Why You Should Consider Getting Bookkeeping Services

In hopes of saving money, many entrepreneurs have a do-it-yourself mentality when it comes to practically everything. They believe they should do everything themselves instead of paying others to do it for them. This is especially true when it comes to paying for bookkeeping services. Here are some of the many reasons why you should consider hiring a bookkeeper for your business.

Greater Efficiency

One major advantage of hiring for bookkeeping services is that it will help you improve efficiency. Many business owners who hire bookkeepers end up discovering that they weren't handling the job as well as they thought they were. A bookkeeper will clean up your financial records, which may be riddled with incorrect figures for expenses and assets that you didn't even know were there. You can also expect the bookkeeper to review all purchases for duplication and to take over the task of paying the bills. Many of the tasks handled by a bookkeeper are mundane in nature, but they are critical. A bookkeeper can take care of these mundane tasks so you that can handle other tasks related to the operation of your business.

Saves Money

Another reason why you should consider getting bookkeeping services is that it will save you money. Many business owners refuse to get bookkeeping services because they want to limit costs as much as possible. However, it is very possible that not having a bookkeeper is costing your business dearly. For example, many companies report saving thousands of dollars in late fees as a result of hiring a bookkeeper. A good bookkeeper will help you make educated financial decisions. As you know, the difference between an educated and uneducated financial decision can cost you thousands, if not millions, of dollars.

If you don't want to hire a bookkeeper due to the cost, you have other options. In many cases, hiring a full-time bookkeeper isn't even necessary, especially in the very beginning. Instead, you should consider sub-contracting bookkeeping services from an agency. You will receive the same quality of service, but it won't cost you an arm and a leg.

Allows You to Focus on Other Tasks

If you're like most entrepreneurs, you probably have a difficult time coping with a substantial amount of admin tasks. Unsurprisingly, entrepreneurs tend to be very creative by nature. Therefore, most entrepreneurs tend to put off routine administrative tasks in favor of other tasks, such as chasing sales, networking, and attending business meetings. As a result, paperwork tends to pile up very quickly until catch-up becomes practically impossible. If you find this occurring to you, it's time to hire a bookkeeper to handle these tasks. That way, you will be able to focus on other tasks that you find natural and more enjoyable. Many entrepreneurs start businesses to get away from mundane work associated with employment in the offices. As a business owner, you are one of the few people who have the privilege of being able to do what they enjoy while still making a profit.

Software is Not Sufficient

Many business owners refuse to get bookkeeping services because they harbor the misconception that software can handle anything and everything. While technology is playing a bigger and bigger role in our lives, no software is able to come close to the advantages a good bookkeeper can offer. Don't make the mistake of purchasing a low-cost software to avoid paying for bookkeeping services.

Even if you do purchase a bookkeeping software, you will have to spend hours entering data into the software before you can even use it. The hours wasted entering this data takes away from the time you could spend making sales, networking, or spending time with family and friends. Once the data is entered into the software, you will find that the software is incapable of managing tax and cash flow, which are probably the two most important aspects of financial control. 

As you can see, there are many reasons why you should consider getting bookkeeping services. You don't have to worry about paying a fortune for these services as long as you stick with agencies, and you will be able to enjoy the many benefits associated with quality bookkeeping services.

Why it's Important for Businesses to Revisit Financial Goals Annually

It’s more important than you realize to revisit your financial goals at least once every year. Whether you’re a small business or a multinational corporation, making this a habit can lead to great things for your business while failing to do so can lead your business to stagnation and a lack of growth in the future. These are a few of the most important reasons why you need to make revisiting financial goals a priority for your business each and every year.

Laws Change

While that might not seem like a big deal, new laws impact businesses every day. New tax codes, the Affordable Care Act, and even new laws regarding truck drivers and how much sleep they are required to have before they can drive again affect the financial outlook of businesses. This requires a new look at your financial goals in order to determine if changes are necessary. The more attention and consideration you give your financial goals, from year to year, the better able you are to adapt to these new changes without experiencing significant blowback.

Customer Needs, Wants, and Demands Change

Consumers are a fickle bunch of people – often off to chase the next shiny new object that comes along. This Shiny New Object syndrome keeps many businesses running. While you may not create new mobile devices that come out two or three times a year with something new added each time, you do provide either products or services to your public.

You need to keep your fingers on the pulse of what they want, need, and require in order to keep coming back to the well of products or services you offer. If you’re losing customers or not gaining new customers at the pace you expect revisiting your financial goals can help you adjust your goals and the plans you make for accomplishing those goals to accommodate these changes.

