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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.

 

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Free Accounting Software – CPA Not Included

Free Accounting Software – CPA Not Included

As a CPA in Miami, I know small businesses love to use QuickBooks. There are versions of QuickBooks which are even free. However, like the “batteries not included” disclaimer on toys, the CPA in Miami is not included with QuickBooks. In order to make informed business decisions with accurate accounting data you should hire Gustavo A. Viera CPA.

If you own a business, then at the end of the every month you mostly face the problems which involve bookkeeping and accounting. CPA provides bookkeeping and accounting services in Miami and support and employ professional qualified CPA. Accounting Miami CPA also complies with the preparation of financial statements, tax preparation and cost reports to regulatory agencies such as AHCA preparing Medicare Cost Reports.

With the advent of the internet, it has become easy to handle the accounting and bookkeeping task in an easy and simple way. That is of course assuming you have some basic accounting knowledge.

Don’t “Fire your CPA” just yet as the old QuickBooks advertisement used to tout. QuickBooks quickly reversed its advertising strategy when business owners flooded their tech support lines with basic accounting questions and their books in shambles. Intuit, the owners of QuickBooks products, quickly came out with an “Accountants Edition” of QuickBooks which allowed the business owner to send CPA in Miami an “Accountants Copy” for review at the end of the month.

CPA SERVICES:

  • Forward-looking
  • Supports in the decision making process
  • Prepares timely financial statements
  • Helps small business improve control functions
  • Highly automated using the latest management information systems

 CPA in Miami firms are traditional vs. innovative. Accounting Miami is all about:

  •  Our Miami Accountants are strategic partners in your organization
  • Our Miami accounting firm assist in decision-making of the organization
  • Our Miami accounting helps you with Risk Management

CPA services are not all alike. With tough economic times, small businesses have been greatly impacted. Saving a buck is always a good idea, but not when it comes to your accounting. We have seen so many businesses get bad advice that lands them in trouble with the IRS. The number of fraudulent tax preparation Miami has also risen with “tax services in Miami” promising huge refunds. What many people don’t know is that the income tax return is prepared fraudulently and you become personally liable when you sign it. These tax services in Miami try to walk away when they get caught. But the IRS is cracking down on the owners of these services and they’re putting them in jail. I applaud the IRS’s efforts to clean up the industry.

When hiring a CPA in Miami, consider if you want traditional vs. innovative practices in your CPA?

Please call us for a free initial consultation.

 

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Ways to find a Good Tax Accountant

Ways to find a Good Tax Accountant

Letting an tax accountant take over your finances makes sense as their experience and knowledge can make your money go further. However, finding a good tax accountant can be tough as you are putting your finances and personal information into their hands, and trusting they will take care of you now, and in the future.

Tax Accountants can work for large businesses or for themselves, get yourself a good one and you should find they save you a lot of money in tax payments, as long as they know what they’re doing. They’ll also be able to assist with various other issues that are important and can’t really be ignored, such as tax, financial planning, business consulting, and more.

When searching for good tax accountants there are various ways you can narrow the field down.

First ask your friends and business associates if they have anyone they can recommend, if they have had the same person for years and are happy with their service then they might also work for you. Also look through the www.google.com  for businesses near you, or for convenience and speed, check online as most companies these days have a web presence and should list their areas of skills, expertise and professional services on their website.

Once you have a list of possibilities, contact them for further information and arrange an interview. Queries should be answered quickly and professionally, if they can’t do this then forget about them and move on. If the company is quite large then find out who will be assigned to you, it’s essential you get on well with your tax accountant as you need to tell them everything regarding your financial issues.

They also have to be aware of your life goals, this involves everything, from your business needs now and in the future to your personal goals and future plans. If your dream is to retire abroad then you need to let them know, being aware of your plans and hopes will mean they have a better understanding of you and can find ways to save you money and give advice based on this information. Someone who takes the time to get to know you will be more proficient at delivering a totally focused and customised service.

Always check out the tax accountant qualifications, they should have a recognised professional qualification, such as the American Institute of  Certified Public Accountants.

It’s advised you choose a firm that have been established for some years. If a company is new it can be more difficult to find out if they are reliable or ask for references. An advantage to choosing a bigger company is that you aren’t reliant on just 1 person, if there is a problem or that person has to be away for an extended period then your finances will still be dealt with.

You tax accountant should have some experience and knowledge in your area of work or interest. There are so many aspects, from self managed funds, investment advice, retirement planning, business management, strategic planning and so on, that it’s nearly impossible to find someone who is knowledgeable about everything. Everyone has different needs and it’s important you find someone who can assist you with yours.

For example, if you need a tax accountant to process your individual tax returns they should be able to ensure you get maximum tax benefits and explore other ways to save money. They are there to help you minimize your tax payments and advice you on other financial matters that will benefit you.

