How To Know If You Need To Hire A Forensic Accountant

If you have been robbed or financially taken advantage of in any way you may need to hire a forensic accountant in order to seek justice. A forensic accountant is a trained professional that combines a host of skills to investigate financial cases from the inside out.

There are many reasons people hire Forensic Accountants, ranging to include suspected company fraud and even divorce.  You can accuse someone of taking millions of dollars from you, but you must prove it on paper for the courts to take it as truth. Forensic Accountants serve as expert witnesses in charge of researching, analyzing and then presenting the facts in a persuasive and undisputable manner to judges, jurors and mediators.

Attorneys, insurers, creditors and many other entities hire forensic accountants to conduct research and present findings as witness testimony in court.  It takes an experienced accountant for the job, someone great at crunching all the right numbers to reveal a raw look at overall damages in totality. As well as someone that knows where to look to find the most telling of damages. This helps prove exactly how much money you are owed to make right a wrong.

You May Benefit From A Forensic Accountant If…

You Suffered Commercial Damages: Forensic accountants provide the expert witness testimony you need to prove unjust commercial losses in court. They not only present the facts but they do the research to pinpoint complex matters involving breach of contract, product liability, fraud, construction claims, intellectual property infringement and so forth.

Employees Were Caught Stealing From Your Business: Business/employee fraud relations are complex. Every last dollar that was taken out from under you deserves to be returned. The only way to know the full sum total of damages is to have a forensic accountant investigate the situation. Many methods are used throughout these types of investigations including tracing of funds, suspect interviews, forensic intelligent gathering and more.

You Are Going Through A Messy Divorce: Divorce is one of the most stressful life experiences, but a good forensic accountant can be a valuable member on your team. When splitting assets, a forensic accountant is often required to make sure all parties are given their fair share. They are also hired to uncover how much income one should pay for spousal or child support.

Your Commercial Insurance Is Not Following Through On Claims: If you are not being properly supplemented through commercial insurance you may need this type of accountant to investigate coverage issues as well as calculate how much is owed in losses. The actual losses of the insured individual are assessed in regards to their current financial picture to determine how much coverage is owed.

You Have A Personal Injury Claim: Under these sorts of circumstances, the investigator puts together a sum total picture of losses and damages including everything from medical bills to lost wages. These claims may involve wrongful termination, medical malpractice, wrongful death cases and more.

You Are Involved In A Shareholder or Partnership Dispute: If partners are having disputes over who gets what, a forensic accountant will take a look at the entire picture, down to every last number. As a result, they come up with the exact amount of compensation or benefits owed to each shareholder or partner.

When To Hire A Forensic Accountant

It’s better to hire a forensic accountant early on in a lawsuit so that the opposing party does not have the opportunity to retain your expert. A forensic accountant knows how to get the discovery process moving quickly in the right direction, saving you time, money and hassles from the start.

Forensic accountants are useful in different elements of court cases. In fact, many cases would end much differently without their expert testimony. A forensic accountant is only as good as his or her track record. You want to hire someone that knows their stuff and has a strong background in accounting and financial analysis, as well as strong communication skills and the drive to never give up.  

DGK will proudly stand as your partner in and out of the courtroom! We do all of the research and analysis to back you up on paper, as well as present our findings in a way that the judge, jurors and mediators understand and accept as fact. When it comes to messy battles that involve money, you don’t want to go at it alone. With DGK on your side you never have to.

5 Common Accounting Mistakes That Cost Businesses Big Money

Small accounting mistakes can cost your business big time, limiting growth and causing serious setbacks. Here are 5 common accounting mistakes that you can avoid by simply being in the know.

1. Counting Profits As Cash Flow

In order to operate a business you have to make investments and purchase product, supplies, etc., but beware you are not buying product faster than profits can catch up. Otherwise, you could find yourself in a lot of debt.

It’s important to know how much money you are bringing in vs. how much money you are spending on product development. If you are making money on paper but constantly have no money left over at the end of each month it might come down to miscalculations in expenses vs. earnings.

The Solution:

Hire our certified CPAs to keep track of profits, expenses and losses, providing you with a clear picture of where your business stands at all times. It’s also important to carefully look over financial plans before embarking on an expansion to ensure your business will make back its investment within a reasonable time.  

2. Throwing Away Receipts

We live in a digital world but paper trails still hold power when it comes to deducting expenses or making up for any mistakes or gaps in accounting records. All purchase records for small and big purchases should be saved and accounted for. If you ever need to prove purchases to the IRS it’s going to be hard to do so if you don’t have any record of it.  Without the receipts to prove certain transactions the IRS will consider it an invalid dedication, charging you back tax and penalties.

Even if you don’t pay with cash you should still keep all receipts. Just because you use a card or check doesn’t mean you will have any record of what that charge was for.

The Solution:

Instead of hoarding piles of paper receipts for the rest of forever, there are online programs that will digitize receipts and save a copy so that you reduce clutter and increase ease of finding what you want. Let us help you keep track of all valid expenses in order to earn the tax credits that you deserve without hassle.

3. Mixing Up Business & Personal Expenses

Using business accounts to pay for non-business related expenses complicates things and raises red flags with the IRS. It never looks good if you are using company money to fund your personal life just as much, if not more, than you are investing back into the company. Not to mention, it complicates the numbers making it difficult to determine if you are breaking even, losing money or in the green.

The Solution:

Keep separate credit cards and bank accounts for business and personal use.  This makes it much easier to keep track of all profits, expenses and losses for your business. It will also simplify things when it comes to doing your taxes. 

      4. Not Checking Invoices & Vendor Statements 

Is someone in charge of checking over invoices and vendor statements to ensure everything matches up? One of the biggest ways employees steal from employers is by making up phony invoices that appear legit, but only at surface level. All that it takes is a little digging to ensure all invoices add up to the real deal.

The Solution:

Keep careful tabs on all charges that go through the company. There are software programs available that make it more difficult for employees to create new vendors or get away with creating phony invoices. 

      5. Not Staying On Top Of Receivables 

Playing bill collector is never a fun gig but it’s necessary in order to stay on top of company finances and keep your business financially thriving. Oftentimes businesses bill out invoices and then don’t keep track of when they are paid, and sometimes even if they are paid.

The Solution:

With so many invoices going out all of the time, it’s hard to keep track of what’s what.  Unless someone is assigned to the task it’s easy for invoices to become long overdue or underpaid. Accounting software can help automatically keep track of what is paid and when. Many of these same programs will send out reminders for late payments and offer clients a platform to pay online.

(Related Topic: 5 Small Business Accounting Mistakes) 

We Help You Avoid These Mistakes And Many More

DGK takes pride in helping small businesses keep track of finances to avoid IRS penalties, fraud, and other common issues that often arise from accounting mistakes. At the same time we can help your company find more opportunities for growth by creating concise reports packed with valuable insight.

Detailed Look At Four Basic Financial Statements

Detailed Look At Four Basic Financial Statements

Accounting can be complicated but when you break it down into different parts it’s far more manageable. The four main financial statements include: balance sheets, income statements, cash flow statements and statements of shareholders’ equity.

These four financial statements are considered common accounting principles as outlined by GAAP. Businesses should keep careful track of all four of these statements. Especially if your company has shareholders, in which case you will need to produce these statements for them to review on a regular basis.

DGK offers hands on accounting services for businesses. Let us take care of the technical accounting details so that you can focus on running your business.

1. Balance Sheet

The balance sheet is a basic financial statement that provides valuable up to date insights on the financial positioning of your business. The balance sheet is used to report entity resources as well as evaluate long-term obligations and goals. Balance sheets vary from year to year and offer a great comparison tool.

The balance sheet is based upon the following equation: 

Liabilities + Equity = Assets

There are two different types of assets, current and fixed. Current assets are easy to convert into cash and include things like notes receivable, inventory, marketable securities and prepaid assets. Fixed assets are marked as what you originally paid for them and may be worth a lot more when you sell them. Fixed assets include things like land, buildings, and equipment.

Liabilities are assets owed to creditors broken down into current and long-term classifications. Short-term or current liabilities include things like accounts payable, wages payable, and taxes payable. Long-term liabilities classify things like mortgages and bonds.

Equity defines owners and stockholders’ equity in a business. Equity owners only have a right to payment after creditors are paid. If the business were to close down for any reason, creditors are paid off before owners or shareholders receive anything.

2. Income Statement

Your income statement defines how much money you made in a certain period of time, for example one year. A simple equation used to define income statements:

Revenue – Expenses = Net Income

All expenses accumulated to produce a sale must be subtracted from revenue in order to know if your business is making money. In order to get a more detailed picture you also need to take into account any gains or losses that result from a good investment, a natural disaster or maybe even an unhappy client that refused to pay for services already provided.

3. Statement Of Owner’s Equity

Also known as Statement of Retained Earnings, this statement utilizes information produced by the Income Statement and in turn provides information to the Balance Sheet.

The basic equation for a sole proprietorship is:

Beginning Equity + Investments – Withdrawals  + Income = Ending Equity

If you are creating a Statement of Owner’s Equity for a corporation the equation goes as follows:

Beginning Equity + Investments – Dividends Paid  + Income = Ending Equity

Stockholder equity is calculated by:

Common Stock + Premium on Common Stock + Preferred Stock + Premium on Preferred Stock + Retained Earnings = Stockholders’ Equity

The premium on a stock is reflected by the actual price your company sold the stock for. Stockholders’ equity does not fluctuate with changing stock prices.

4. Cash Flow Statement

It’s very common for profitable companies to struggle keeping adequate funds in the bank.  The Cash Flow Statement helps to evaluate what’s really going in terms of cash sources and uses, while providing a solid way to assess how well your company can pay its bills. The information that goes on the cash flow statement is originated from the beginning and ending balance sheets, as well as the income statement for the same period.

Cash Flow Statements reflect:

-Where cash is sourced

-How company cash is used

-Any fluctuations in cash balances

This form of analysis breaks cash sources and cash flow into three categories: Operating, Investing and Financing Activities. From there you can determine where to make cuts if necessary.

Let Us Take Care Of Your Small Business Accounting

Outsourcing accounting can be a valuable tool for small businesses. DGK can help your business save money, time and hassles with our thorough small business accounting services. Let us take over all of your accounting needs or offer advisory support.

7 Things You Need To Know About Your 401(k)

7 Things You Need To Know About Your 401(k)

How much do you know about 401(k) plans, yours in particular? You might be surprised to find out how many people with a 401(k) remain unsure about the details of their plan.

401(k) plans are one of the most popular ways people save for retirement, largely because many employers offer them as a benefit. If you work at a tax-exempt operation, such as a non-profit or educational institution, you may be offered virtually the same thing but called a 403(b).

If you don’t work for a company that offers 401(k) plans, there are still plenty of options to look into. Allow one of our CPAs to help you find a retirement plan that works for you.

1. How Much You Can Contribute To Your 401(k)

Workers under 50-years-old can contribute as much as $18,000 per year and still receive tax credits. Employees that are 50 and older can contribute an additional $6,000 ‘catch-up contribution’ per year.

Contributing to your 401(k) offers tax savings benefits, for example if you make $3,500 per month and you put $500 into your 401(k) every month you only pay taxes on $3,000 a month. Employers match a percentage of every contribution you make up to a certain amount.  

The retirement issue in America is being called a “crises.” The problem? No one is saving enough to maintain their current lifestyle considering how long people are living these days. Percentagewise, seniors makeup one of the largest groups living in poverty. In other words, the more you can contribute to your 401(k) the better off you’ll be, because you’re going to need it.   

Calculate how much you can afford to stash away for retirement every month and stick to it.

2. Are You Contributing Above Your Plan’s Default Rates?

Many 401(k) plans automatically enroll employees unless they opt out. The initial contribution typically starts out small and then “auto escalates” from there. You can always opt out and contribute whatever you want to your plan. But in most cases you want to contribute more than the default rate in order to build up a sufficient nest egg. If you never contribute more than default rates, how much money do you end up with when retirement kicks in? In many cases it’s not enough to retire, or at least not for long. The general rule of thumb is to contribute between 12% and 15% per year.

3. Expense Ratio: How Much Do You Pay In Fees?

Always be in the know about specific fees associated with your account. Some 401(k) plans are loaded with operating expense charges, which can total up to 30% of your entire savings by the time you retire.

Pay close attention to the fund’s expense ratio to see if your plan is costing more to operate than it’s worth. An expense ratio of 1% or less is considered fairly normal.

4. You Have Options

Employers pick a large pool of investment options and from there, employees pick where they want to invest.  The Plan Sponsor Council of America reports that on average 401(k) funds include 19 funds to pick from. If you do not make a choice, your money will be invested into a default location. All investment options are not created equally. Take advantage of your ability to choose in order to make the most out of your investments.

(Related: Top 10 Fidelity Funds for 401k)

 

5. Is A Roth 401(k) An Option For You?

Some plans offer the option for a Roth 401(k). This type of plan allows you to contribute more money after meeting your tax limits, of which can be withdrawn tax-free in the future after incurring tax-free growth. You have the option to split up your investments between a Roth 401(k) and a traditional plan.  

6. How Much Your Employer Contributes

Employers generally match your contributions to a certain percent, often around 4%, and up to X amount of money per year. Some employer contributions immediately become vested in your plan, while others do not technically become ‘your money’ until you have been with the company for a certain amount of time.

If you leave your job for another job, your plan can be rolled over to a different account and the money you contributed over the years should still be there. Depending on the terms you have with your previous employer, employer contributions may or may not roll over. If you have less than $5,000 in your account there’s a chance it will not roll over.

7. When You Can Withdraw Money From Your 401(k) Without Fee

If you retire early or roll 401(k) money into a different retirement account, you will more than likely have to pay the 10% early withdrawal fee. In order to avoid the fee, you’ll have to wait to withdraw money until you are precisely 59½-years-old.

Need help working out the logistics of your 401(k) plan, or need some other retirement solution to maintain your lifestyle long into your golden years? DGK has you covered! Our CPAs are knowledgeable, intelligent and experienced. But most important of all they are dedicated to helping you prepare for a better retirement.