but I am going to discuss a few important principals.

The first important principal is every financial transaction of a company needs to be recorded. This process has been made much easier with the advent of accounting software. For most startups, Quickbooks will do in the beginning. As the company grows, the choice of accounting software will become more complicated, but by then you will have hired a financial team that can make those choices.

The recording of financial transactions is not an art. It is a science and a well understood science. It revolves around the twin concepts of a “chart of accounts” and “double entry accounting.” Let’s start with the chart of accounts.

The accounting books of a company start with a chart of accounts. There are two kinds of accounts; income/expense accounts and asset/liability accounts. The chart of accounts includes all of them. Income and expense accounts represent money coming into and out of a business. Asset and liability accounts represent money that is contained in the business or owed by the business.

Advertising revenue that you receive from Google Adsense would be an income account. The salary expense of a developer you hire would be an expense account. Your cash in your bank account would be an asset account. The money you owe on your company credit card would be called “accounts payable” and would be a liability.

When you initially set up your chart of accounts, the balance in each and every account is zero. As you start entering financial transactions in your accounting software, the balances of the accounts goes up or possibly down.

The concept of double entry accounting is important to understand. Each financial transaction has two sides to it and you need both of them to record the transaction. Let’s go back to that Adsense revenue example. You receive a check in the mail from Google. You deposit the check at the bank. The accounting double entry is you record an increase in the cash asset account on the balance sheet and a corresponding equal increase in the advertising revenue account. When you pay the credit card bill, you would record a decrease in the cash asset account on the balance sheet and a decrease in the “accounts payable” account on the balance sheet.

These accounting entries can get very complicated with many accounts involved in a single recorded transaction, but no matter how complicated the entries get the two sides of the financial transaction always have to add up to the same amount. The entry must balance out. That is the science of accounting.

Since the objective of this blog is not to turn you all into accountants, I’ll stop there, but I hope everyone understands what a chart of accounts and an accounting entry is now.

Once you have a chart of accounts and have recorded financial transactions in it, you can produce reports. These reports are simply the balances in various accounts or alternatively the changes in the balances over a period of time.

The next three posts are going to be about the three most common reports;

  • the profit and loss statement which is a report of the changes in the income and expense accounts over a certain period of time (month and year being the most common)
  • the balance sheet which is a report of the balances all all asset and liability accounts at a certain point in time
  • the cash flow statement which is report of the changes in all of the accounts (income/expense and asset/liability) in order to determine how much cash the business is producing or consuming over a certain period of time (month and year being the most common)

If you have a company, you must have financial records for it. And they must be accurate and up to date. I do not recommend doing this yourself. I recommend hiring a part-time bookkeeper to maintain your financial records at the start. A good one will save you all sorts of headaches. As your company grows, eventually you will need a full time accounting person, then several, and at some point your finance organization could be quite large.

There is always a temptation to skimp on this part of the business. It’s not a core part of most businesses and is often not valued by tech entrepreneurs. But please don’t skimp on this. Do it right and well. And hire good people to do the accounting work for your company. It will pay huge dividends in the long run.

The Profit And Loss Statement

Today we are going to talk about one of the most important things in business, the profit and loss statement (also known as the P&L).

Picking up from the accounting post last week, there are two kinds of accounting entries; those that describe money coming into and out of your business, and money that is contained in your business. The P&L deals with the first category.

A profit and loss statement is a report of the changes in the income and expense accounts over a set period of time. The most common periods of time are months, quarters, and years, although you can produce a P&L report for any period.

Here is a profit and loss statement for the past four years for Google. I got it from their annual report (10k). I know it is too small on this page to read, but if you click on the image, it will load much larger in a new tab.

Google p&l

The top line of profit and loss statements is revenue (that’s why you’ll often hear revenue referred to as “the top line”). Revenue is the total amount of money you’ve earned coming into your business over a set period of time. It is NOT the total amount of cash coming into your business. Cash can come into your business for a variety of reasons, like financings, advance payments for services to be rendered in the future, payments of invoices sent months ago.

There is a very important, but highly technical, concept called revenue recognition. Revenue recognition determines how much revenue you will put on your accounting statements in a specific time period. For a startup company, revenue recognition is not normally difficult. If you sell something, your revenue is the price at which you sold the item and it is recognized in the period in which the item was sold. If you sell advertising, revenue is the price at which you sold the advertising and it is recognized in the period in which the advertising actually ran on your media property. If you provide a subscription service, your revenue in any period will be the amount of the subscription that was provided in that period.

This leads to another important concept called “accrual accounting.” When many people start keeping books, they simply record cash received for services rendered as revenue. And they record the bills they pay as expenses. This is called “cash accounting” and is the way most of us keep our personal books and records. But a business is not supposed to keep books this way. It is supposed to use the concept of accrual accounting.

Let’s say you hire a contract developer to build your iPhone app. And your deal with him is you’ll pay him $30,000 to deliver it to you. And let’s say it takes him three months to build it. At the end of the three months you pay him the $30,000. In cash accounting, in month three you would record an expense of $30,000. But in accrual accounting, each month you’d record an expense of $10,000 and because you aren’t actually paying the developer the cash yet, you charge the $10,000 each month to a balance sheet account called Accrued Expenses. Then when you pay the bill, you don’t touch the P&L, its simply a balance sheet entry that reduces Cash and reduces Accrued Expenses by $30,000.

The point of accrual accounting is to perfectly match the revenues and expenses to the time period in which they actually happen, not when the payments are made or received.

With that in mind, let’s look at the second part of the P&L, the expense section. In the Google P&L above, expenses are broken out into several categories; cost of revenues, R&D, sales and marketing, and general and administration. You’ll note that in 2005, there was also a contribution to the Google Foundation, but that only happened once, in 2005.

The presentation Google uses is quite common. One difference you will often see is the cost of revenues applied directly against the revenues and a calculation of a net amount of revenues minus cost of revenues, which is called gross margin. I prefer that gross margin be broken out as it is a really important number. Some businesses have very high costs of revenue and very low gross margins. And example would be a retailer, particularly a low price retailer. The gross margins of a discount retailer could be as low as 25%.

