What is a CPA

A CPA, or Certified Public Accountant is licensed by the state to provide various financial and business advisory services. It means the individual has passed a rigorous twenty hour examination on accounting theory, accounting practice, taxation, auditing and business law. In most states, the CPA is also required to an examination on accounting and business ethics. But what does that mean to you - the business owner or manager? It means your CPA is uniquely qualified to assist you, as your business partner, with the diverse and complex issues you face today and will face tomorrow. These issues can range from typical financial statement and tax return preparation, to cash flow management and analysis, internal control systems development and analysis, business planning, "turn-around" program development, budgeting systems development and implementation, and accounts receivable and credit management. These are but a few of the services an experienced and qualified CPA can provide you and your company. In today's complex business environment, business owners and managers must wear many hats to deal with the diverse issues facing them. They must weave their way through a maze of questions and problems using whatever expertise is available to them. Because of limited resources, you are unable to employ those individuals possessing the required expertise and for these reasons, need to seek out those in the business community uniquely qualified to provide the required expertise.

Tips for Having Your Bookkeeping Done by Professionals

Many small businesses started doing their own bookkeeping when micro computers became economical and accounting software became inexpensive and effective. For some, this has been a worthwhile experience. They have reduced costs and improved their understanding of the business; they are more aware of the impact that a transaction will have on net income. For others, the experience has been a nightmare of having to learn how to do bookkeeping, how to reconcile a bank, having to upgrade computers that are not used except periodically, having to buy and install software upgrades, etc. Generally, the time involved with bookkeeping has been costly and frustrating, particularly because of the time it took the business person away from performing those tasks that they were good at and enjoyed, and which were the reasons for going into business. These are the tasks that make the business profitable.

Become More Effective and Profitable

Do a cost benefit analysis. How much time does it take you to do your books? How much does this save you in monthly bookkeeping fees? If you used the same time doing what you are good at, and what you enjoy, how much revenue and gross profit could you earn? If you are saving $500 a month doing your own books, something you don't enjoy, but are giving up $1000 a month of gross profit, get effective and have your books done by a professional. If you don't have time to do your books, or doing your books frustrates you, have your books done by a professional. Providing your books to your accountant each month gives you an opportunity to discuss your business with someone. Sometimes all that is required is to talk about a problem and you come up with the solution.

Tips for New Small Businesses

Design an extensive chart of accounts that is responsive to the business you are in. Make sure you have an account for each type of expense; don't combine one class of expense with another, or you won't know what you have spend on each. If you can't do your own books properly, or you can use your time more effectively generating revenue, let someone else do your bookkeeping. Review your financial statements each month to make sure you are making money or use the information in the statements to make changes so that you can be profitable. Prepare a forecast before you start business. You can revise it at any time; you don't have to wait until your first year end. We suggest that you regularly forecast the results for the next 12 months. Reconcile you bank balance as soon as you receive the bank statement. Keep a running bank balance. You don't do this because the bank might make a mistake, but to force yourself to know what is going on in your own business. Considering the power of computers and the excellent bookkeeping software available at low prices, it is probably a mistake to do your bookkeeping manually. If you are concerned about using a computer, consider having someone else do your bookkeeping. Cash: Don't mix cash receipts with cash expenses. Deposit cash receipts intact each day. Learn to use an imprest petty cash fund. It will save you a lot of problems. Follow up on past due accounts promptly. It's your money. Suppliers: Don't buy merchandise or have work done for cash deals at substantial discounts. You have no recourse to the supplier. Also, it would be too expensive if you can't deduct the expense for tax purposes. File unpaid bills alphabetically in an accordion binder (until you get too big for this system). Pay your bills twice a month and only pay based on an invoice. Paying bills promptly avoids receiving a statement from your supplier with the risk that the statement will be paid too. Stamp and initial your bills after you pay them so that if you are looking at them again, you will know they have been paid. If you have cash available, pay promptly to earn cash discounts. Scan suppliers invoices for reasonableness. There could be mistakes but our experience is that suppliers seldom make mistakes; any mistakes made are obvious. But there could be industries where you have to audit most invoices. Payroll: Make sure you understand payroll preparation and reporting of benefits. If you don't report and deduct properly, you may get stuck with paying deductions that should have been paid by the employees. Filing: This is one area that you can waste a lot of time on if you don't set up a filing system as soon as, or before you start. The wasted time comes later when you try to find something. Write down where documents are to be filed, how long they are to be kept, and what determines current, old and dead.