Your Small Business Accounting Tips

Tip #1: Keep it Separated
Too many business owners mix and mingle their personal and professional finances. Even if you are a sole proprietor keep you business business, and your personal personal. Set up separate checking accounts and if you need some funds from your small business, write yourself a check, or make a cash withdrawal. This will help come tax time when you need to separate business expenses. Even though the form of business is a path-through, you should still make sure a separation takes place. This will make expense tracking and budgeting much easier on you.

Tip #2: Keep Up to Date

Falling behind on your bookkeeping will only make matters worse. Set a specific time aside to deal primarily with record keeping. This will make tax time easier and quicker for you or your accountant. If you simply do not have the time necessary to complete the task, then look at outsourcing the work, or bringing in a part-time bookkeeper. This necessary function of business is so crucial to the success of the business that if cannot be put off and forgotten.

Tip #3: Use Your Numbers
Your financials can tell you a lot about your business, you just have to know what to look for. Check with your financial guru (CPA, bookkeeper, financial analyst, and/or consultant) at least quarterly and have them give you a thorough breakdown of your financial position. These individuals should be able to give you a written and oral report on how your business is functioning. Which areas are weak, and which are strong. Along with that they should also provide advice and an action plan on how you can go about strengthening your financial position.

Tip #4: Know When to Recognize
Recognizing revenue and expenses can make a difference in how your business performs month-to-month and how your taxes are calculated. If you use the accrual basis accounting system your year and month end numbers will be quite different then the cash basis accounting. Be sure you know what accounting method you are using, and how to recognize revenues and expenses correctly.

Tip #5: Check, Check, and Double Check

If you do not use an automated accounting software program (QuickBooks, Peachtree, Great Plains, etc) then there is a chance you will not balanced at the end of every period. By using a Trial Balance you can catch mistakes early and often, this saves from year-end headaches and added expense from your CPA while he/she finds the problem associated with your calculation error. Even if you use accounting software you can still enter erroneous information, be sure to reconcile your bank account against the program every month, this will allow you to catch errors that may have happened when filling out checks, invoices, or journals entries.

Retirement

With baby boomers finally arriving at retirement age, the Web is the place to be for planning their escape from the 9-to-5 grind. With retirement savings, the earlier you start, the better off you'll be when the time comes to rely on your investment strategies for your income.

Studies how that people normally spend more time planning a vacation and do better research on buying a car than getting ready for retirement. If you are part of the majority of people who put off planning for your "golden years" until your thirties, forties or even fifties and sixties, there are still ways to maximize the money you've put away or invested.

Get all the facts and check out tips, advice and online tools and calculators specifically geared to retirement planning, savings and investing, social security, IRA's and other tax deferred retirement plans as well as estate planning information...


Quicken Retirement Planner Help - Information on financial planning focusing on tax issues, healthcare, insurance, and more.

AARP: Money - Feature articles on social security, insurance, estate planning.

WIFE - Women's Institute for Financial Education - Offering information, tips & advice specific to women's retirement with discussions on choosing the best IRA 401k plans, stretching retirement cash, retirement plans for the self-employed and related issues.


American Savings Education Council - Focusing on ASEC programs, with a retirement calculator, articles, tools and resources on financial planning.

Planning For Retirement - Top notch, multi-part article on financial planning for retirement from MetLife.


InvestorGuide University - Retirement Planner - In-depth look at social security, IRA's, estate planning, and more.

AARP - Insurance - Guides to several types of insurance for those with retirement plans including details on long term health care, disability and life insurance.

Money Magazine - Best Places to Retire (US) - Guides to the best cities for living on retirement income and enjoying it. While you're there check out the retirement section for plenty of great articles and expert advice on planning your retirement or making your fixed income stretch.

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General Personal Tax Information Everyone Should Know

Having the right personal tax information can make all the difference when it comes to getting the most out of filing. Filing your personal income tax returns can be really taxing, unless you consider the following information which will help you get organized, file early and get the most out of your return.

Getting Organized

The first step to filing any personal tax information return is going to be to get organized because keeping track of things will help you get the most out of your tax savings no matter what you do or how much money you make.

Keep track of anything that you can write off or otherwise deduct throughout the year so that itemizing your deductions will be easier at the end of the year. For the most organization, you should consider keeping a simple spreadsheet on you computer that lets you track of all of these charitable contributions and other deductions. Rather than allowing the receipts to pile up with time, you can record each deduction the day it happens.

Filing Early

The money that you are expecting to earn every single year on the behalf of your personal income tax return is going to be precious, regardless of where you intend on investing it once you receive it. The earlier that you file, the faster you will receive those dollars in your bank account or in the form of a check. You should get started on the work involved in your personal income tax filing as soon as you have all of the necessary information and forms. Many of these documents are available months before the deadline for filing your income taxes. If you start sooner, you will significantly speed up the process involved in filing your taxes and receiving your refund check.

Work with an Accountant

It would be wise for you to find an affordable tax preparer, an affordable accountant or even a free tax service to help you with the number crunching involved in doing your personal income taxes. One of the best ways for you to de-stress the process of filing your yearly income taxes is to let someone else do the brunt of the work for you. You will not always need to turn to a large scale corporation for help, because there are much cheaper alternatives out there for you to consider.

For example, you may want to consider a small scale accountant such as someone doing it on the side or someone who is retired. These professionals have the know-how and can give you the individualized type of attention that you are looking for, but they often cost as much as 60% less. The other option is free community organizations offering free tax preparation. These are a little harder to find in general, but if you can find an organization that will give you tax advice for free, take advantage of the opportunity because it will take a great deal of stress off your shoulders and give you some peace of mind.

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What is a Certified Public Accountant (CPA)?

Educational Requirement
Most state boards of accountancy now require that CPA candidates have 150 college credits in specified accounting and business courses before they are allowed to sit for the Uniform CPA Examination. (You need to check with your own state's board of accountancy to determine what the requirements are. If you do not meet your state's requirements, you will not be allowed to sit for the CPA Exam. ) Reputable colleges and universities have accounting curriculums that meet their state's 150-credit requirement.

Because the CPA Exam is considered to be highly rigorous, it is to your advantage that you select a college or university with an equally rigorous accounting program that will adequately prepare you for the CPA Exam.

Other Requirements
After you've passed the CPA Exam, most state boards of accountancy require you to have at least one year of professional experience and pass an ethics test before you can be licensed as a CPA. Once licensed, you will be required to earn professional continuing education credits to maintain your license. Again, check with your own state's board of accountancy for specifics.


Membership Associations
In addition to the organizations targeted to non-CPA accountants, CPAs are eligible to join a state society of CPAs and the American Institute of Certified Public Accountants (AICPA).


Tasks and Responsibilities during First Year at CPA Firms
In order for a CPA firm to be profitable, its CPAs must be highly focused individuals who can complete tasks within a reasonable amount of time. CPAs are often billed out to clients using a per-hour billing rate, and clients do not want to pay high fees for CPAs who spend time on non-essential tasks.

Some larger CPA firms assign newly hired college graduates to work in their tax departments or advisory services area. More common, however, is for firms to start new hires in the auditing department where they typically work audit engagements on a team comprised of a supervising or senior accountant, a manager, and one of the firm's partners.

Smaller CPA firms, however, perform relatively few audits, so there is likely to be more variety in the workload for the new hire. Responsibilities in a smaller CPA firm might include: reviewing a business client's financial statements, preparing a business tax return, preparing the business owners' personal tax returns, and tax planning.

Most CPA firms find their busiest season to be the months of January through March or April. The reason for this is that many clients are businesses with an accounting year ending on December 31. As a CPA, you would prepare and audit annual financial statements for your business clients during January and February. Additionally, your clients who are individuals will want you to complete their personal tax documents in time to meet the IRS deadline of April 15. Some CPA firms try to "smooth out" their annual workload by taking on clients whose fiscal years end in varying months. For example, school districts and some private non-for-profits have accounting years that end on June 30.

If you are a recent hire who is planning to take the CPA Exam, May through December is the time period during which you are most likely to study for the exam.

After the First Year at CPA Firms
After one year at a CPA firm, you may be assigned to work with new clients as well as with your familiar clients. The firm's goal is to deepen and broaden your range of experiences while offering clients efficient and professional service. Each subsequent year you are with the firm, you can expect more and diverse responsibilities in areas such as audit planning, supervising the work of other auditors and accountants, increased client contact, and additional training.