Stuff Happens

Your business does not exist or operate in a vacuum. Things that happen in the world around you impact your business and your financial goals. Everyday situations such as data breaches, evolution in technology, wars, and even changes in the worldwide economy can have big consequences for your business – or even be a boon for your business. If you’re not revisiting your financial goals as you should, you might miss out on golden opportunities. Or you may fall victim to your own shortsightedness by not making key changes in time to do good things for your business.

Forces You to Keep Your Business Model Fresh

The thing about financial goals for businesses is that they drive the business model. The model you have for your business is all about achieving your financial goals. This includes your yearly business plans, the products you launch, and even the way you conduct your business. Without financial goals lighting your way, you’d have no direction. If you’re not consistently updating your financial goals, you’re not refreshing your business model and making effective changes to your business plan.

Gives You the Opportunity to Explore the Effectiveness of Current Goals and Strategies

Sometimes, your current goals and strategies are ineffective. Either they are too ambitious to accomplish in a reasonable amount of time or they are not ambitious enough. Either problem can lead to a lack of motivation among key players and an overall atmosphere of failure. Revisiting your financial goals once a year allows you to assess them more objectively – removed from the emotions of the time when the goals were set – so that you can make critical changes to those goals and strategies.

Financial goals are critical for businesses today. They give you specific numbers to strive for and require a plan of action to accomplish. For most businesses, it is these goals that is the driving force behind marketing, research and development, product creation, and the development of new technology. These financial goals deserve far more thought than a “one and done” business meeting and must be revisited often in order to keep your business on task and on target.

These are just a few quick reasons why they are so important. There are sure to be reasons that are specific to your business that may require you to revisit your goals even more frequently. Once a year should be the absolute minimum if you’re interested in gearing your business up for success.

Misconceptions On Corporate Income Tax Audits That Can Cost You

With each passing year, companies go through the process of filing an end-of-year return and face the foreboding possibility of being audited. Corporate tax audits are unfortunately a source of worry and apprehension for business owners, and they inevitably entail additional accounting expenses that impact a company's bottom line.

It's impossible to entirely avoid an audit, but staying informed by knowing what puts up a red flag in the eyes of the IRS can help companies avoid the audit hassle and minimize their accounting expenses.

Misconceptions run rampant regarding corporate audits and how they can be avoided. These misconceptions sometimes cause companies to waste money on ineffective efforts to avoid audit. The following are a few of these common misconceptions about corporate audits:

Misconception 1: Companies can avoid audits by overpaying.

If you overpay the IRS when handling your corporate taxes, you won't in any way diminish your chances of being audited. The IRS is not going to make adjustments for you if you pay too much in one area and not enough in another. You'll simply be audited and have to put the time, effort, and money into resolving the issue yourself. Overpaying simply makes it likely that you'll lose the extra money.

When it comes to filing a corporate tax return, accuracy is the most important thing. The easiest way to be accurate is to carefully maintain your records and receipts throughout the year.

Misconception 2: There is only one type of business tax audit.

Some business owners are under the impression that the only type of audit is an audit conducted because the IRS sees some inaccuracy in a company's return.

In fact, there are three different types of corporate income tax return audits: a correspondence audit, a field audit, and a random audit. A correspondence audit is usually conducted because the IRS detects a mathematical error in the audit submitted by a company. A field audit is a more detailed audit that results if the IRS feels that a company has a suspiciously high number of write-offs. The third type of audit is a random audit. Both the IRS and the CRA conduct random audits every year to encourage accuracy when returns are filed.

Companies shouldn't invest too much time and energy into avoiding audits because they are always at risk of experiencing a random audit even if they do everything right.

Misconception 3: The IRS is not going to be familiar enough with my industry to understand appropriate deductions and expenses.

When the IRS processes company returns, these returns are compared to the returns of other companies operating in the same industry and in the same area.

Because the IRS does this comparative processing, it becomes familiar with what deductions and expenses are appropriate to a given company. Unfamiliar or suspicious expenses are therefore likely to stand out, so companies should consider how expenses claimed are likely to compare with the expenses of competitors when attempting to minimize audit chances.

Misconception 4: Any correspondence from the IRS means I'm being audited.

If your company receives correspondence from the IRS, it's important to analyze the correspondence carefully. Assuming that an audit is coming and investing time and effort into preparing receipts and spending reports could prove to be useless if the issue can be resolved with a brief response from your accountant.