If the tax accountant you have chosen meets all your criteria, is agreeable, gives you advice and information in easy to understand terms, and is ready to answer all your questions, then you should consider signing up for their services.

Look for firms online that are committed to clients and can assist with business, tax and financial planning solutions. Whether you are an individual, a family business, or a small enterprise a good tax accountant can ensure you legally pay the lowest tax possible.

 

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What a CPA in Miami Knew All Along

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Gustavo & Daivisi Viera

CPA in Miami Moving Toward “Value Pricing” Model

Value pricing, also known as fixed-fee billing, is attractive on some levels to both CPA in Miami and their clients: because they get their fee up front, normally at a premium above their time-based billing; and clients, because it provides them with certainty about the services they will receive and the fee they will be billed.

Our CPA in Miami Firm has known this all along and we put it in writing for everything we do.

“They don’t feel they’re being nickled and dimed to death every time they call with a question,” said CPA in Miami Gustavo A Viera, managing partner in a Miami Accounting Firm.

Yet most CPA in Miami are reluctant to actually go ahead and convert their practice into a value billing one. “A value-pricing agreement, tied in with an engagement letter, defines the engagement terms prior to starting work, and enhances client perception of the CPA in Miami value”, said Gustavo Viera”.

“Clients know exactly what we are providing and how much it will cost up front,” he said. Our CPA in Miami Firm knows exactly which services need to be done for the client—each line on the value-pricing agreement becomes a task to be completed on our Miami Accounting Firm’s practice management software.

As a CPA in Miami I switched to value pricing 20 years ago as I met each client individually to explain the new system. “Your biggest fear is they won’t like it and will go away”. “In actuality, our attrition rate was extremely low. the only ones who walked were those that weren’t paying us anyway.”

CPA in Miami are transitioning it piecemeal to stay within the most accountant’s comfort zone. Many CPA in Miami Firms just don’t feel easy about it and refuse to just  jump in and do it. As a  CPA in Miami for more than 25 years, I know it works, but very few CPA’s feel comfortable making the switch.

So I recommend the next time you’re looking for a new CPA in Miami ask yourself if you want to pay the accountant by the hour or a Fixed Fee? Migrating one step at a time is great for the Miami Accounting Firms, but not for clients.

 

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Business Trends

Warning Signs it’s Time to Change Your Accountant

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CPA

Warning Signs it’s Time to Change Your Accountant

Are you considering firing your current Accountant in favor of a new one? If so, you’re probably not sure if you’re overreacting or if you have just cause. The following warning signs will help you decide if it is time for you to change accountants: Your accountant does not return your phone calls in a timely manner, if at all.The bottom line here is you have hired your accountant to work for you. If he/she is not returning your telephone calls, or waits until you’ve left several messages before calling you back, take this seriously. A few incidents here and there are not something to worry about, as your accountant likely has many other clients and may not be in the office for days at a time. However, if not returning phone calls are the normal state of affairs, you will want to set up an appointment to discuss your concerns.

Your accountant is never in the office.

This could mean he or she is very busy and out with other clients the majority of the time. It could also mean they do not take their business, or your business, very seriously. Regardless, if you have a difficult time connecting with your accountant, it may be time to look for someone who has more time in their schedule to see to your needs.

Your accountant never delivers your financial statements or income taxes or other forms to you on time.

This is not a good scenario! You have hired your accountant to be on top of the financial aspects of your business. If they are not able to get your forms to you on time, you need to first ask yourself if it is your fault. If you are late getting them the material they need, then it probably has little to do with them, but if they have everything they require from you with ample time – and are still consistently late, you will probably want to consider changing accountants.

Your accountant does not take the time to discuss your financial reports with you.

This is your business. You have the right to understand your financial reports, and if your accountant is unwilling to schedule the time to go over them with you, this is a warning sign you shouldn’t ignore. Think of it this way if you don’t understand your reports, then you can’t feel confident that the IRS is getting correct information. It is essential to your peace of mind, and to your business, that you understand all of your financial reports.

The staff member accountant assigned to your account does not seem competent.

If staff is unable to answer your questions, or if you seem to know more about the accounting aspects of your business than they do, you should request a different person to handle your accounts. If this is unable to be done, you may want to consider switching accountants.

You begin to receive a lot of IRS notices in the mail.

This is a serious warning sign. If the IRS is sending you repeated notices, then your business’s financial affairs are not being taken care of correctly. Too many of these notices, and your business will be red-flagged by the IRS, which could lead to years of issues every time a form is filed. Speak with your accountant and demand to know what the problem is. If you are unsatisfied with the answers, it is time to search for a new accountant.

Trust your instincts.

Often overlooked, but it shouldn’t be. If your instincts are telling you something isn’t right, pay attention.

