What's New in QuickBooks for Accountants 2010

For the second year in a row, Intuit has given accountants a compelling reason to upgrade to QuickBooks for Accountants 2010.  In addition to all the wonderful new features found in Quickbooks Pro and Premier 2010 this year, Intuit has added additional Client Data Review tools and made improvements in Intuit Statement Writer.

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The Importance of Accountants in Payroll Activities

Any business that has a staff of employees relies on accurate payroll accounting in order to ensure the proper imbursement of the employees as well as the monitoring of expenditures that a business covers month in and month out. A willy-nilly approach just won’t do when staff is waiting for their pay at the end of a work week, nor will it sufficiently answer the auditor’s questions when they call the account executive in for a look at the books.

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Ethics of Accounting

Accountants at some point in their career will find themselves having to make a decision whether their situation is ethical or not. Professional ethics is an important aspect of an accountant’s job.  As an accountant you have the commitment to each customer to demonstrate competence, confidentiality, integrity, and credibility. Competence is where you must show a level of professionalism as well as developing the knowledge and skills that you will need as an accountant.  Confidentiality is when you as an accountant must keep information confidential unless authorized or legally required to release client information.  Integrity is when you must communicate with the associates to avoid any conflict of interests. Lastly there is credibility which is when you must communicate information in a reasonable and objective manner.

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The Unresolved Flaws in Financial Accounting

The users of accounting information include company owners, managers, investors, creditors, and government agencies. It is generally acknowledged that most financial reporting is “primarily externally oriented” and most of the users are nonaccountants who get frustrated trying to understand the statements. Since they are not part of the management team, they more or less are looking from the outside in.

Despite the many accounting associations from the Accounting Principles Board to the American Institute of Certified Public Accountants to the Financial Accounting Association that established the Financial Accounting Standards Board, there continues to be alternative ways of reporting which adds to the confusion and limitations of financial reporting.

Recognizing and Reporting Methods:

FIFO vs. LIFO:

FIFO and LIFO are two of the major methods of reporting transactions. Because these are alternative methods left to the discretion of the entities, two similar companies in the same industry could report the same transactions for similar goods and arrive at two separate conclusions. The FIFO method assumes that earliest goods purchased are the first to be sold. The LIFO method assumes that the latest goods purchased are the first to be sold “as a result the first cost assigned to ending inventory are the costs of the beginning inventory.” So goods purchased in September can be included in a prior month’s cost of goods sold. This method, though acceptable alters final reporting for better or for worse.

ACCRUAL vs. CASH:

Under current generally accepted accounting principles, financial accounting is backward looking. By reporting past transactions that rely on accrual accounting to conform to the matching principle, financial statements do not account for how much of the outstanding debit accrued under accounts receivable will actually be collected. This could mislead non accountants into over estimating assets in the immediate period after the release of a report because the adjustments due to non collection are done much later. In this scenario, a report released at the end of the year may project that a firm has $10,000.00 in accounts receivable. That projects $10,000.00 more in the asset column of the firm. This may give a more positive outlook when in actuality the firm may end up recouping only $3,000.00 of its account receivable. An investor attracted to the company on the basis of its strong outlook may be disappointed to find out later that in trying to collect on the accounts receivable only one-third was actually obtained. This weakness was the reason of the now defunct cash basis versus the current accrual basis. In the cash basis accounting, revenue or expenses were recorded when actual units of measurement (money) exchanged hands.

SUBJECTIVE vs. OBJECTIVE REPORTING:

A greater existing flaw in financial accounting is the subjective latitude given to accountants preparing financial statements to use their “professional” judgment. This flaw gives some accountants the latitude to manipulate reports as we witnessed in the Enron debacle of 2001. Business transactions between entities, people or business, are concrete events that are recorded. In the Unites States for example, the unit for measuring these events is the dollar. As a result, there should be no basis subjective judgment when reporting an empirical event or transaction. It is odd that different accountants should reach different acceptable conclusions for the same event. This creates room for more questions and further skepticism from the public. As a quantifiable unit of measurement, a dollar amount should always be the same no matter how it is reported.

LESSONS FROM OTHER DISCIPLINES: ECONOMICS

The above mentioned flaws do not exhaust the list of limitations of financial statements which among others include quantitative versus qualitative values in reporting; the principle of cost which does not reflect current market value after an asset is purchased; and the inability to compare firms in the same industry because of different reporting methods for example Coke and Pepsi.

Economists have their share of inconsistencies, most of them over the future effects of policy. Financial reporting however is backward looking. It reports events that already took place. But when it comes to measuring quantitative values, the kind accountants handle in reporting, economists have a more unified angle from which to measure transactions. For example, in computing the price elasticity of demand which measures the responsiveness of quantity demanded to a change in price, economists realized that the price elasticity going from point A to point B was not the same with going from point B to point A, a mathematical approach. So they developed the midpoint method for measuring elasticity which gives the same answer regardless of the direction of change. (Attoh Moutchia)

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Learning about Forensic Accounting

Forensic accounting is a growing field, especially in the wake of recent financial scandals. Simply put, forensic accountants go over a business or individual's financial records and analyze them for the client's use. Forensic accounting evidence may be called for in situations as diverse as bankruptcy, inventory falsification, divorce, statutory audits or even major fraud. After analyzing the data of the situation, the forensic accountant will then compile reports or exhibits to be used in court or in other legal proceedings, and may be called upon to testify about their findings. This aspect of the job necessitates the forensic accountant being familiar with legal procedures and knowing what parts of their findings are relevant to the case.