Correspondence from the IRS could be received for a variety of reasons. It could indicate simply that a return was incomplete or that a calculation discrepancy was noticed.

Misconception 5: Sole proprietorships and corporations have equal chances of being audited.

Being incorporated makes you eligible for some deductions for which sole proprietorships are not eligible. Many business owners therefore assume that it also leaves you more open to being audited. However, this is not true.

In fact, corporations tend to be less likely to be audited. Statistics show that sole proprietorships are actually three times more likely to experience audits than corporations.

Misconception 6: I'm more likely to be audited business is financially strong.

One of the most significant red flags for corporate income tax audits is consecutive years of business loss. If you experience losses, you will be paying less in taxes. As such, the IRS will be getting less money and will be more suspicious that you are not reporting correctly on your return.

Forensic Accounting & The Evolution of The Role

When it comes to specialty practices, one surrounded in mystery is often forensic accounting. However, we're going to clear up some of the confusion regarding forensic accounting and explain just how much this practice has changed over the years. With this being said, here's a look at forensic accounting and how much this occupation has developed as of late.

What Is Forensic Accounting?

Forensic accounting is a specialty practice that results whenever litigation or anticipated/actual disputes are on the horizon for a business. The "forensic" term translates to "suitable for use in a court of law", meaning that forensics are the standard (and possible outcome) in which the forensic accountants have to work with. Forensic accountants are also known as investigative auditors and forensic auditors. No matter what you call them, their occupation is to give expert evidence in the event of a trial.

Many police, government agencies, boutique firms, and large accounting firms have their own forensic accounting department. However, these groups normally have sub-divisions that specialize in areas such as royalty audits, construction, Anti-Money Laundering, fraud, personal injury claims, and insurance claims. It should also be mentioned that forensic engagements regarding financial matter can often fall into different categories such as:

• E-Discovery/Computer Forensics
• Business valuation
• Money laundering
• Tax fraud
• Securities fraud
• Reorganization, insolvency, and bankruptcy
• Post-acquisition such as breaches of warranties or earn-outs
• Economic damage calculating, whether they be suffered through breach of contract or tort

 

What Events Would Constitute Forensic Accounting?

In the event of professional negligence claims, forensic accountants comment and assess the work of the professionals in a business. In addition to this situations, forensic accountants are also utilized for family and marital law. When forensic accountants are engaged in such situations, they help determine equitable distribution, income available for child support, and spousal support. For criminal matters, forensic accountants are brought typically brought in for situations regarding fraud. For instances of fraud, forensic accountants are needed to assess the accounting systems to make sure funds reflect reality.

Some accountants specialize in the analytics department of forensics, in which they claim, detect, or reconstruct electronic data to detect fraud. The steps for forensic analytics include:

• Reporting
• Data Analysis
• Data Preparation
• Data Collection

A great example of forensic analytics would be reviewing the activity of a business purchasing card to determine whether or not purchases made on the card were made for personal use.

Differences Between Forensic Accounting & Internal Auditing

The fraud investigation methodologies of forensic accounting and internal auditing are fairly different in comparison. In situations of crime scenes, forensic accounting practices and services must be handled by forensic accounting experts... meaning that they cannot be done by internal auditing experts (for obvious reasons). In addition to this, forensic accounting experts can easily translate numerical data and complicated financial transactions into terms that the ordinary person can easily understand.

The importance of forensic accounting translation is based on the fact that when the fraud case comes to trial, the people in the jury will understand the layman terms to make a decision regarding the case. In addition to this, internal auditors go by checklists in which the event of fraud (or the possibility of covering up the fraudulent case in question) can easily be ignored when presented to the jury. With this being said, there's many legal risks that come with internal auditing checklists (as opposed to information presented by a forensic accountant) which can result in a very serious malpractice case.

How Forensic Accountants Operate Today

The forensic accountants of today operate on a simple set of rules and regulations for their occupation. Such rules and regulations are:

• Litigation procedures and processes
• Evidence gathering
• Investigative techniques
• Data analysis techniques to detect fraud
• Electronic discovery
• Data management
• Auditing and accounting procedures and standards
• Financial reporting systems
• Business information
• Economic theories

Over time, the role of forensic accounting has evolved and applied more proactive risk reduction methods to their service. These other roles include assisting with investment analyst research, fraud deterrence engagements, advising audit committees, and designing the extended procedures for statutory audits.