With any of the above warning signs, it is always best to speak with your accountant about the issues at hand first. Sometimes, you may gain a clearer understanding and then feel more comfortable, but if you don’t, you need to move on. Changing accountants isn’t easy, but if it is the right decision, then it is absolutely what you must do.

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Tax

Corporate Taxes May Get Cut

Corporate Taxes May Get Cut

Consider this: if Japan reduces its Corporate Taxes rate as planned, the United States will have the dubious honor of having the highest statutory Corporate Taxes rate in the world. While the topic of taxes is always top-of-mind for CPA in Miami, in recent months it has climbed higher on the national agenda as well. As the sluggish recovery drags on and as issues of debt reduction and job creation dominate the national discussion, pressure is clearly building for Congress to lower the corporate rate states Miami Accounting managing partner Gustavo Viera CPA.

As a CPA in Miami I am a proponent of such a change have argued that it will create a more globally competitive business environment for U.S. firms and stimulate economic growth. President Obama’s deficit-reduction commission recommended a rate between 23% and 29%. At least one U.S. senator, Mike Johanns (R–Nebr.), has called for the rate to be lowered to 20%, while others have even suggested a drop to 10%. No matter the final rate, our Miami Accounting firm agrees most indications point to a reduction coming — and soon.

Corporate Taxes A Significant Earnings Effect

While the news of a rate reduction will likely be warmly received among CPA in Miami, they will have work to do to address the change. With the enactment of any prospective Corporate Taxes change come many changes for Miami Accounting Firms, current U.S. financial-reporting requirements will cause a financial statement effect in the year the legislation is passed. According to Viera a CPA in Miami pronouncement ASC 740 (formerly FASB No. 109), if the Corporate Taxes rate is lowered, Miami Accounting Firms and finance executives at companies with a net deferred tax liability (DTL) position will need to make an immediate, one-time adjustment to decrease that balance-sheet account while making a commensurate increase in the company’s earnings through the provision for taxes account. Conversely, a company with a net deferred tax asset (DTA) position on its balance sheet will need to decrease that account and decrease earnings. Either of these one-time effects are potentially material and will alter a number of key financial-performance ratios, states CPA in Miami Viera.

Our Miami Accounting Firms research, we focus on seven important ratios: earnings per share (EPS), percentage change in earnings, and the five DuPont ratios (return on sales [ROS], asset turnover [ATO], return on assets [ROA], financial leverage [LEV], and return on equity [ROE]). With an assumed tax-rate reduction to 25%, our research indicates that for the 239 S&P 500 firms with net DTL positions, fiscal 2010 EPS would have increased by 40%, simply due to the one-time required adjustment. For the 226 S&P 500 firms with net DTA positions, the opposite would occur: earnings would have fallen, but by a smaller amount.

Corporate Taxes Looking Forward, Looking Back

As a CPA in Miami we note that there are two significant financial-reporting issues associated with deferred taxes. Determining the deferred tax amount to be reported in accordance with GAAP requires both a balance-sheet focus and a future statutory-income-tax-rate focus. For our Miami Accounting Firm purposes, we have used the currently enacted U.S. statutory corporate income-tax rate of 35%. In practice, however, per ASC 740, DTAs and DTLs are to be measured “using the enacted tax rate(s) expected to apply to taxable income in the periods in which the deferred tax liability or asset is expected to be settled or realized.” If Congress were to pass legislation during 2011 that would lower the rate beginning in 2012, however, the deferred tax amount to be reported on the 2011 ending balance sheet must reflect the effects of that lower rate.

CPA in Miami could easily overlook the required adjustment (see formula, below).

If a company currently has a net DTL position of $14 million and in 2011 Congress lowers the corporate tax rate to 25% beginning in 2012, the DTL account must be reduced as of the year-end 2011 balance sheet by $4 million — (.10/.35) x $14 million — and 2011 earnings would also be increased by $4 million.

Widespread Impact

Many Miami Accounting Firms would see the impact of a Corporate Taxes tax change on their financial statements, as deferred tax amounts on corporate balance sheets are both prevalent and substantial. Within the S&P 500, 93% of companies report either a net DTA or a net DTL, as do 71% of all publicly traded companies. There are roughly an equal number of companies with deferred tax assets as with deferred tax liabilities, but the relative size of the net DTL position is larger than that of the net DTA position.

In general, large DTL account balances are most likely to occur in capital-intensive industries like utilities, petroleum and natural gas, and transportation, primarily due to differences in Internal Revenue Service and financial-statement depreciation schedules. Conversely, sizable DTA account balances often exist for companies in industries with large balance-sheet liabilities that have not yet been recognized for tax purposes — contingent liabilities, for example — and at companies with operating losses where the tax law permits carryforward and carryback offsets. Apparel, heavy equipment, and recreation-related businesses lead the list.

