Financial accounting and financial statements are a vital part of a company’s operations. They enable management to make current and future decisions on the basis of accurate data. Properly kept and presented financial records allow companies and outside parties to get a complete picture of the organization’s financial health. Financial statements inform decision-making in the following ways.
The QuickBooks accounting software package helps small and medium businesses run their affairs smoothly with easy transacting, reporting, tracking, and invoicing. Georgen Scarborough, the leading certified public accountants in Virginia, Maryland, and District of Columbia, outline the various packages suitable for your business needs.
QuickBooks Online or Pro?
Choosing the right QuickBooks software version can help you run your business more efficiently. QuickBooks Online is less expensive than the desktop version as the subscription package also includes the updates that run automatically. Another advantage of the online version is that it is easily accessible as it works on other devices, including mobile phones. Georgen Scarborough recommends buying a low tier version of QuickBooks Online initially, and then upgrading it according to business needs.
The QuickBooks Pro (desktop) version includes additional costs without the added functionalities. This version is recommended for businesses that have strict compliance requirements and do not allow employees to use online software.
QuickBooks Online plans
As mentioned earlier, the QuickBooks Online version is more popular than the desktop version as it is less expensive and does not tie the user down to a contract. For freelancers and independent contractors, QuickBooks also offers several flexible QuickBooks Self-Employed plans.
The first-tier plan in this version, QuickBooks Self-Employed gives you the ability to track expenses and mileage, estimate your taxes (quarterly) and send invoices from anywhere.
QuickBooks Self-Employed Tax Bundle
With this plan, you enjoy all the benefits of the Self-Employed package as well as an additional account that allows you to transfer your tax information to TurboTax, which in turn, includes the fees for a federal and state return.
QuickBooks Self-Employed Live Tax Bundle
The highest tier of this plan, the QuickBooks Self-Employed Live Tax Bundle includes all the features of the previous packages as well as unlimited advice from a qualified CPA who can also conduct a final review of your tax returns.
QuickBooks Online Tiers
QuickBooks Simple Start
This version is recommended for a single user and thus, cannot be used if you have employees. With this package, you can track income, expenses, sales, sales tax, and maximize tax deductions.
This version is suitable for three users and includes additional functionalities such as tracking payment statuses and simultaneous payment of multiple vendors.
The most popular version, QuickBooks Plus is suitable for five users and includes all the benefits of Simple Start and Essential. Additionally, it allows you to track inventory and project profitability.
This enterprise-level version is suitable for 25 users and includes a dedicated account manager and the ability to send and import multiple batch invoices.
Contact Georgen Scarborough, providers of quality financial and accounting assistance, for more information on how QuickBooks can help your business flourish.
Filing your taxes can be stressful, especially if your tax return is any more complex than a standard individual W-2. Getting a CPA to do your taxes, rather than doing it yourself, can save you a lot of hassle and possibly some money. Here are five reasons why you may want to hire a certified public account to take your tax filing burden off your shoulders.
1. You have a small business or additional income streams
If you run a small business, you may not be aware of the numerous tax write-offs you can claim to save you money. If you have a side hustle or are working in the gig economy with several income streams, your return becomes a lot more complicated, but a professional can help you complete it without too much fuss.
2. The IRS asks for specific information
Many people find it very stressful if the IRS reaches out to them to ask for substantiation of income or expenses or other documentation. If you get a professional tax practitioner on your side, you can eliminate this stress. They will know how to deal with the IRS and help you comply.
3. You’re self-directing your retirement
If you have other investments to fund your retirement, aside from your 401k, that’s called self-directing. Filing for personal investments such as cryptocurrency or real estate can get a little tricky for the layperson. That’s why you may need a CPA to do the filing for you.
4. You have a rental property
If you are earning income by charging rent on one or more of your properties, you should seek the advice of a tax practitioner to see where you can make deductions.
5. You want to send your children to college
If you are planning on filling out a Free Application for Federal Student Aid (FAFSA), you would do well to seek out the help of a CPA. Unwanted assets or income in your child’s name could adversely affect the application, even if it works from a tax planning perspective. Let a professional help to make the right adjustments in this regard.
Creating financial statements can seem tedious and complicated, but preparing these documents is a vital part of planning for the year ahead. Financial statements make up a large part of the projections and planning for your business’s future and can give you strategic guidance on crucial changes to make to ensure sustained success.