Google’s gross margin in 2009 was roughly $14.9bn (revenue of $23.7bn minus cost of revenues of $8.8bn). The way gross margin is most often shown is as a percent of revenues so in 2009 Google’s gross margin was 63% (14.9bn divided by 23.7). I prefer to invest in high gross margin businesses because they have a lot of money left after making a sale to pay for the other costs of the business, thereby providing resources to grow the business without needing more financing. It is also much easier to get a high gross margin business profitable.

The other reason to break out “cost of revenues” is that it will most likely increase with revenues whereas the other expenses may not. The non cost of revenues expenses are sometimes referred to as “overhead”. They are the costs of operating the business even if you have no revenue. They are also sometimes referred to as the “fixed costs” of the business. But in a startup, they are hardly fixed. These expenses, in Google’s categorization scheme, are R&D, sales and marketing, and general/admin. In layman’s terms, they are the costs of making the product, the costs of selling the product, and the cost of running the business.

The most interesting line in the P&L to me is the next one, “Income From Operations” also known as “Operating Income.” Income From Operations is equal to revenue minus expenses. If “Income From Operations” is a positive number, then your base business is profitable. If it is a negative number, you are losing money. This is a critical number because if you are making money, you can grow your business without needing help from anyone else. Your business is sustainable. If you are not making money, you will need to finance your business in some way to keep it going. Your business is unsustainable on its own.

The line items after “Income From Operations” are the additional expenses that aren’t directly related to your core business. They include interest income (from your cash balances), interest expense (from any debt the business has), and taxes owed (federal, state, local, and possibly international). These expenses are important because they are real costs of the business. But I don’t pay as much attention to them because interest income and expense can be changed by making changes to the balance sheet and taxes are generally only paid when a business is profitable. When you deduct the interest and taxes from Income From Operations, you get to the final number on the P&L, called Net Income.

I started this post off by saying that the P&L is “one of the most important things in business.” I am serious about that. Every business needs to look at its P&L regularly and I am a big fan of sharing the P&L with the entire company. It is a simple snapshot of the health of a business.

I like to look at a “trended P&L” most of all. The Google P&L that I showed above is a “trended P&L” in that it shows the trends in revenues, expenses, and profits over five years. For startup companies, I prefer to look at a trended P&L of monthly statements, usually over a twelve month period. That presentation shows how revenues are increasing (hopefully) and how expenses are increasing (hopefully less than revenues). The trended monthly P&L is a great way to look at a business and see what is going on financially.

I’ll end this post with a nod to everyone who commented last week that numbers don’t tell you everything about a business. That is very true. A P&L can only tell you so much about a business. It won’t tell you if the product is good and getting better. It won’t tell you how the morale of the company is. It won’t tell you if the management team is executing well. And it won’t tell you if the company has the right long term strategy. Actually it will tell you all of that but after it is too late to do anything about it. So as important as the P&L is, it is only one data point you can use in analyzing a business. It’s a good place to start. But you have to get beyond the numbers if you really want to know what is going on.

The Balance Sheet

The Balance Sheet shows how much capital you have built up in your business.

If you go back to my post on Accounting, you will recall that there are two kinds of accounts in a company’s chart of accounts; revenue and expense accounts and asset and liability accounts.

Last week we talked about the Profit and Loss statement which is a report of the revenue and expense accounts.

The Balance Sheet is a report of the asset and liability accounts. Assets are things you own in your business, like cash, capital equipment, and money that is owed to you for products and services you have delivered to customers. Liabilities are obligations of the business, like bills you have yet to pay, money you have borrowed from a bank or investors.

Here is Google’s balance sheet as of 12/31/2009:

Google balance sheet

Let’s start from the top and work our way down.

The top line, cash, is the single most important item on the balance sheet. Cash is the fuel of a business. If you run out of cash, you are in big trouble unless there is a “filling station” nearby that is willing to fund your business. Alan Shugart, founder of Seagate and a few other disk drive companies, famously said “cash is more important than your mother.” That’s how important cash is and you never want to get into a situation where you run out of it.

The second line, short term investments, is basically additional cash. Most startups won’t have this line item on their balance sheet. But when you are Google and are sitting on $24bn of cash and short term investments, it makes sense to invest some of your cash in “short term instruments”. Hopefully for Google and its shareholders, these investments are safe, liquid, and are at very minimal risk of loss.

The next line is “accounts receivable”. Google calls it “net receivables’ because they are netting out money some of their partners owe them. I don’t really know why they are doing it that way. But for most companies, this line item is called Accounts Receivable and it is the total amount of money owed to the business for products and services that have been delivered but have not been collected. It’s the money your customers owe your business. If this number gets really big relative to revenues (for example if it  represents more than three months of revenues) then you know something is wrong with the business. We’ll talk more about that in an upcoming post about financial statement analysis.

I’m only going to cover the big line items in this balance sheet. So the next line item to look at is called Total Current Assets. That’s the amount of assets that you can turn into cash fairly quickly. It is often considered a measure of the “liquidity of the business.”

The next set of assets are “long term assets” that cannot be turned into cash easily. I’ll mention three of them.  Long Term Investments are probably Google’s minority investments in venture stage companies and other such things. The most important long term asset is “Property Plant and Equipment” which is the cost of your capital equipment. For the companies we typically invest in, this number is not large unless they rack their own servers. Google of course does just that and has spent $4.8bn to date (net of depreciation) on its “factory”. Depreciation is the annual cost of writing down the value of your property plant and equipment. It appears as a line in the profit and loss statement. The final long term asset I’ll mention is Goodwill. This is a hard one to explain. But I’ll try. When you purchase a business, like YouTube, for more than it’s “book value” you must record the difference as Goodwill.  Google has paid up for a bunch of businesses, like YouTube and Doubleclick, and it’s Goodwill is a large number, currently $4.9bn. If you think that the value of any of the businesses you have acquired has gone down, you can write off some or all of that Goodwill. That will create a large one time expense on your profit and loss statement.

After cash, I believe the liability section of the balance sheet is the most important section. It shows the businesses’ debts. And the other thing that can put you out of business aside from running out of cash is inability to pay your debts. That is called bankruptcy. Of course, running out of cash is one reason you may not be able to pay your debts. But many companies go bankrupt with huge amounts of cash on their books. So it is critical to understand a company’s debts.