 The effect of a change in corporate taxes rates on a particular company’s earnings and balance sheet, and the performance metrics drawn from those two financial statements, is, of course, dependent on both the company’s deferred tax-balance position, the starting point of the financial ratio of interest, and the assumed reduction in tax rates. Pro-forma effects for a specific company should be evaluated individually, but reasonable projections can also be applied using a “multiples” approach as a shortcut.There is little doubt that Congress will change the corporate income-tax rate states CPA in Miami Viera. It could be this year, or it could be next. No matter when, Miami Accounting Firms will need to make immediate adjustments to their clients income statements and balance sheets. The resultant effect on key financial-performance metrics will be experienced by many, and in rather significant ways. 

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Business Trends

Do I Need an Accountant or CPA?

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CPA

Do I Need an Miami Accountant or CPA?

If you’re like most Americans you probably have a good handle on completing your income taxes on your own. Over the years it has become incredibly easy for anyone with a computer thanks to TurboTax to sit down and go through their tax documents instead of hiring a CPA, enter information as the software asks questions, and then even file your return instantly online. For those of you with relatively simple tax circumstances, this is the ideal way to go. The software is inexpensive, most of the questions asked can be easily answered in an hour or two, and there’s very little opportunity for error. It sure beats the days of sitting down with paper forms and spending a few days doing your taxes by hand!

But what about those with slightly more complex financial situations? Sure, there are more robust versions of tax software available such as TurboTax’s Home & Business, Property Manager, and so on. These solutions go into greater depth to help you account for less traditional sources of income and expenses. With more complex finances comes more time and money required to get through the tax filing process, not to mention more room for error. So, at what point does it become cost-effective to make the move from doing your own taxes with the help of software to hiring an CPA?

A CPA Clients Personal Tax Story

As soon as he was on his own he began using tax software to do his own taxes. He used TurboTax software and it did a great job. For a few years during college his finances were so simple and his income and deductions were so trivial that he could spend under $50 and just about an hour and get his taxes done. Those were the good ol’ days. As time went on his finances started to get a little more complicated. For a few years he was a member of an LLC in addition to working part-time. This created a few unique scenarios that made doing his taxes a little more complicated, yet he was still comfortable in handling it on his own. As the years went on he moved on to where his wife and him just had regular salary jobs, no house, no kids, no odd circumstances, so doing my taxes again became as easy as sitting down at the computer for an hour and plugging in a few numbers.

Then, things started to change as he started to dabble in freelance work and other self-employment ventures. The first few years were easy because it was more of a hobby and the income and expenses generated from the freelance work were trivial. As time went on, more sources of income started coming in, and additional expenses started adding up, his tax returns became more of a nightmare. Sure, the software could still handle it, but he was spending more time tracking down documents, receipts, and trying to find deductions because the tax bill at the end of the year was growing significantly. One year after putting in all of his data the tax software said he owed the IRS nearly $4,000. That’s impossible, he thought. They had as much taken out of our paychecks as possible through work, he was paying estimated quarterly taxes, and was itemizing deductions so that they could deduct as much as possible. There had to be a glitch in the software so he plugged the numbers in over and over for about a week straight only to come to the same result.

With that, he knew it was time to seek professional help. They asked around with some friends and co-workers about CPAs that specialize in small businesses accounting and self-employed taxpayers, and he made a few calls around and interviewed a few of them. they eventually found one not too far down the road and their name came up a few different times from the people they asked. So, he set up an appointment. After sitting down with the CPA for about an hour discussing our situation, looking over some numbers, and doing some calculations I knew he could help me. A few days later he was thrilled when I called him stating that he now only owed somewhere in the neighborhood of $2,500. Wow, that phone call and meeting just saved him about $1,500. Sure, the cost of having my taxes done increased compared to doing it myself, but at around $200 it was some of the best money I ever spent.

When Should You Consider Hiring an CPA For Your Taxes?

He shared his story just to give you one scenario where making the move to hire a professional CPA can be a good decision. He’s a pretty savvy guy when it comes to finances, but he admit that he did not do a great deal with taxes on a daily basis. He thought he had enough knowledge with the assistance of tax preparation software to get the job done right, but clearly someone who does this stuff for a living can still do it better than he can. While it was the right decision for him, it may or may not be the right decision for you.

To start off, he wants to make one thing clear. There is a difference between an CPA and just a tax preparer. As tax season kicks into gear in a few months you’ll begin to see advertisements pop up with tax preparers in your area who will do your taxes for you at a cost. Keep in mind that when dealing with one of these places you probably aren’t going to get a full-blown accountant or CPA. Instead, you’ll likely have someone who is qualified to handle returns, but they will likely do little more than ask you the same questions that software you buy on your own does and then plug in the numbers. While it’s nice to get some one-on-one time with someone, you also want to keep in mind that this person is more or less just trying to get your taxes done, not assess your financial situation and help you put together tax strategies going forward.So remember, there are accountants that do taxes, and there are people who do taxes that aren’t accountants.

Here are a few scenarios when it might make sense to start looking for professional CPA tax help:

1. You own a business.

Self-employed individuals stand to see the greatest return when hiring an CPA. Running a business presents a lot of unique situations that can have a significant impact on your taxes. Being self-employed also opens the door for a new world of deductions, credits, and retirement account planning that you may not be used to. While you can certainly find this information online, having someone who does this for a living will save you time and maybe even some money. In addition to just helping you find all the available deductions and paying the IRS as little as possible an CPA can be tremendously helpful in working with you to structure your business as best as possible, putting together a plan for the future to help you take advantage of tax breaks in the coming year, and being there for you if you encounter problems down the road.

2. Going through a major life change.

If you’ve been plugging alone for the past few years with basically the same financial situation there’s obviously little need to pay someone to do what you’re already comfortable doing. But when you encounter a major life-changing event in the middle of a tax year it could lead to an unpleasant surprise come tax time. Getting married, divorced, changing jobs, having children, receiving an inheritance, preparing to retire, etc. These are the things that can change your financial situation in a heartbeat and if you aren’t prepared it could end up costing you dearly.

3. Real estate or taxable investment dealings.

Do you own a rental property? If so, a CPA will be your best friend. Owning a rental opens up a lot of special tax situations that you’ll surely want to take advantage of and make sure you aren’t making any mistakes. The same thing can go for just buying and selling a home or other real estate. While the laws are pretty straightforward, it’s usually a large transaction in terms of dollars so you want to make sure you’re doing everything properly. Finally, let’s not forget tracking gains and losses on taxable investments. If you buy and sell stocks, bonds, mutual funds, or anything else throughout the year in a taxable account you’re going to have a lot of things to consider. Long-term vs. short-term gains and losses, dividends taxed at a different rate, cost basis, the wash rule, and so on. Sure, you can do this on your own, but how much time will it take and are you sure you’ll catch everything? The time saved by hiring a professional alone may pay for itself.

Don’t Be Afraid to Get Help from a CPA

For people who like to and are proud of doing things themselves it can be difficult to make the decision to seek outside help. Don’t let that get in the way of doing what’s best for your finances. Sure, the majority of people will be just fine doing their own taxes. If that’s you, grab the latest edition of TurboTax or H&R Block At Home. It’s still the easiest and cheapest way to do your taxes. But for those of you who may have finances that are a little more complex, are self-employed, or would otherwise just like to outsource your tax preparation don’t be afraid to get a CPA to help. At most it will probably only cost a couple hundred dollars compared to buying software and e-filing yourself, and chances are you save that much or more on deductions and tax strategies you overlooked by doing it on your own. Whatever you do, make sure you get an early start so you don’t miss the tax filing deadline!

 

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Business Trends

CPA in Miami Warns of Small Businesses Employee Fraud

CPA in Miami Warns of Small Businesses Employee Fraud

Small businesses and nonprofit organizations often overlook the warning signs of employee fraud, especially by managers, according to CPA in Miami Gustavo A Viera. Our CPA in Miami firm advises management and owners to recognize the red flags and act early to stop fraud.

“Organizations pay a high price for fraud,” said CPA in Miami Viera, a forensic CPA in Miami who serves as managing partner in the CPA in Miami Accounting Firm of Gustavo A Viera CPA. “The damage can be particularly severe at small organizations where losses can be extremely threatening. These organizations often do not have the systems in place to detect fraud and prevent or limit their losses,” states Accountant Miami Viera.

According to CPA in Miami Accounting Firm of Gustavo A Viera CPA and the Association of Fraud Examiners 2010 Report to the Nations on Occupational Fraud and Abuse, the typical organization loses 5 percent of its annual revenues to fraud. Frauds last a median of 18 months before being detected.

CPA in Miami found that frauds committed by managers or senior employees were more than three times as costly as frauds committed by others, and more than nine times as costly as employee frauds. Executive-level frauds also took much longer to detect.

“There are warning signs for the most common types of fraud,” said CPA in Miami Viera. “If management and boaowners recognize them, they will be better able to detect fraud early and prevent or minimize the losses.”

CPA in Miami Viera warned of signs of fraud such as shrinking inventories. “Skimming is defined as diverting funds before they get recorded into an organization’s books,” he noted. “For example, employees often skim funds by pocketing customers’ checks and trying to cash them, but customers will complain if they don’t receive their goods, so the employee ships them. The result is that goods disappear from inventory, but no sale has been recorded.  An inventory comparison by a CPA in Miami  can reveal the fraud, as can analytical procedures such as gross profit analysis.”

Bank deposits that don’t match cash receipt records are another telltale sign. “Cash larceny involves diverting funds after they’re on the books—it’s clearly outright theft,” stated CPA in Miami Viera. “An example might be an employee who steals checks or cash before they can be deposited at the bank. The best detection method is to compare receipt records to deposits. Data analysis software can help an organization check for this kind of fraud.”

Checks made payable to an employee, an unknown person, an unapproved vendor, or “cash,” are another warning flag “Any of these are signs of a kind of check fraud known as a ‘forged maker scheme’ where an employee intercepts, forges or alters one of the organization’s own checks,” said CPA in Miami Viera. “Usually, the check is made out to the employee, but it might be made out to an accomplice, an unknown vendor, or simply to cash. Strange endorsements can also be a sign of fraud, as can missing checks or missing disbursement documentation.”

He said organizations should also beware of payroll fluctuations—or poorly documented employees on the payroll. “In a payroll scheme, fictitious employees are added to the company’s payroll. If you find unusual fluctuations in payroll, or employees with minimal or no personnel records, or employees with missing social security numbers receiving payroll checks, you should suspect payroll fraud,” said CPA in Miami Viera. “High overtime for a particular job category can be a red flag, as can discrepancies between net payroll and payroll checks issued.”

Changes—or unusual patterns—in employees’ expenses are another red flag. “It’s common for employees to commit fraud by inflating their expenses or submitting fictitious expense reports,” warned CPA in Miami Viera. “Look for unusual fluctuations or changes in patterns in employees’ expenses. Also watch for expenses that end in round numbers, recurring expenses for the same amount, and expenses that fall just below the reimbursement limit. This is another area where data analysis software can reveal the patterns and help detect the fraud.”

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Tax

13 Tips to Finding the Right Tax Preparer Miami Team

13 Tips to Finding the Right Tax Preparer Miami Team

How do you find an Income Tax Preparer Miami Team that is right for you? First, income Tax Preparer Miami are not all the same.

First, not all Tax Preparer Miami are the same.

I previously wrote an article about this last year titled: “Tax Preparer Miami – Are they really all created equal”, and you may be as surprised as other readers about just how much tax return preparation can vary.
In fact, I calculated the average savings I typically find from annual tax savings, reducing professional fees and audit assessments. In total, the average savings are:
– $23,750 Annual tax savings
– $5,000 Audit defense savings
– $10,000 Reduced audit assessment savings
– $50,000 Reduced legal fees
– $3,000 Reduced tax return preparation Miami (average) fees
This is a total average potential savings of $91,750! Your tax preparer does make a difference! How much more could you do with these savings?
Second, the right tax preparer for you depends on what is important to you. Take a minute to answer this question:

WHAT MAKES YOUR INCOME TAX PREPARER MIAMI SUCCESSFUL?

How you answer this question will impact what type of Tax Preparer Miami team you need. I’ve asked these questions to clients, prospects and colleagues. I have compiled the most popular answers and what it means to you as you find the Income tax preparer Miami for your team.

ANSWER #1: Paying the least amount of tax legally
Your Income Tax Preparer Miami team needs to:
– Know the tax law very well and know how to be creative legally.
– Ask you a lot of questions about your situation in order to understand your situation and goals.
– Have a review process where at least one other person reviews your return solely for the purpose of how to reduce your taxes legally.
HERE ARE SEVEN (7) QUESTIONS YOU SHOULD ASK YOUR INCOME TAX PREPARER MIAMI TEAM TO DETERMINE IF IT’S A GOOD FIT:
Q1: Can you tell me about the other (your industry) you service?
A: Your Tax Preparer Miami needs to know how the tax law applies to your situation. Having other clients in your industry or with similar investments indicates that the tax preparer is likely to be familiar with the tax laws that impact you.
Q2: Who will be working on my income tax return?
A: It’s very common (and a good business practice) for income tax preparers in Miami to have staff prepare your tax return. You want to make sure the other people working on your return have the same level of expertise.
Q3: What is your tax return review process?
A: Tax Preparer Miami who are focused on reducing your taxes will have this built into their review process. Usually it involves having another experienced tax preparer review the return solely for the purpose of finding ways to reduce your taxes.
Q4: What would you have done differently on my past tax return?

A: Show the income tax preparer Miami you are interviewing your prior year tax return. Creative income Tax Preparer Miami will be able to give you at least one idea of what you can do to reduce your taxes by looking at your tax return for just a few minutes. If it’s creativity you are after, this is a great question to ask! But don’t expect the income tax preparer Miami to give you all the details right then and there – that’s why you pay them!
Q5: How much can you save me in taxes?
A: While it’s difficult for any income Tax Preparer Miami to answer this in just a few minutes of looking at your past tax return, it is possible for them to know if they can save you taxes after spending 30 minutes with you.

Q6: What deadlines do you impose on clients?
A: This may seem like an odd question for minimizing your taxes but it has a direct impact. If your income tax preparer in Miami allows you to provide your information a week before the tax return is due, it’s very unlikely that the income tax preparer Miami will have the time to focus on your return to truly minimize your taxes. Income Tax preparers in Miami that want to reduce your taxes want your tax return information early and will communicate that to you.
Q7: What recent tax law changes should I be aware of?  A: To minimize your taxes, your tax preparer needs to know the tax law inside and out, which includes the latest changes? Your tax preparer needs to be able to answer this question without hesitation.
ANSWER #2: Minimizing tax return preparation fees your tax preparer needs to:
– Focus on the tax work and recommend someone else for the non-tax work (such as bookkeeping).
– Request tax information in a certain format.
– Require you to input your information online.

HERE ARE TWO (2) QUESTIONS YOU SHOULD ASK YOUR TAX PREPARER MIAMI REGARDING MINIMIZING RETURN PREPARATION FEES TO DETERMINE IF IT’S A GOOD FIT:

Q1: What can I do to reduce my tax return preparation fees?
A: To minimize your tax return preparation fees, your tax preparer always needs to have your fees in mind. Ask your tax preparer what you can do to reduce your fees. If you don’t get at least 2 suggestions, your tax preparer probably isn’t thinking about how to keep your fees low.
Common suggestions include:
– Have someone other than the tax preparer do your bookkeeping. I am always skeptical when a tax preparer does the bookkeeping. First, they either charge an arm and leg or if they reduce their rates to accommodate you, it means they don’t spend their time entirely on tax issues, which could indicate their tax skills aren’t up to par.
– Organize your information. Don’t bring your tax preparer a shoebox! A tax preparer that is really focused on keeping your fees down will have forms, spreadsheets and other tools available for you to use to organize your tax return information.
– Enter your information online. Many tax preparers now require clients to input their information online. Accurately entered information can help reduce fees. Caution: Information that is entered inaccurately can increase your fees!
Q2: What is your fee structure?
A: Your tax preparer needs to be able to answer this question with confidence. Any wavering could indicate that the tax preparer knows the fees are too high for you but just doesn’t want to tell you. Unfortunately in these situations, you find out too late!
ANSWER #3: Reducing audit risk your tax preparer needs to:
– Know the tax law very well and how to properly report your activity.
– Understand the IRS’s current “hot buttons” or “red flags.”
– Offer an audit defense plan.

HERE ARE FOUR (4) QUESTIONS YOU SHOULD ASK YOUR TAX PREPARER MIAMI IN REGARDS TO REDUCING AUDIT RISK TO DETERMINE IF IT’S A GOOD FIT:

Q1: How many audits have you been through and what triggered the audit?
A: The most important part of this question is what triggered the audit. If it was triggered by how something was reported, then that may be something the tax preparer had control over (and may be a bad sign for you).
Q2: What was the outcome of the audits you have been through?
A: A return can be randomly selected for audit or selected because of a certain activity (even though it was reported correctly). So it’s important to understand the outcome of the audits. Was additional tax assessed or were there no changes? Additional tax may indicate that something was not reported properly.
Q3: Do you offer an audit defense plan?
A: Tax preparers that are confident in their work will offer an “insurance” program that covers their professional fees to handle your audit if your return is selected for audit.
Q4: What is your tax return review process?
A: Although tax returns can be selected randomly for audit, many are selected due to how items are reported on the tax return. Tax preparers who are focused on reducing audit risk will have a review process that includes another tax preparer reviewing your return solely for accuracy of reporting.
Be selective with the tax preparer you put on your team. The average savings I find for my clients is over $90,000! Your tax preparer makes a difference!

 

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Business Trends

Accountant Miami Positions Himself for Growth

Accountant Miami Positions Himself for Growth

Gustavo A Viera CPA, Accountant Miami, plans to begin emphasizing growth as its new “brand focus,” positioning the Accountant Miami Firm as an organization that can help business clients grow despite the challenges of today’s economy.

The Accountant Miami Firm announced the new brand positioning at its annual client conference in Miami on Tuesday. Besides just the U.S. firm, Gustavo A Viera CPA operates in most Latin American countries which are also expected to emphasize similar positioning.

“Growth is really at the center of the brand promise,” said Accountant Miami Firm Gustavo A Viera CPA in an interview with Palmetto Bay News. “It’s going global, so all around Accountant Miami members firms will be delivering on the same brand promise of growth. The notion of growth really aligns with the marketplace that we’ve chosen. We’re very focused on being the firm of choice for dynamic organizations that are growing, expanding, raising capital, and moving internationally. Growth is obviously the key dominant issue that faces business today. Our brand is all about unlocking their potential to grow through our services and advice, and the value that we bring to the relationship, said Accountant Miami Viera.”

Viera pointed out that the Accountant Miami Firm current services already do provide this type of support and advice to help clients grow their businesses, but in the future the Accountant Miami Firm plans to expand those capabilities.

“As a Accountant Miami I’m sure, as we move down the road, we will innovate and have additional services,” said the Accountant Miami based CPA firm. “But our traditional services in the audit, tax and business advisory area really today allow us to provide distinctive value to dynamic organizations that are seeking to grow. It’s important to note that this is not growth for growth’s sake. It’s quality growth, and growth holistically, smart growth. It’s about getting their financial house in order so that they can access the capital markets. It’s about growth in terms of talent, customers, distribution channels, products, services. Growth is much more than just growing top-line revenue. It’s all the things that dynamic organizations need to do to advance toward their objectives. In our traditional services that we will continue to evolve and innovate, we already support that. One of the things that we learned, in our market research on this brand proposition, is that the market sees us as an organization that can already deliver on the growth opportunity.”

The Accountant Miami based CPA Firm worked with the an external advertising and market research agency to create the new brand strategy.

To emphasize the new brand positioning, Accountant Miami Firm has unveiled a new Web site, http://www.accountantsinmiami.com featuring a information for prospective clients.

“The Web site will be an opportunity for our clients and other businesses to learn what we’re doing to support the growth agenda, and contribute about what they think is important as they seek to grow their businesses,” said Viera. “It will become a virtual meeting place for ideas and thoughts and what we bring to the table on the growth opportunity and debate.”

 As a Accountant Miami Firm I expect that our Firms growth strategy will help its clients generate more of the jobs that are needed to revive the economy.

“In the economic world that we are in today, we’re all striving to drive growth, and growth leads to jobs,” he said. “Jobs are obviously on everybody’s mind, and our Web site will provide a forum to really advance the debate on growth and what it takes to grow, especially in a challenging environment. Through the site content and Q&A, we will have an opportunity for people to provide their input and ideas and thoughts.”

He noted that Accountant Miami Firm has growth plans of its own. “We want to grow ourselves,” said Viera. “We’re dynamic and we’re on the move. We want to, over time, raise the bar on the growth agenda and be committed to it for the long haul.”

The CPA Firm plans to continue with its global expansion plans, especially in emerging markets. “We’ve been very vocal about how the global organization has an ambitious five-year strategy to double our market share. “There will be organic growth, it will be strategic growth. We will invest in new talent and expertise, and it will be M&A growth through mergers and acquisitions.”

CPA in Miami Viera noted that the CPA Firm announced the expansion of our Home Healthcare Accounting unit in the last week.

“You’ll find our Accountant Miami based CPA Firm continuing to drive an M&A agenda, both within the U.S. and globally, as part of our growth ambitions,” said Viera. “Geographically on a global basis we have aggressive plans in the major emerging markets: in Brazil, Mexico, Venezuela, Colombia, for example. In the United States we are very industry focused, on Home Healthcare, technology, energy, sectors within the consumer industrial products area, financial services, real estate and hospitality. We also do a lot of work for dynamic nonprofit organizations, so our industry sectors are very important to the focus of our growth within the United States.”

The new brand positioning will not extend as far as changing the firm’s logo or slogan, at least not yet. “We are not changing our logo,” said Viera. “You will see the same Accountant Miami Firm logo, but you will see a lot of branded material focused on supporting the growth agenda.”

However, Accountant Miami based CPA Firm may eventually evolve its strategy to incorporate new taglines or slogans. “As we move forward with this over the next several months, we will certainly be looking for different ways to innovate to present our messaging,” said Viera.

The CPA Firm will start by selling services to its clients. “Initially the most important thing is for us to focus on the services and the interaction with our existing clients and our existing relationships,” said Viera. “In the beginning phases this is less about an advertising campaign and a slogan and much more about the value that we deliver to the growth agenda. You’ll certainly see us talking about it and providing thought leadership. We will be visible and vocal about growth. But the focus will be on delivering on the growth agenda rather than a major advertising campaign.”

Accountant Miami based CPA Firm plans to offer seminars built around the concept. “We’ve been very keen to ensure that this is less about a gimmicky advertising campaign, and more about what we really stand for, how it aligns with the markets that we choose to serve, and how we deliver on the promise of unlocking the potential for growth,” said Viera. “You’ll see surveys, you’ll see commentary. We’re working on seminars with groups of CEOs to discuss the growth agenda and the opportunities and barriers associated with growth. Within our existing offices and outreach to various communities, not only in the Miami but around the country, you will see us engaging with the community on the growth agenda.”

Viera said there was no specific timeframe for the branding effort. “We do anticipate that this is a long-term commitment,” he said. “This is not a flavor of the month. This is a real commitment to the marketplace, a commitment to the public interest.”