How financial statements can help you plan for the year ahead
While you are preparing your financial statements, you will become more aware of the status of your business’ finances, the progress you are making towards your goals, and will give you a clear view of any issues you might face down the road.
Financial status overview
Keeping close tabs on the financial status of your business is a must. The financial statements offer a summary of your business’s financial position. They can provide you with the information you need to help you set goals and understand where you might need to change your budget. If you regularly work through your financial statements, you will pick up any issues at an early stage, and you can make small changes before the finances go off the rails.
Relating business goals into specific business targets
The financial status overview is a powerful tool to help you create specific targets that will drive your business strategy towards achieving the goals you have set out for any given year. The adage goes that failing to plan means planning to fail, and it holds true in a business context.
Measured targets will help to keep your business on track and will provide employees with structured outcomes to work towards. By creating specific targets, you can practically set out a roadmap that will lead your business to its goals, instead of making decisions on the fly without proper planning to back up actions. Through specific targets, you will be able to create a sustainable pace for the business while leaving room for direction changes necessitated by external factors that influence the business strategy.
Your financial statements contribute to most planning and strategic decisions and can help you measure the progress within your set of goals. If you have carefully set out specific business targets, the progress measurement process will be easier to manage. The business’s financial statements can give you a higher-level overview of the progress, even if you do not measure specific targets. When comparing the financial statements across several years, you can track how the business is progressing towards its goals on a year-by-year basis, giving you valuable insights into the overall development of the company.
Identifying potential issues
When you study the financial statements for the previous years, you can compare the financial situation to your business forecast to see if you might run into problems relating to cash flow and inventory, among others. It is especially important to use your financial statements when planning the goals you want to achieve in the business to identify shortfalls and plan out budgets to cover the activities you plan to undertake for the following year.
If you need assistance from our accounting service experts on your financial statements, taxes, and other financial planning activities, contact Georgen Scarborough Associates, PC, for more information.
Business accounting does not have to be a daunting process with these practical and straightforward accounting tips. At Georgen Scarborough Associates, PC, we have helped small businesses to get their financial statements, tax preparation, and payroll off to the best start. Here are our top accounting tips for startups:
Top accounting tips for managing a startup
There are countless resources online with tips and plans for getting your start up’s accounting in order. Not all of these tips have been created by accounting service experts, and the wrong advice can cost you time and money and get you into a lot of trouble with the law. Here are the tips you need to keep your books in tip-top shape.
Keep business and personal finances separate
You might be tempted to put everything together in the same account and treat your business accounting like your personal accounting. Mixing the two is a quick way to create a lot of trouble in the long run. We recommend opening a dedicated business account from day one. The little bit of extra effort, in the beginning, will help you to keep everything in order and will save you a lot of frustration as your business grows.
Record expenses, income, and payments meticulously
Now that you have a dedicated business account, it will be much easier to keep a thorough record of income, expenses, and payments you make for the business. If you deal with a lot of physical paperwork, you should invest in a filing system to keep your records organized and safe. We recommend that you read up on record keeping requirements in your industry and area so that you don’t unknowingly expose sensitive information to unauthorized parties.
Stay on top of financial matters
If your records are in order, it will be a reasonably simple task to stay on top of your finances. Remember to stay updated on regulations, legal requirements, and developments that might impact your business accounting. For business owners, this requirement is especially critical when it comes to taxes and payroll matters that affect employees.
Use professional software tools
Modern digital accounting tools can make the accounting process incredibly simple for startups. We recommend using a cloud-based accounting tool that will help you organize your accounting process and access your information anywhere. We recommend that you research a few different options and reach out to an accounting service expert before investing in a paid plan for your business.
Hire an expert
Suppose you are unclear about your business accounting, or you don’t want to spend your time managing your accounting. In that case, we recommend reaching out to one of our accounting service experts. We have the knowledge, experience, and resources to assist you with all your business accounting needs. Our professional staff members provide a variety of services for your startup, from payroll to taxes.
For more accounting tips or help with your startup accounting, contact Georgen Scarborough Associates, PC, in Virginia for more information.
Financial Statements represent a formal record of the financial activities of an entity. These are written reports that quantify the financial strength, performance, and liquidity of a company. The financial statements are used by investors, market analysts, and creditors to evaluate a company’s financial health and earnings potential.