The main current liabilities are accounts payable and accrued expenses. Since we don’t see any accrued expenses on Google’s balance sheet I assume they are lumping the two together under accounts payable. They are closely related. Both represent expenses of the business that have yet to be paid. The difference is that accounts payable are for bills the company receives from other businesses. And accrued expenses are accounting entries a company makes in anticipation of being billed. A good example of an accounts payable is a legal bill you have not paid. A good example of an accrued expense is employee benefits that you have not yet been billed for that you accrue for each month.

If you compare Current Liabilities to Current Assets, you’ll get a sense of how tight a company is operating. Google’s current assets are $29bn and its current liabilities are $2.7bn. It’s good to be Google, they are not sweating it. Many of our portfolio companies operate with these numbers close to equal. They are sweating it.

Non current liabilities are mostly long term debt of the business. The amount of debt is interesting for sure. If it is very large compared to the total assets of the business its a reason to be concerned. But its even more important to dig into the term of the long term debt and find out when it is coming due and other important factors. You won’t find that on the balance sheet. You’ll need to get the footnotes of the financial statements to do that. Again, we’ll talk more about that in a future post on financial statement analysis.

The next section of the balance sheet is called Stockholders Equity. This includes two categories of “equity”. The first is the amount that equity investors, from VCs to public shareholders, have invested in the business. The second is the amount of earnings that have been retained in the business over the years. I’m not entirely sure how Google breaks out the two on it’s balance sheet so we’ll just talk about the total for now. Google’s total stockholders equity is $36bn. That is also called the “book value” of the business.

The cool thing about a balance sheet is it has to balance out. Total Assets must equal Total Liabilities plus Stockholders Equity. In Google’s case, total assets are $40.5bn. Total Liabilities are $4.5bn. If you subtract the liabilities from the assets, you get $36bn, which is the amount of stockholders equity.

We’ll talk about cash flow statements next week and the fact that a balance sheet has to balance can be very helpful in analyzing and projecting out the cash flow of a business.

In summary, the Balance Sheet shows the value of all the capital that a business has built up over the years. The most important numbers in it are cash and liabilities. Always pay attention to those numbers. I almost never look at a profit and loss statement without also looking at a balance sheet. They really should be considered together as they are two sides of the same coin.

Cash Flow

The standard form of a cash flow statement is a bit hard to comprehend in my opinion and I don’t think it does a very good job of describing the various aspects of cash flow in a business.

That said, let’s start with the concept of cash flow and we’ll come back to the accounting treatment.

Cash flow is the amount of cash your business either produces or consumes in a given period, typically a month, quarter, or year. You might think that is the same as the profit of the business, but that is not correct for a bunch of reasons.

The profit of a business is the difference between revenues and expenses. If revenues are greater than expenses, your business is producing a profit. If expenses are greater than revenues, your business is producing a loss.

But there are many examples of profitable businesses that consume cash. And there are also examples of unprofitable businesses that produce cash, at least for a period of time.

Here’s why.

As I explained in the Income Statement post, revenues are recognized as they are earned, not necessarily when they are collected. And expenses are recognized as they are incurred, not necessarily when they are paid for. Also, some things you might think of as expenses of a business, like buying servers, are actually posted to the Balance Sheet as property of the business and then depreciated (ie expensed) over time.

So if you have a business with significant hardware requirements, like a hosting business for example, you might be generating a profit on paper but the cash outlays you are making to buy servers may mean your business is cash flow negative.

Another example in the opposite direction would be a software as a service business where your company gets paid a year in advance for your software subscription revenues. You collect the revenue upfront but recognize it over the course of the year. So in the month you collect the revenue from a big customer, you might be cash flow positive, but your Income Statement would show the business operating at a loss.

Cash flow is really easy to calculate. It’s the difference between your cash balance at the start of whatever period you are measuring and the end of that period. Let’s say you start the year with $1mm in cash and end the year with $2mm in cash. Your cash flow for the year is positive by $1mm. If you start the year with $1mm in cash and end the year with no cash, your cash flow for the year is negative by $1mm.

But as you might imagine the accounting version of the cash flow statement is not that simple. Instead of getting into the standard form, which as I said I don’t really like, let’s talk about a simpler form that gets you to mostly the same place.

Let’s say you want to do a cash flow statement for the past year. You start with your Net Income number from your Income Statement for the year. Let’s say that number is $1mm of positive net income.

Then you look at your Balance Sheet from the prior year and the current year. Look at the Current Assets (less cash) at the start of the year and the Current Assets (less cash) at the end of the year. If they have gone up, let’s say by $500,000, then you subtract that number from your Net Income. The reason you subtract the number is your business used some of your cash to increase its current assets. One typical reason for that is your Accounts Receivable went up because your customers are taking longer to pay you.

Then look at your Non-Current Assets at the start of the year and the end of the year. If they have gone up, let’s say by $500k, then you also subtract that number from your Net Income. The reason is your business used some of your cash to increase its Non-Current Assets, most likely Property, Plant, and Equipment (like servers).

At this point, halfway through this simplified cash flow statement, your business that had a Net Income of $1mm produced no cash because $500k of it went to current assets and $500k of it went to non-current assets.

Liabilities work the other way. If they go up, you add the number to Net Income. Let’s start with Current Liabilities such as Accounts Payable (money you owe your suppliers, etc). If that number goes up by $250k over the course of the year, you are effectively using your suppliers to finance your business. Another reason current liabilities could go up is Deferred Revenue went up. That would mean you are effectively using your customers to finance your business (like that software as a service example earlier on in this post).

Then look at Long Term Liabilities. Let’s say they went up by $500k because you borrowed $500k from the bank to purchase the servers that caused your Non-Current Assets to go up by $500k. So add that $500k to Net Income as well.

Now, the simplified cash flow statement is showing $750k of positive cash flow. But we have one more section of the Balance Sheet to deal with, Stockholders Equity. For Stockholders Equity, you need to back out the current year’s net income because we started with that. Once you do that, the main reason Stockholders Equity would go up would be an equity raise. Let’s say you raised $1mm of venture capital during the year and so Stockholder’s Equity went up by $1mm. You’d add that $1mm to Net Income as well.

So, that’s basically it. You start with $1mm of Net Income, subtract $500k of increased current assets, subtract $500k of increased non-current assets, add $250k of increased current liabilities, add $500k of increased long-term liabilities, and add $1mm of increased stockholders equity, and you get positive cash flow of $1.75mm.

Of course, you’ll want to check this against the cash balance at the start of the year and the end of the year to make sure that in fact cash did go up by $1.75mm. If it didn’t, then you have to go back and check your math.

So why would anyone want to do the cash flow statement the long way if you can simply compare cash at the start of the year and the end of the year? The answer is that doing a full-blown cash flow statement tells you a lot about where you are consuming or producing cash. And you can use that information to do something about it.

Let’s say that your cash flow is weak because your accounts receivable are way too high. You can hire a dedicated collections person. You can start cutting off customers who are paying you too late. Or you can do a combination of both. Bringing down accounts receivable is a great way to improve a business’ cash flow.

Let’s say you are spending a boatload on hardware to ramp up your web service’s capacity. And it is bringing your cash flow down. If you are profitable or have good financial backers, you can go to a bank and borrow against those servers. You can match non-current assets to long-term liabilities so that together they don’t impact the cash flow of your business.

Let’s say your current liabilities went down over the past year by $500k. That’s a $500k reduction in your cash flow. Maybe you are paying your bills much more quickly than you did when you started the business and had no cash. You might instruct your accounting team to slow down bill payment a bit and bring it back in line with prior practices. That could help produce better cash flow.

These are but a few examples of the kinds of things you can learn by doing a cash flow statement. It’s simply not enough to look at the Income Statement and the Balance Sheet. You need to understand the third piece of the puzzle to see the business in its entirety.

One last point and I am done with this week’s post. When you are doing projections for future years, I encourage management teams to project the income statement first, then the cash flow statement, and then end up with the balance sheet. You can make assumptions about how the line items in the Income Statement will cause the various Balance Sheet items to change (like Accounts Receivable should be equal to the past three months of revenue) and then lay all that out as a cash flow statement and then take the changes in the various items in the cash flow statement to build the Balance Sheet. I like to do that in monthly form. We’ll talk more about projections next week because I think this is a very important subject for startups and entrepreneurial management teams to wrap their heads around.

 

Categories
Business Trends

Miami Health Care Accountants Optimistic about Business Growth

Health Care Accountants Optimistic about Business Growth

Miami Health Care Accountants are more optimistic about business growth predictions for 2012 in their respective states than the nation as a whole, according to a new survey of Health Care Accountants in Florida, Texas and California.

Those polled were most confident about the Health Care Accountants industry, and their own Health Care Accountants. Information technology tops the list of capital investments planned in the coming year. Survey respondents also anticipate some new hiring in the next 12 months. Health care costs continue to be a top concern of businesses along with government regulation and uncertainty in the tax laws.

Healthcare Accounting Service

The poll was conducted for Health Care Accountants industry and Institute of CPAs.

It polled nearly 13,000 Health Care Accountants in who are partners or sole owners of public Health Care Accountants or serve as CEOs, CFOs or presidents of companies in various industries. More than 2,100 Health Care Accountants completed the survey.

“The poll showed that Health Care Accountants in the three states feel confident about the prospects for growth in the Health Care Accountants industries they work in and serve, but still have concerns about factors beyond their control”,  said Health Care Accountants VieraCPA in a statement. This includes increasing health care costs and government regulation, and the lack of available credit to grow theirs or their clients’ businesses.”

Only 6 percent of the Health Care Accountants who responded predict robust growth in the United States, but the numbers climb as they evaluated the growth outlook for their own state (9 percent), Health Care Accounting Service industry (20 percent), and organization (26 percent).

The Health Care Accountants surveyed did not report significant decreases in workforce or revenues since the financial crises took hold, and say they expect both areas to increase marginally in the next year. These Health Care Accountants business leaders expect marginal (53 percent) or substantial (7 percent) revenue growth in the next year, with marginal (32 percent) and substantial (2 percent) growth in employment. Less than 10 percent of respondents predict a reduction in employment.

Information technology topped the list of investment and spending priorities over the next year. Sixty percent of the surveyed Health Care Accountants said their organizations plan to invest marginally or significantly more in this area followed by 40 percent planning capital spending increases. Product development and marketing/advertising will remain relatively flat with more than 50 percent citing no change in either category.

Health Care Accountants and their clients listed the ability to obtain funding as a significant area of concern. Approximately 76 percent do not think small businesses have access to adequate credit to grow or sustain their operations. The financial crisis and forecasts for slow growth greatly reduce their or their clients’ ability to obtain loans, according to 70 percent of the Health Care Accountants polled. Health Care Accountants also cite health care costs as a concern, with 98 percent of those surveyed responding affirmatively when asked if the cost of health care benefits was a worry for businesses in their states.

Some are looking into this area for savings, with 94 percent agreeing that companies are reevaluating employee/benefit costs, while 63 percent are aware of companies dropping or reducing employee health insurance coverage. Labor costs, workers’ compensation, and public pension funding were also seen as problems, with public pension exposure taking the highest percentage among the three.

 

 

Categories
Tax

Miami Accounting CPA List of 9 Top Tax Scams

Miami Accounting CPA issues a list of 9 Top Tax Scams on how to reduce tax liability 

Miami Accounting firms and taxpayers are to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to fraud.

The list of 9 Top Tax Scams, compiled by Miami Accounting Tax Services each year, lists a variety of common scams taxpayers can encounter on how to reduce tax liability and other matters. But many of these schemes peak during Miami Accounting filing season as people are in the process of Income Tax Preparation in Miami.

“Miami Accounting Taxpayers should be careful and avoid falling into a trap with the Miami Accounting CPA today issued a list of 9 Top Tax Scam,” said Miami Accounting VieraCPA. “Scam artists (including some Miami Accounting Tax Preparers) will tempt people in-person, on-line and by e-mail with misleading promises about how to reduce tax liability and false refunds. Don’t be fooled by these scams.”

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shutdown scams and prosecute the criminals behind them.
Hiding Income Offshore

Miami Accounting CPA’s are very cautious of individuals who have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities, using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and Income Tax Preparation in Miami Accounting Firms suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice to prosecute tax evasion cases.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting and disclosure requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution, according to Miami Accounting CPA Gustavo A Viera.

Since 2009, 30,000 individuals have come forward voluntarily to disclose their foreign financial accounts, taking advantage of special opportunities to bring their money back into the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore will become increasingly more difficult.

At the beginning of this year, the Miami Accounting Firms warned clients IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion.  This program will be open for an indefinite period until otherwise announced.

The IRS has collected $3.4 billion so far from people who participated in the 2009 offshore program, reflecting closures of about 95 percent of the cases from the 2009 program. On top of that, the IRS has collected an additional $1 billion from upfront payments required under the 2011 program.  That number will grow as the IRS processes the 2011 cases.

“Free Money” from the IRS & Tax Scams Involving Social Security

Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can do their Income Tax Preparation in Miami with little or no documentation, have been appearing in community churches around the country. These schemes are also often spread by word of mouth as unsuspecting and well-intentioned people tell their friends and relatives.

Miami Accounting Tax Service Scammers prey on low income individuals and the elderly. They build false hopes and charge people good money for bad advice. In the end, the victims discover their claims are rejected. Meanwhile, the promoters are long gone. The IRS warns all taxpayers to remain vigilant.

There are a number of tax scams involving Social Security. For example, Miami Accounting Tax Service scammers have been known to lure the unsuspecting with promises of non-existent Social Security refunds or rebates. In another situation, a taxpayer may really be due a credit or refund but uses inflated information to complete the return.

Beware. Intentional mistakes of this kind can result in a $5,000 penalty.

False/Inflated Income and Expenses

Including income that was never earned, either as wages or as self-employment income in order to maximize refundable credits, is another popular scam. Claiming income you did not earn or expenses you did not pay in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions when doing your Income Tax Preparation in Miami.  This could result in repaying the erroneous refunds, including interest and penalties, and in some cases, even prosecution.

Additionally, some taxpayers are filing excessive claims for the fuel tax credit. Farmers and other taxpayers who use fuel for off-highway business purposes may be eligible for the fuel tax credit. But other individuals have claimed the tax credit when their occupations or income levels make the claims unreasonable. Fraud involving the fuel tax credit is considered a frivolous tax claim and can result in a penalty of $5,000.

False Form 1099 Refund Claims

In this ongoing scam, the perpetrator files a fake information return, such as a Form 1099 Original Issue Discount (OID), to justify a false refund claim on a corresponding tax return. In some cases, individuals have made refund claims based on the bogus theory that the federal government maintains secret accounts for U.S. citizens and that taxpayers can gain access to the accounts by issuing 1099-OID forms to the IRS.

Don’t fall prey to Miami Accounting Services who encourage you to claim deductions or credits to which you are not entitled or willingly allow others to use your information to file false returns. If you are a party to such schemes, you could be liable for financial penalties or even face criminal prosecution.

Frivolous Arguments

Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. Miami Accounting CPA’s have a list of frivolous tax arguments that taxpayers should avoid. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

Falsely Claiming Zero Wages

Filing a phony information return is an illegal way to lower the amount of taxes an individual owes. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer may also submit a statement rebutting wages and taxes reported by a payer to the IRS.

Sometimes, fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any variations of this scheme. Filing this type of return may result in a $5,000 penalty.

Abuse of Charitable Organizations and Deductions

IRS examiners continue to uncover the intentional abuse of 501(c)(3) organizations, including arrangements that improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or the income from donated property. The IRS is investigating schemes that involve the donation of non-cash assets –– including situations in which several organizations claim the full value of the same non-cash contribution. Often these donations are highly overvalued or the organization receiving the donation promises that the donor can repurchase the items later at a price set by the donor. The Pension Protection Act of 2006 imposed increased penalties for inaccurate appraisals and set new standards for qualified appraisals.

Disguised Corporate Ownership

Third parties are improperly used to request employer identification numbers and form corporations that obscure the true ownership of the business.

These entities can be used to underreport income, claim fictitious deductions, avoid filing tax returns, participate in listed transactions and facilitate money laundering, and financial crimes. The IRS is working with state authorities to identify these entities and bring the owners into compliance with the law.

Misuse of Trusts

For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. While there are legitimate uses of trusts in tax and estate planning, some highly questionable transactions promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. Such trusts rarely deliver the tax benefits promised and are used primarily as a means of avoiding income tax liability and hiding assets from creditors, including the IRS.

IRS personnel have seen an increase in the improper use of private annuity trusts and foreign trusts to shift income and deduct personal expenses. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering a trust arrangement.

Categories
Business Trends

CPA firms Tips for Dissolving a Business Partnership

CPA firms in Miami can help you if you or your partner trying to exit or dissolve your business partnership?

Business partnerships, just like CPA firms in Miami, dissolve for many reasons – one partner may have lost interest, is no longer committed to the business or just wants to retire.  Sometimes things just don’t work out.

But how do you plan and execute a clean dissolution of your partnership? What are your options and what legal steps must you take? CPA firms Gustavo Viera will walk-through your options and your obligations.

Revisit Your Partnership Agreement and Review Your Options with your CPA firms

CPA firms always recommend and is the one critical foundation for a clean break-up, the partnership agreement – best established when you formed your partnership.  Most agreements outline how the partners will run the business – how business decisions are made, how responsibilities are divided, how disagreements will be resolved and so forth.  A good one will also include a dissolution strategy, like a prenuptial agreement.  Although not required by law, CPA firms in Miami warn it can be extremely risky to operate without one.

CPA firms advice is if your partnership isn’t working, revisit the agreement and review your options. Remember, dissolving the partnership isn’t always necessary. You might consider changing the weighting of the partnership so that one partner has more decision-making or financial control through a majority share, allowing a less-committed partner to remain involved while relinquishing some control.

If that’s not an option, and you or your partner wish to continue the business outside the partnership, consider selling your share or buying your partner’s share. Consult an CPA firms to ensure your interests are protected during this process.

If either of you want out or you can’t reach an agreement about the future of the business, it may be time to legally dissolve the partnership.

CPA firms How to Guide on Legally Dissolving a Partnership

Dissolving business partnerships is governed by state law, so check your state’s website for information about the process and the forms you need to complete.  It usually takes 90 days from filing a statement of dissolution (usually a simple one-page form prepared by your CPA firms) to dissolve a partnership.

The process ensures that neither partner will be responsible for the other’s debts and liabilities and, once dissolved, that neither partner can enter into any binding transaction on behalf of the partnership. It also renders your original partnership agreement void.

Before you file any paperwork with your state, make sure you review with your CPA firms in Miami your current business:

  • Have you or your partners completed all agreed duties?
  • What is the business worth? A third-party valuation can help you develop this figure. Once your partnership is dissolved you can typically expect each partner to assume business assets and liabilities based on percentage of ownership.
  • Review all leases, contracts, and loan agreements to see how the dissolution will affect them.  For example, are you locked into a contract period regardless of your partnership status?

Once the partnership dissolution is in process, draft a dissolution agreement with the help of a Miami CPA Firms. This will outline the terms of the split and protect you against any future disputes or claims that might be brought against you.

What if You Never Had a Partnership Agreement?

If you didn’t have a partnership agreement that outlined a dissolution strategy, try to work out terms together. If not, an intermediary such as your CPA firms in Miami may be able to help you resolve your dispute through mediation. Many law firms offer these services. Your final resort is a court-dictated decision which could be costly and may not provide the result you were looking for. Courts often divide assets and liabilities 50-50 regardless of any disputes.

Miami Accounting CPA Firms Big Question – What about Taxes?

There are no direct tax consequences of dissolving a partnership, but you will need to account for business-owned property that has appreciated in value and for payment of business and employer taxes. Let the tax authorities know that you are no longer in partnership when you file your final return.

Notify Suppliers, Customers, and the Authorities

Don’t forget to notify customers, partners, and suppliers. If you choose to continue the business in your own right, give the message a positive spin.

You will to tie up some loose ends, such as business licenses, permits, “doing business as” name registrations, and final paychecks for example. Refer to your Accounting in Miami CPA Firms for more information.

Continuing the Business?

If you want to continue and grow the business after dissolution, consider restructuring it as an LLC or S Corporation. And it never hurts to get mentoring from your Miami CPA Firms or legal counsel to help you formulate your new business strategy.

 

Categories
Tax

IRS Stops Accounting Services Miami Accused of Stealing Client Refunds

IRS Stops Accounting Services Miami Accused of Stealing Client Refunds

The Internal Revenue Service’s Criminal Investigation division has cracked down on a pair of Accounting Services Miami accused of stealing their clients’ tax refunds.

In one case, Accounting Services Miami has pleaded guilty and faces up to six years in prison. The Accounting Services Miami admitted to preparing and filing hundreds of tax returns, including his own, claiming inaccurate and false  items on his taxpayer-clients’ returns. They filed the false tax returns to increase refunds, collecting over $1.4 million of stolen refunds from the IRS. Hence a reason always to hire licensed CPA Firms.

According to the plea agreement, the pair of Accounting Services Miami and Tax Accountants accused would meet clients at their homes and prepare a largely accurate income tax return on his laptop. If the client was due a refund, the pair of Accounting Services Miami and Tax Accountants accused would give the client a check from his personal checking account in the amount stated on the accurate return and misrepresent to the client that he would file the accurate return with the IRS according to CPA Firms

Accounting Services Miami Close to the case:

Later, the pair of Accounting Services Miami and Tax Accountants accused would prepare a false tax return, including fictitious items such as false spouses, dependents, child or dependent care, and education expenses, in order to increase the refund amount.  The pair of Accounting Services Miami and Tax Accountants accused would forge the signature of the taxpayer and then mail the false tax return to the IRS. The pair of Accounting Services Miami and Tax Accountants accused would direct the inflated refunds to be deposited into 29 different bank accounts that he controlled.

The pair of Accounting Services Miami and Tax Accountants also admitted, according to his plea agreement, that he employed a similar scheme on his own 2008 federal tax return, claiming a fictitious spouse and dependent. They also admitted failing to report their true income from his tax return business and the illegal refunds he received.

As part of his plea agreement, the Accounting Services Miami agreed to a permanent injunction, barring him for life from preparing federal income tax returns for anyone other than himself and his legal spouse and barring him from representing persons before the IRS. The non CPA Firms will publish the civil injunction to all of his current clients. They also agreed to make full restitution in the amount of $753,477 and agreed to enter into a closing agreement with the IRS for taxable years 2005 through 2009, correctly reporting his tax liability to the IRS.

The pair of Accounting Services Miami and Tax Accountants convicted face a combined maximum sentence of six years in prison when they is sentenced in May, along with a one-year period of supervised release; a fine of $500,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and a mandatory special assessment of $200.

In a similar case, a Accounting Services Miami, was arrested and made his initial appearance in court. A federal grand jury returned a 39-count indictment Wednesday charging him with 35 counts of filing false income tax returns and four counts of theft of government property, namely tax refunds and economic stimulus checks.

According to the indictment, the Accounting Services Miami filed 35 tax returns claiming false deductions, expenses or credits for which the taxpayer was either not entitled to claim or only entitled to claim substantially less than the reported amount. The false tax returns allegedly included information with respect to false dependents, unreimbursed employee business expenses, education credits, and business profit or loss.  Accounting Services Miami allegedly also stole two refund checks and two stimulus checks issued from his clients.

Categories
Tax

Miami Income Tax Mortgage Debt Forgiveness: 10 Key Points

Miami Income Tax Mortgage Debt Forgiveness: 10 Key Points

VieraCPA a Miami Income Tax firm points out that canceled debt is normally taxable to you, but there are exceptions. One of those exceptions is available to homeowners whose mortgage debt is partly or entirely forgiven during tax years 2007 through 2012.

Miami Income Tax

Miami Income Tax CPA Firms would like you to know these 10 facts about Mortgage Debt Forgiveness:

1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence, according to VieraCPA a Miami Income Tax Firm.
2. Miami Income Tax Firms point out the limit is $1 million for a married person filing a separate return.
3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
4. Miami Income Tax Firms remind you that to qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.
5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion, according to VieraCPA a Miami CPA Firms.
6. Miami Income Tax Firms point out that proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion.
7. If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.
8. Miami Income Tax CPA Gustavo Viera points out that debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions – such as insolvency – may be applicable. IRS Form 982 provides more details about these provisions.
9. If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
10. Miami Income Tax CPA Firms advises to examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.
For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit www.irs.gov. IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments, is also an excellent resource.
You can also use the Interactive Tax Assistant available on the IRS website to determine if your cancelled debt is taxable. The ITA takes you through a series of questions and provides you with responses to tax law questions.

Finally, you may obtain copies of IRS publications and forms either by downloading them from www.irs.gov or by Miami Income Tax CPA Firms.

Categories
Tax

Small Business CPA Warns of Taxation of abandonments, foreclosures and repossessions

Small Business CPA Warns of Taxation of abandonments, foreclosures and repossessions

Small Business CPA Office warn many taxpayers in the current economy have had trouble paying mortgages, car notes and other debts. Some are forced to abandon property, go through foreclosures or have property repossessed. While such measures may alleviate the financial burden on these taxpayers, Small Business CPA warn of the tax consequences often are overlooked.

Small Business CPA warn that when property that secures a debt is abandoned by voluntary or involuntary action, the tax consequence depends, among other things, on whether the taxpayer was personally liable for the debt and whether the abandoned property was personal use, according to VieraCPA a Small Business CPA.

PROPERTY SECURED BY RECOURSE DEBT

Small Business CPA remind you that if the debtor is personally liable for the loan on the property being abandoned, the loan is a recourse debt, and until foreclosure or repossession procedures are completed, there are no tax consequences, whether the property is personal use or business use. The foreclosure or repossession is treated as a sale, and the debtor may realize a gain or loss on the deemed sale, according to VieraCPA a Small Business CPA. The amount realized is the lower of the asset’s fair market value on the date of abandonment or the outstanding debt immediately before the transfer, reduced by any amount for which the taxpayer remains personally liable after the transfer. The amount realized also includes any proceeds the debtor received from the foreclosure sale. The amount realized is compared with the debtor’s basis in the property to determine gain or loss.

Small Business CPA warn that the gain from a foreclosure sale of abandoned property is includible in gross income whether or not the taxpayer used the property for business purposes. However, losses from personal-use property are nondeductible. If the property is a business-use asset, the gain or loss on disposition is either a capital or an ordinary gain or loss, depending on the character and nature of the asset. After the foreclosure has been completed, if the financial institution or creditor forgives the debtor any part of the debt, the forgiven portion is cancellation of debt (COD) income and may be includible in the debtor’s gross income. It is reported separately from any gain or loss realized from the sale, according to VieraCPA a Small Business CPA.

PROPERTY SECURED BY NONRECOURSE DEBT

If the debtor is not personally liable for the debt (nonrecourse debt) and abandons personal-use property, such as a home or an automobile, the abandonment is treated as a sale in the year of abandonment. The amount realized on the sale—the outstanding loan balance according to Small Business CPA —is compared with the taxpayer’s adjusted basis in the property to determine gain or loss. Any loss is a nondeductible personal expense. If the property abandoned is business or investment property, the amount of gain or loss is determined in the same way. However, a loss is deductible. The character of the loss depends on the character of the property.

Generally, no COD income arises from these types of transactions because the debtor is not personally liable for the debt. However, if the debtor retains the collateral and accepts a discount from the creditor for the early payment of the debt, or agrees to a loan modification that reduces its principal balance, the amount of the discount or principal reduction is considered COD income, even if the debtor is not personally liable for the debt.

CANCELLATION OF DEBT INCOME

Generally, if a creditor forgives or cancels a taxpayer’s recourse debt, the amount forgiven or canceled is ordinary income to the taxpayer, according to VieraCPA a Small Business CPA. The taxpayer may be able to exclude canceled debt from gross income if the debt cancellation was a gift, or in some cases if the canceled debt was a student loan, deductible debt or a price reduction after the original purchase of the property. Sec. 108 also may exclude canceled debt from gross income if the taxpayer was bankrupt or insolvent immediately before the debt cancellation or if the debt is qualified farm indebtedness, qualified real property business indebtedness or qualified principal residence indebtedness.

This is an overview of some of the principles that are likely to be involved for Small Business CPA clients in these situations. Facts and circumstances may indicate a variety of options and considerations regarding these issues. Small Business CPA can guide clients through such determinations and help them avoid undesirable tax consequences when they must relinquish property securing their debts.

Categories
Accounting

Small Business CPA and Accounting for Small Business

Accounting for Small Business

There is always the need for Accounting for Small Business by business people to understand and apply the principles of Accounting for Small Business to requirements for best practices. There is never enough guidance when it comes to Accounting for Small Business, billing and taxes. There are certain sensitive guidelines which are recommended by CPA’s in order to ensure best practices.

Small Business CPA and Accounting for Small Business

Small Business Accounting Services remind you that in order to have efficient revenue negotiation there is the need to produce reliable and accurate financial reports. This is because users of these reports must be satisfied to be able to trust the financial institution

Accounting for Small Business

Accounting for Small Business must have set out accounting principles based on which financial reports must be prepared, according to their Small Business CPA. These principles and format standards are very crucial because they increase comparability within the various departments in the firm and other business firms as well. Sometimes there is software which is designed to ensure that the reports are produced automatically, or by a Small Business Accounting Services. These software applications have been produced based on standard accounting principles. Therefore there is increased accuracy and dependability on the reports generated and are widely used by Accounting for Small Business.

Accounting for Small Business will create useful and accurate financial statement must comprise the following characteristics:

  • Understandable and Clear: It must not be complicated and must have a clear presentation. The users of the financial statement must be able to spot the necessary information at a glance. There must be transparency because when reports are difficult to understand banks may raise a red flag.
  • Significant Information: The information must be valuable and relevant to the financial or business institution. It is a best practice to make sure the report is prepared within a time period. This increases the accuracy of the report.
  • Trustworthy Information: The management of a firm is responsible for the information in the financial report to be reliable. The transactions must be consistent with what the financial report displays. Being faithful is the key! It must be neutral and free of bias.
  • Comparable: The financial report must be comparable to enable performance review over a specified period of time. The comparison is usually between companies and competitors.

Accounting for Small Business prepare financial statements have information about assets, liabilities and taxes over the financial year. This is why there are a set of documents which play an important role in providing information for a financial statements. These documents include the following:

  1. Balance Sheet
  2. Income Statement
  3. Statement of retained earnings
  4. Statement of change in cash balance
  5. Notes to the financial statement

Your Small Business CPA prepares these documents and must be up to date at all times as they can be used for references at any time of the financial year. This is why they must be accurate and authentic. The information available in these accounting documents is very helpful in best practices for risk management and compliance in banks and business institutions as well. There are other reasons why a good financial report is important, for example when it comes to revenue negotiation and recognition.

Therefore, all Accounting for Small Business must have a standard for financial reporting as a best practice to ensure success.

 

Categories
Tax

Miami CPA’S Point Out Small Employers Can Benefit from Health Care Tax Credit

Miami CPA’S Point Out Small Employers Can Benefit from Health Care Tax Credit

With tax-filing deadlines fast approaching for many small businesses, the Miami CPA’S VieraCPA today encouraged small employers that provide health insurance coverage to their employees to check out the small business health care tax credit and then claim it if they qualify. (You can also check out our Miami CPA’S website for an overview of the tax credit at.

The new Small Business Health Care Tax Credit page on the Miami CPA’S VieraCPA website has information and resources to help small employers see if they qualify for the credit and then calculate it correctly (recommended consulting a Miami CPA’S. The website includes a step-by-step guide for determining eligibility, examples of typical tax savings under various scenarios, answers to frequently-asked questions.

The small business health care tax credit was included in the Affordable Care Act enacted two years ago. Miami CPA’S VieraCPA advise Small employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for this credit. The credit is specifically targeted to help small businesses and tax-exempt organizations provide health insurance for their employees, stated Miami CPA’S VieraCPA.

Depending upon how they are structured, eligible small employers are likely subject to one of the following three tax-filing deadlines, which fall in coming weeks according to Miami CPA’S VieraCPA :

  • March 15: Corporations that file on a calendar year basis can have their Miami CPAS figure the credit on Form 8941 and claim it as part of the general business credit on Form 3800, both of which are attached to their corporate income tax return.
  • April 17: Individuals have until April 17 to complete and file their returns on Form 1040. This includes Sole proprietors, as well as people who have business income reported to them on Schedules K-1—partners in partnerships, S corporation shareholders and beneficiaries of estates and trusts  according to Miami CPA’S VieraCPA  . They also attach Forms 8941 and 3800 to their return. The resulting credit is entered on Form 1040 Line 53.
  • May 15: Tax-exempt organizations that file on a calendar year basis can use Form 8941 and then claim the credit on Form 990-T, Line 44f.

Taxpayers and CPA Firms needing more time to determine eligibility should consider obtaining an automatic tax-filing extension, usually for six months. See Form 4868 for individuals, Form 7004 and its instructions for businesses and Form 8868 for tax-exempt organizations.

Miami CPA’S that have already filed and later find that they qualified in 2010 or 2011 can still claim the credit by filing an amended return for one or both years. Corporations use Form 1120X, individual’s use Form 1040X and tax-exempt organizations use Form 990-T.

Some businesses and tax-exempt organizations that already locked into health insurance plan structures and contributions may not have had the opportunity to make any needed adjustments to qualify for the credit for 2010 or 2011. These employers can still make the necessary changes to their health insurance plans so they qualify to claim the credit on 2012 returns or in years beyond. Eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014.

Additional information about eligibility requirements and figuring the credit can be found at Miami CPA’S.

Categories
Accounting

Outsourcing Accounting Services is an Investment for Your Small Business

Outsourcing Accounting Services is an Investment for Your Small Business

As a small business owner in Miami, you want to make investments in your business; outsourcing accounting services in Miami will do that just that. QuickBooks is a great accounting software program, but unlike what most people think you need to have basic accounting skills. As a Miami Accountant I see it all too often, garbage in – garbage out. Our Accounting Services in Miami are your virtual accountants that can help you keep your books straight and accurate. Our accounting services in Miami will also save you money and help you better the bottom line of your business. Accounting Miami Firms are not all the same. Accounting is something that you need to outsource, so do not try to do it yourself. Look at how Accounting Miami is actually an investment for your business.

Use Accounting Services that are Streamlined:

With all the options out there, small business owners have choices. Outsourced accounting services, are becoming more and more popular today. You will find that there are easy ways to get information online and you can have your documents submitted electronically. You will also be able to easily communicate through email, Share Point sites, and know that you will be able to get it done so easily. Make sure that you are looking at these streamlined Accounting Firms so that you can get your accounting done quicker and easier.

Save Money with Accounting Services Miami:

People do not realize or comprehend the amount of money that you can save by outsourcing your bookkeeping and accounting services in Miami. You are going to be able to pay someone by the hours that they actually bill instead of paying them a salary. Outsourced accounting services in Miami is going to save you a ton of money and are going to be an excellent way to save you cash by not hiring someone in your office that requires extra pay for when the accounting is slower. You will find that just in the recruiting, training, and advertising for a new employee that you will save a ton of money just outsourcing your accounting.

Access Accounting Services that Corporations are used To

The hard part about hiring accountants in house is that you just do not get the best of the best. Those accountants require a higher salary and generally end up in the hands of a corporation that is much larger. What you will find is that with Accounting Miami, you will be able to take advantage of a team of accountants and CPA’s, which are more like what a large corporation gets. Get talent and do not pay the extra cash that you would generally have to shell out for.

Accountability and Liability

If there is an error in your books and you do it yourself, it is your fault. Instead, what you will find is that when you outsource accounting you take the liability out of your hands. You want to have someone else to blame if there is an error and even though a team of professionals does a great job if they make an error, they are to blame for it. Be sure that you are looking into Accounting Services in Miami and getting what you need to have quality accounting completed for you that is error free.