Forensic accountants usually begin as general accountants, since the job requires a strong background in auditing and accounting. Other qualities that employers look for in a forensic accountant are exceptional organization, the ability to be creative in working methods, curiosity about things that seem "off", and the persistence to sift through extraneous material and the professional judgement to find what matters.

A lot of forensic accounting training is experiential and on the job. However, many countries have forensic accounting organizations that can provide certification, and some universities also offer graduate courses in forensic accounting. Most universities require at least a bachelor's degree in accounting and sometimes a CPA certification before they will accept a student for their forensic accounting courses. Some people do study forensic accounting on their own since there are many books on the subject, but most agencies recommend taking courses to learn forensic accounting since so much of it is experience-based. Many CPA firms, universities and even police stations offer internships in forensic accounting, which is highly recommended for gaining real world experience.

After gaining basic forensic accounting training, many forensic accountants will also go back to train to be a Certified Fraud Investigator or a Certified Forensic Accountant. Although these qualifications are not required to become a forensic accountant, they provide a definite leg up in the job market, and also provide a great deal of information about law enforcement, which is invaluable in a forensic accounting career.

Once a forensic accountant has their certification, their services can be called upon by many different people, including private investigators, who may need help analyzing the financial records of their clients in a divorce case, insurance companies that use a forensic accountant when valuing probates, or by businesses that are in shareholder disputes. Most forensic accounting assignments begin with a meeting with the prospective client to gain information about the case and check for any conflict of interests, then move on to an in-depth analysis and investigation, culminating in a report of the forensic accountant's findings.

Because of its variable nature, forensic accounting is an excellent career for a talented accountant who thinks out of the box. Those interested in beginning a career as a forensic accountant can find more information about jobs and local regulations from their country's forensic accounting organizations. (Nasreen Haque)

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Does outsourcing your accounting make sense for your small business?

Outsourcing accounting services has long remained a privilege reserved only for larger corporations. But now, the affordability and cost effectiveness of using outsourced accounting services is attracting small businesses as well. Small businesses normally have a lot of functions and very less resources for completing them. Using expert bookkeeping and accounting service providers for outsourcing accounting functions save small businesses a lot of resources, which can then be utilized somewhere else within the business.

But the main query a small business entrepreneur will have is this: Is outsourcing accounting services really worth it for my small business? The answer to this is complicated and requires evaluating the pros and cons of using a firm for financial functions of the business.

There are advantages attached to hiring a firm for outsourced accounting which are especially applicable to small businesses:

The first and most important advantage of using an outsourced accounting service provider is its cost effectiveness, with an attractive possibility of saving up to 40% costs compared to in-house hiring.

Small business accounting requirements can be handled easily by expert bookkeeping and accounting service providers through their expert staff

You can choose to hire only those services which are applicable to your business

You save valuable time by using accounting services which you can then dedicate to the core business activities

You don't have to hire, train or retain in-house accounting staff

One drawback that can be associated with outsourcing accounting functions is that there are many companies which are into the domain of accounting services and it is a difficult task to filter out the experienced and genuine ones from the inefficient ones. So select an accounting service provider with a lot of care, and take the following factors into consideration:

Does the outsourced accounting service provider have experience in your industry?

Can it provide valid references of its current/past clients?

Has it dealt with accounting functions of small businesses?

Can the accounting service provider provide doorstep service if required?

Is the accounting firm ready to sign a contract with you detailing the terms and conditions and guarantees of service?

Is the accounting service provider flexible enough to allow you to scale your bookkeeping and accounting requirements up or down?

Are the data security measures of the outsourced accounting service provider in question enough to protect sensitive information related to your small business?

In case you get positive responses to most of the questions posed above, you can rest assured that the firm you are considering outsourcing accounting services to is an appropriate one for your business.

There are many advantages of outsourcing accounting services for small businesses, which far surpass the disadvantages. If you get the right service provider, it can become a partner in helping you develop your small business. As a small business owner, you can consider hiring a professional bookkeeping and accounting service provider who will help you focus on the core activities of the business and grow it appropriately. (Mark Waltzer)

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Myths and Realities : Outsourcing Bookkeeping Functions

Outsourcing today has evolved as a powerful tool which aids in the transformation of any conceivable business operation. However, there are a few myths still present when one considers the different aspects while outsourcing bookkeeping jobs to a specialist company. But the reality has dawned, even though late, that it is absolutely viable for small businesses too and presents tremendous possibilities in terms of cost saving as well as business strategies.

Myth : Only big corporate houses can afford to Outsource.

Outsourcing the bookkeeping functions used to be the prerogative of big business houses. With the winds of change sweeping the world, small business too have joined the fray and are outsourcing their bookkeeping functions in order to acquire increased efficiency and profitability in their respective business domains. Companies with a full-time bookkeeper can save about $30,000 a year by availing bookkeeping services of highly competent and competitive service providers in India. By outsourcing non-core business activities like Bookkeeping to destinations like India, China and Philippines, small business organizations .In the developed nations like the US and countries in Europe can save substantially by taking advantage of the difference in the foreign exchange rates.

Myth : Bookkeeping Outsourcing is not reliable.

No offshore service provider would risk their business prospects by unauthorized use of accounting data of the client company. Using secure FTP soft wares, offshore companies send the documents securely into the client server. Using customer-specified soft wares the firm finishes the assigned tasks and send the accounting files back to the customer's server securely. The clients then import the accounting files into their accounting soft ware. Thus the possibility of any breach of data security is ruled out.

Myth : Complex IT integration is essential.

It’s just a misconception that outsourcing requires complex IT integration. But just a server and internet connection will suffice. The service provider can use Remote Server
model to access client’s computer to perform activities like Bookkeeping, Tax Returns,
Account reconciliation etc. In the Secure File Transfer mode, all the accounting records are transferred securely from the client’s computer to the vendor’s. The trend has risen sharply and more and more companies are increasingly outsourcing accounting jobs and the sector is growing rapidly. An IDC study has predicted that the global market for bookkeeping outsourcing services, which crossed $30 billion in 2003, will touch $47.6 billion in 2009.

Myth : Bookkeeping when outsourced, induces job cuts and in the process harms the economy.

Small businesses, by outsourcing their bookkeeping functions, are witnessing an increase in their business returns and less processing time. Everyone, from the manufacturer to the customer and the governments accrue significant benefits. This is particularly more relevant for small businesses, since by resorting to outsourcing, they too can save money without compromising on the quality side. This benefit can be channeled for the purpose of hiring people needed in other operational areas to increase their production and sales. Ultimately, there is no significant loss of employment opportunities. (Vish)

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Tax Preparation

Chewed-on pencils, crumpled-up pieces of paper, worn-down erasers, and your hair standing on end from running your hands through it in frustration, what do these all mean? Why, of course! You’re doing your taxes!

It’s an annual ritual that bonds Americans as truly as fireworks and complaining about our mothers-in-law: tax time. As April 15th draws near, tempers grow short and time seems to speed up. A contest brews between two worries: that you’ll make a mistake that will bring the scrutiny of the IRS upon your finances, or that you’ll overlook deductions that could have kept more money in your own pocket.

How to ease the frustrations? First, make sure you avoid the most common taxpayer mistakes. Even if you have found an accounting firm in Naperville to advise you, it is possible to overlook things. A recent study by the Government Accountability Office (GAO) discovered errors even on most returns completed by paid tax preparers. These errors can be quite costly to fix. Thus, it’s important for each taxpayer to know the most common mistakes in order to avoid them.

The number one mistake is the easiest to correct: math errors. Too many bleary-eyed nights can lead to adding when you should subtract or copying numbers wrong. This can be fixed by utilizing tax preparation software. Also, always double-check your entries, for it’s easy to transpose numbers (for example, putting $3087 instead of $3807).

The second most common mistake is one that costs many people: overlooking deductions. Even though it’s much simpler to take the standard deduction, it’s almost always better to itemize. The GAO estimates that every year, more than 2 million taxpayers overpay because they fail to do this. Because there is such a long and varying list of possible deductions, including job search expenses, volunteer work expenses and gambling losses, this is where it’s easiest to get lost within the tax codes. It’s also where some professional help with your Naperville tax preparation can come in handiest. Your tax advisor can go through all your expenses with you and may well find deductions that didn’t occur to you. Additionally, a good advisor will guide you to future money decisions to help lighten your tax load in subsequent years.

Even if you do utilize tax preparation software or an accountant, keeping good records is up to you. Here is where many Americans make a third mistake: forgetting all about taxes once April 15th has passed. Something as simple as a shoebox or a drawer for receipts, health bills and donations can assist greatly in the next year’s filing.

Avoid these common mistakes and you may avoid the hair-pulling and teeth-gnashing when next April rolls around! (Elle Wood)

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All about Retirement Savings Plan

Each person recognize that we become a wee bit frugal about how we spend our money as we grow older. Are you feeling of how to save up more money for your retirement?

Many banks, building societies, finance issuers, credit unions and life insurance companies put forward retirement savings account (also popularly referred to as RSA). But the tricky part is figuringhow to choose a good retirement savings account provider, as the major is to start saving for your retirement early. If you start saving now, the more time your money matures and works for you. It is your liability to make hay while your sun is still shining.

How to pick a retirement savings account

Remember there are a numbers of selections to choose from but in my opinion the best option is the workplace retirement savings account. