Why Good Accountants Are Wise Investments

With all the sophisticated bookkeeping, accounting and tax preparation software out there, you might think you don’t need to hire an accountant for your start-up small- or medium-sized enterprise. Think again.

An accountant is not a superfluous business expense. An experienced professional accountant who understands how to run a business in today’s economic environment can be a great asset to your business. A good accountant can provide essential support in many areas, including tax planning, strategic approaches, growth and expansion strategies, budgeting, financial forecasting, evaluating new business ideas, and, of course, keeping your financial records in order.

Although hiring an accountant may cost you up front, you’ll likely recoup the investment many times over. A good accountant can often find numerous ways for you to shave expenses, structure transactions, time payments and save money. Moreover, many accountants offer fixed or scalable fee structures, and some are willing to arrange their fee structures according to your cash-flow circumstances.

There are many benefits to using a professional accountant. The following are some examples:

Tax Savings: A qualified accountant possesses knowledge, training and experience in tax planning and tax strategies as well as in tax preparation. Often they can recommend legitimate ways to reduce your tax obligations.

Improved Profitability: In addition to overseeing the accounts, an accountant can assist you with budgeting and advise you on forecasting cash flow. You may be able to improve cash flow through better management of inventories, payables and receivables. As your business grows, your accountant may suggest ways to manage or direct growth to maximize profitability.

Up-to-date and Accurate Accounts: Timely, accurate financial information is crucial for all businesses. Knowing where you stand financially will enable you to understand your business thoroughly and optimize your business performance through economic cycles. This is especially critical if you are looking to expand, diversify or add new lines of business.

Expert Business Advice: Whether you’ve just started out or are on a growth trajectory, an accountant with knowledge of best practices and business conventions across a spectrum of industries is a source of quality professional advice.

Referrals and Business Networks: Don’t underestimate the value of being part of an accountant’s business network. Accountants who work with other small businesses can keep you abreast of trends and issues and also refer clients and vendors to your company.

Stay Ahead of the Curve: A savvy accountant will be aware of current legislation affecting small businesses and will make sure that you comply with legal requirements in an appropriate, timely and efficient way.

Spend Your Time on What’s Important: Financial matters can be frustrating and time-consuming. Delegating accounting and bookkeeping tasks to a pro frees up your time so that you can concentrate on making your business successful.

Gain Peace of Mind: Knowing you have a great accountant on your team will help you sleep better at night, secure in the knowledge that your business finances are in good hands.

Key Things Every Business Must Know About Sales Tax

Knowing your sales tax obligations is an important part of running any type of business. But the myriad taxes can be confusing to even the most astute professional.

A sales tax is a duty imposed on a retail sale or market transaction. There are several categories of sales taxes, based mainly on whether the tax is paid by the seller or the buyer.

In the vast majority of states, consumers bear the legal burden of paying sales taxes, and the seller is simply an agent who collects and remits the money to the taxing authority.

In some jurisdictions, however, sales taxes are imposed on vendors that may either absorb or pass the tax along to customers. And there are a few states where the tax is levied on the retail sales transaction itself, so the tax liability is shared by sellers and buyers. In addition, there are five states that do not have a sales tax: these are Alaska, Hawaii, Delaware, New Hampshire, Montana and Oregon.

Sales taxes are calculated on the gross transaction amount. Generally, the method of payment is irrelevant, and thus installment plan sales, layaway sales, and sales involving trade-ins or other property exchanges are still subject to sales taxation. In most states, certain items such as food and clothing are exempt from sales tax.

If you operate an Internet-based business, you are responsible for collecting and remitting applicable sales taxes. In addition, if your business has a physical presence in a given state, you must collect state and local sales tax on online purchases made by customers in that state.

Year-End Tasks to Help Start 2010 at Top Speed

There are several important year-end accounting, bookkeeping and administrative chores owners of small and midsize businesses must take care of before popping the champagne cork to ring in 2010.

Many tasks should be handled as close as possible to the calendar rollover. Don’t procrastinate. Schedule the tasks and make it a priority to get them done.

Several reports must be run at the end of every financial year. These reports summarize your entire business year. You’ll need a complete set of these basic financial documents:

•    Profit and loss statement
•    Balance sheet at year-end
•    Income tax summary
•    All transaction details by account for the year
•    Payroll tax and employee earnings summary

|The payroll tax and employee earnings summary will come in handy if an employee or former employee ever questions your withholdings.

Business owners must complete and submit all required tax forms. If you have employees or hire independent contractors, there are three essential forms to prepare before Jan. 31:

•    Form W-2 – Employers must file Form W-2 for wages paid to each employee. Anyone required to file Form W-2 must also file Form W-3 to transmit Copy A of the W-2 forms.
•    Form 940 – This form is used to report your annual Federal Unemployment Tax Act tax.
•    Form 1099-MISC – This form must be completed for each independent contractor you paid $600 or more to. Form 1096 must also be completed to transmit Copy A of Form 1099.

Make backups of all these important documents. There are a number of good, cheap and free online storage and backup services available.

In addition, print out all critical documents on paper, label them clearly and store them as part of your company’s permanent records.

Having hard copies of all your important financial records protects you in the event of software system obsolescence, data loss or other technological failure. It is wise to make several backup copies of these reports and store them separately off-site.

Another important year-end chore is a physical inventory. An annual inventory count can reveal shrinkage, losses, discrepancies or other problems that might not have shown up previously.

It will also signal when it’s time to clear out, dispose of or write off obsolete or spoiled stock.

If you need to meet with your accountant, attorney or any other professional to complete some or all of these annual tasks, schedule that meeting now and gather up necessary data and documents so that you’ll be prepared.

With these tasks completed and the knowledge that you have taken steps to set your business up for the year ahead, you’re all set.

You can go ahead and pop the cork on that champagne bottle and celebrate.

How to Make the Most of Business Credit Cards

When used properly, business credit cards can be a powerful financial and strategic tool for small-business owners. In addition to providing a cash infusion or capital for emergency purchases, using a business or commercial credit card can be a sound business strategy.

Business owners often rely on credit cards to deal with lumpy cash flows or to facilitate growth, expansion and acquisitions. Some business card issuers offer various payment options to help small- and midsize enterprises (SMEs) meet these specific needs.

Credit cards can also be a tool for record-keeping. Credit card statements can help SMEs monitor spending by category and assess the financial health of the business. Year-end statements can be invaluable for tax
preparation.

It is important to keep business and personal expenses separate. Never use a business credit card for personal expenses, and avoid accumulating debt on a business credit card. There are other benefits to using business credit cards:
•    Designated spending limits give business owners control over employee expenditures.
•    Business-friendly incentives, such as discounts on supplies, travel or business services, can add up for SMEs.
•    Reward benefits like frequent flier miles, restaurant and hotel points, merchandise rewards, or cash back help small businesses leverage spending.
•    Because there is no liability for unauthorized charges, business credit card owners are protected against fraud.