How to enhance the usefulness of your financial statements
- Consider the format of your financial statements. This tiny detail can make a tremendous difference. Providing investors with easy-to-read financial information in the financial statements is essential to achieving your objective of capable, confident, and well-informed investors.
- Make sure to include an operating and non-operating presentation. It is important to consider the effects of both operating and non-operating components of the income statement. Due to the material nature of non-operating items, they are typically reported separately from operating items in a company’s financial statements.
- Review peer organizations’ financial statements for best practices. A review of other organizations’ financial statements is a great place to start when updating your own.
- Modify your footnotes. Financial statements are easier to read and understand when you identify what information is relevant to your investors, prioritize it appropriately, and present it in a clear and simple manner. In some cases, this includes additional information that is useful for investors and, in other cases, removing information that is immaterial.
Financial statements are intended to provide investors with information that is useful for making investment decisions. These statements need to be updated annually and should be prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
Government contractors have always faced accounting and financial management challenges. Federal contractors face critical challenges in aligning accounting methodologies with the demands of their target market. They face issues which include maintaining constant audit readiness, the need for diligence, and the demand to stay on the cutting edge of applicable technologies. If you are a part of the world of government contractors, here are 5 common accounting problems that you may face.
1. Obtaining DCAA Approval of a Government Contractor’s Accounting System
Prospective government contractors are often faced with an array of special difficulties in qualifying their accounting systems with the Defense Contract Audit Agency (DCAA).
It is critically important for all government contractors to thoroughly understand the approval requirements as well as how those will be assessed.
- Keeping Pace With Changes in Government Rules for Finance Management and Accounting. Managing in a perpetual stream of changes in requirements is the way of business in government contracting. Currently, the increased transparency of government finance motivated by the economic stimulus plan provides a good example. But, with merely the usual turnover of new regulations, continuous changes in government financial management and accounting requirements are an ongoing fact of operating as a US government contractor.
2. Preparation for Surprise Audits
Your business must operate under the assumption that it will be subjected to a thorough government audit that will occur without advance notice. Contracts may be terminated and in some cases, payments may even be withheld on existing contracts, pending satisfactory improvements. Always be prepared to ensure that your company will receive a positive evaluation.
3. Maintaining Sufficient Staff and Training
Inaccurate data and incorrect data entry, or errors in performance, put the system at risk. If data is wrong or entered into the system improperly, or internal accounting processes such as contract cost allocations are performed incorrectly, the system is jeopardized. Contractors must ensure that the entire accounting staff is fully skilled to prevent mistakes, and for the correction of undue mistakes.
4. Failing to Use Available Information
An accounting system and design procedures have little value if the contractor does not leverage it to manage and grow the company. With innovative technology, government contractors are far better able to comply with government contracting requirements and can use the system to manage and grow their companies while gaining necessary compliance.
5. Organizing a System Around an Individual
As government contractors grow, they organize the accounting function to improve compliance and may hire a mid- or senior-level accountant to institute a system. This results in a system that cannot be maintained if the key individual leaves the business or is incapacitated.
Georgen Scarborough Associates, PC for Your Accounting Needs!
A full-service accounting firm located in Vienna, Virginia, Georgen Scarborough Associates, PC is licensed to practice in Virginia, Maryland, and the District of Columbia (DC). We are professionals who listen carefully to our clients and can customize a suite of accounting, tax, and financial management services tailored to each unique situation.
At Georgen Scarborough, we provide a broad range of products and services to give our clients a secure financial future. We offer customized services to each of our clients.
We will carefully listen to your needs, and we produce results that work. Our services include:
- Individual Income Tax Preparation
- Estate and Trust Tax Preparation
- Small Business Accounting Services
- Financial Statement and Tax Preparation for Small Businesses
- Payroll Services
- Audits and Tax Reporting of Non-profits
- Accounting Services for government contractors
- QuickBooks Advisor
Accounting can be tough! Entrepreneurs often implement their own accounting, thanks to accounting software, which is easy and effective to use. However, these software services are not always easy to learn or completely accurate. Some of the errors that could occur during accounting are minor, while others can be quite significant and affect your business’s financial health. These mistakes, however, can be prevented. We have a list of the 5 most common accounting mistakes entrepreneurs can make: