Tag Archives: Accounting

Sticking To Principles from One Accounting Body Can Help Your Business Flourish in Global Markets

All businesses work on some principles to drive their organization on a pre-planned track that will deem effective in the end. Whether we talk about human resource, management, taxation, finance, accounting or any other function of the business, working with some principles provides for a clear direction and support in achieving the business goals.

Are you a booming business? But you are not clear about the accounting body you want to follow when preparing your financial statements? Then this article will be your guideline towards making an informed choice.

Two major accounting standards are followed in the United States.

US GAAP

The accounting standards used commonly in the US are known as US GAAP (Generally Accepted Accounting Principles) formulated by the FASB (Financial Accounting Standards Board) for governing of the financial reports of non-governmental organizations. There is also the AICPA (American Institute of Certified Public Accountants) who is responsible for developing the standards used in auditing private company’s financial statements.

US GAAP outlines the principles for maintaining the records of inventory valuation, short and long-term investments, taxation and every other component of financial reporting. The guidelines issued by GAAP educate on how to record accounting information properly, in a consistent and fair manner.

Although no company is required to follow these guidelines but large companies, do follow these to provide consistency when comparing organizational statements. Even investors look for proper financial statements that will give them the fair picture of the organization that can be trusted upon, is consistent, reliable, comparable, and relevant in disclosing the right information.

IFRS

This abbreviation refers to International Financial Reporting Standards by the IASB (International Accounting Standards Board). Previously these standards were also known as the IAS (International Accounting Standards) issued by the IASC (International Accounting Standards Committee). People still know the standards as IAS rather than IFRS but the principles are same.

IFRS’s are designed for the goal of communicating with the world through a common language of accounts in business that is comprehensible and comparable. IFRS’s have greatly benefited the international trade and overseas shareholding practices. These accounting standards are making progress across boundaries and becoming increasingly successful in replacing the national accounting standards.

Some general features of IFRS are:

  • Fair Presentation & Compliance

This refers to the faithful representation of transactions considering several events, conditions and respective definitions of components of financial statements.

  • Going Concern

Financial statements should be prepared to show the organization is in operation and should not be produced if management intends to liquidate.

  • Accrual Basis of Accounting

Assets, expenses, income, liabilities and equity should satisfy recognition criteria present in the IFRS framework.

  • Materiality & Aggregation

Every distinct item should be read separately unless immaterial. Similar items should be shown as one.

  • Offsetting

Although forbidden, some standards require this when explicit conditions are fulfilled.

Frequency of Reporting

IFRS guides to prepare financial statements at least annually although listed companies are required to publish provisional financial statements.

  • Comparative Information

As IFRS’s are globally adopted, information should be relevant, narrative, descriptive and comparable with the preceding periods.

  • Consistency of Presentation

Classification of financial statement items should be consistent from one period to next, to make it understandable and easily reviewable.

SK Financial is a Tampa based company that can help you with preparing your financial statements by adopting the accounting principles you reckon necessary for your business.

Effective Accounting and Payroll is Crucial for a Booming Business

Many of you might not exactly know the true essence of accounting and payroll, especially to those who are starting up a new business. An idea and a business plan are important to start a business and a strategy is paramount for building a business. However, no one has ever thought of accounting, which is the building block to a booming business.

Why is Accounting Important

Accounting provides entrepreneurs with a clear picture of the business, the rate of success and failure. Though entrepreneurs are not a fan of going through heaps of financial documents, though they are the most important and informative documents of a business. Effective record keeping is essential and helps keep owners informed of the expenses and revenues.

Owners also keep copious records for legal and tax purposes. Accounting is a collective term comprising of various types like cost, management, finance etc. Accounting helps focus on costs of running a business, which involves production and non-production costs, and management. For a new business, focusing on and managing costs is the key to success.

Payroll in Relation to Accounting

Another factor crucial to managing a business is payroll. It is a branch of accounting, which relates with production units, time or a fixed salary. It is the financial record of employees, their wages, salaries, net pay, bonuses and deductions. It is very important to pay your employees on time, no matter what size of amount is paid. Effective payroll calculations and timely transfer might not be as important to employer as it is to the employee.

Employers can also lose huge amounts if execution of the payroll process consists of errors. In small companies, an accountant will deal with all of the financial statements like, payroll, journals etc., whereas in large companies, different individuals are hired to perform different roles. A company’s payroll system influences the morale of its employees and motivates them to work harder especially if bonus payments or share options are linking to the basic pay.

Managing Payroll System

Managing payroll system is also important for tax deductions and lowering tax bills. Often companies use accounting and payroll software, who forget to ask themselves these important questions:

  • What are my ongoing annual costs, and what does it include?
  • Can I use the same software as my competitor?
  • Is the software compatible with others I use?
  • What are the limitations in functions offered by the software?
  • Is the support staff experienced enough to provide the technical support needed?
  • Is the software easy for everybody to use at my company?

Businesses spend a lot of time and money in searching for the right software. Integrating unsuitable software in the business system can be costly to replace and disrupt the day-to-day business functions. No software is compatible with every business and not all software covers every function of a specific business.

Outsourcing a business’s accounting and payroll functions is very common these days and effective results are achieved. Large firms often have their own accounts and payroll departments but outsourcing can help reduce costs and time spent, and a test run might help to lock in on your choice.

4 Myths Related To Securing Small Business Loans That Aren’t Really True

Struggling entrepreneurs often have to face great many difficulties in securing small business loans in order to kick start their new business venture. Small business loans are offered by banks as well as other lending institutions. Most business owners give up on their dreams of running their very own business because of the complicated procedures and other myths. This blog will bust the 5 biggest small business loan myths that most people believe in.

Securing a Small Business Loan Is Possible

Most people believe that securing a loan to set up a small business is next to impossible. But that’s not true. Yes, there are many complicated procedures that you will have to follow in order to have a loan successfully approved. With sound advice from small business loan lending experts, securing a small business loan is actually possible. However, it is necessary that the entire business plan is complete along with all the other necessary documents. Loan applications without submitting necessary documents are never entertained by banks and other lending institutions.

Perfect Credit Scores Are Not Necessary

Another myth that has shot down the hopes of many aspiring entrepreneurs is that a perfect credit score is mandatory when it comes to securing a small business loan. Bad credit is never favorable, but having perfect credit scores is not necessary either. Some banks still follow this rule rigidly but there are many lending institutions out there that have relaxed lending policies. Other lending institutions usually look at the performance of the business, cash flows and the type of industry other than credit scores.

Banks Are Not the Only Lending Resources Out There

Those who think that the only place to get a small business loan from is none other than a bank are completely wrong. Struggling entrepreneurs have successfully built their businesses by receiving loans from venture capitalists and angel investors. These are individuals who can very well afford to pool in some money in order to kick-start a new business. However, impressing such individuals is a completely different ball game and only a few can interest them in lending money for a new business setup. Crowd funding is another popular method used to raise funds for upcoming business ventures these days and it is definitely worth a try.

Large Sums of Money Are Never Granted As Loans

This is perhaps the worst hasty generalization you will ever come across regarding securing small business loans. Banks provide loans of various amounts to its customers depending upon their credibility and needs. The best advice one can follow when applying for a business loan is to apply for a loan with an amount that you need to kick start a business; nothing more or less. So if you are thinking that applying for a six figure loan will cloud your chances of securing a loan, you are probably wrong. Loans of bigger denominations are also granted if the business plan is solid.

For all your bookkeeping needs, SK Financial CPA in Tampa is the one firm you should definitely call. The reason why small businesses should contact SK Financial CPA is that accounting services from expert CFOs and CPAs can be availed on contract basis depending on the kind of work.

Business Owner-Managers Benefit from a Tampa CPA

As a business owner-manager, there is no doubt that you have your hands full between trying to grow your business and maintain a satisfying personal life. One of the biggest ways in which many owner managers struggle is trying to balance their finances between their business and personal finances. Knowing how much to pay yourself, how to set up the corporate structure of your business, dealing with family ownership, and planning for retirement are all complex issues, and ones that combine aspects of your personal finances on top of your business finances. Many business owner-managers look to different financial experts to manage their finances – one for business and one for personal finances. This is often a big mistake because there is so much overlap between the two. If you are a business owner manager in the Tampa area, a good idea would be to find a CPA (certified public accountant) to help you manage both your business and personal finances.

Benefit from a Tampa CPAWhen you own and manage your own business, it not only becomes a source of income like any other job, but an opportunity to maximize your income and create a stable future for your family. The difference between earning an income as paid by another employer and earning an income through your own business is that as a business owner, you have the power to maximize your income by making wise choices in regards to your business’ finances. By maximizing the profits of your business, you are enabling yourself to draw a bigger income, and will be creating a future source of income for your family, as they are set to someday take over the business. A good Tampa CPA will be able to guide you in making the best financial decisions for your business.

One of the things that a Tampa CPA can do for you is to help you settle on the corporate structure of your business. This might include deciding to incorporate, going public, or naming your children as to various stakeholder positions in your company. Your Tampa CPA will guide you to choose a structure that will maximize the profits (often by reducing the taxes) of your business and provide you with the most ideal personal returns. A Tampa CPA will also help you to plan for events such as retirement and transitioning the business to other family members (or third-party buyers) in such a way that your wealth is maintained and the smallest amount possible is lost to taxes and other fees.

Once you become a business owner-manager, your personal and business finances will inevitably see a certain amount of overlap. The business decisions you make will directly affect your personal wealth and investments, and this is precisely why the advice and guidance of a financial professional is important. By employing the services of a Tampa CPA, your Tampa based business will thrive, as will your own personal finances. The result will be a secure financial future for both you and your family. At SK Financial, we can offer you that security and professional wisdom to make sure your finances grow.

How An Accountant in Tampa can Help with the Bad Side of Money

This blog article looks at the negative side to money, keeping track of it, budgeting, expenses, and doing taxes, and shows why an accountant is useful for alleviating some of that money related stress.

Money might not equal happiness, but it certainly proves itself to be pretty useful, and fun, from time to time. Do you know what is not fun? Money is not fun. At least the whole accounting, bookkeeping, budgeting and generally keeping track of expenses aspect of money is not fun. Luckily for all of those people who find keeping track of money to be tedious, or confusing there are professionals who like it, and can do it well, people who work as accountants.

An accountant handles the boring aspect of money like bookkeeping for a business. They get to go through your company’s transactions and make sure everything on the company credit card and in the company bank account balances. They check the numbers to see why the business books aren’t balancing so that the business owner does not have to worry about that.

 

Keeping track of money can be simple.

 

Accountants live and breathe money, numbers, calculations, and keeping detailed records. Since they can get a handle on your Tampa company’s books, an accountant in Tampa can also provide a summary and statements of your company’s finances. Investors, stockholders, creditors, and employees find these reviews. An accountant in Tampa would be able to do a review on your company, and let you know if you could be saving money in somewhere. Maybe your company is unknowingly wasting money on something it does not need. An accountant would be able to find where the money hole is, and figure out how to patch that hole up.

 

The other part of money people don’t like, even those who say they like budgeting and keeping track of expenses, is the taxes. No one wants an audit from the Internal Revenue Services. No company wants to find out they accidentally miscalculated some number on a line of the giant tax form they had to file. No one wants to get audited, but it happens. An accountant in Tampa however can help you fill out your tax forms, and can help you if you have tax problems, such as you forgot to file your taxes on time, or if they IRS suddenly wants to talk to you.

 

Keeping track of expenses, budgeting, and doing taxes can be a stressful for any business. Why not hire SK Financial to help you with the boring, and stressful aspects of money, and let you focus on the business your company needs to.

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SK Financial CPA Letter explains recent developments that may affect a client’s tax situation

Dear Client:The following is a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.Social security taxes going up next year. All employees and self-employed persons will face higher social security taxes next year due to an expiring tax break. Higher earners may also face increased tax because the Social Security wage base is increasing to $113,700 from $110,100 and a higher Medicare tax applies to higher earners.The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees, and self-employed workers—one for Old Age, Survivors and Disability Insurance (OASDI; commonly known as the Social Security tax), and the other for Hospital Insurance (HI; commonly known as the Medicare tax).For 2013, the FICA tax rate for employers is 7.65% each6.2% for OASDI and 1.45% for HI. For 2013, an employee pays:

(a) 6.2% Social Security tax on the first $113,700 of wages (maximum tax is $7,049.40 [6.20% of $113,700]), plus
(b) 1.45% Medicare tax on the first $200,000 of wages ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return), plus
(c) 2.35% Medicare tax (regular 1.45% Medicare tax + 0.9% additional Medicare tax) on all wages in excess of $200,000 ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return).

By contrast, for 2012, the OASDI rate for employees is 4.2%; the OASDI rate for employers is 6.2% and the HI rate for both employers and employees is 1.45%.

For 2013, the self-employment tax imposed on self-employed people is:

  • 12.4% OASDI on the first $113,700 of self-employment income, for a maximum tax of $14,098.80 (12.40% of $113,700); plus
  • 2.90% Medicare tax on the first $200,000 of self-employment income ($250,000 of combined self-employment income on a joint return, $125,000 on a separate return), , plus
  • 3.8% (2.90% regular Medicare tax + 0.9% additional Medicare tax) on all self-employment income in excess of $200,000 ($250,000 of combined self-employment income on a joint return, $125,000 for married taxpayers filing a separate return).

By contrast, for 2012, the self-employment tax rate is 13.3%: 10.4% for OASDI, reflecting the two percentage point drop in the OASDI rate for employees, plus 2.9% for HI.

By contacting us, we can tailor a particular plan that will work best for you.

Very truly yours,

Shams Khan, CPA, CFP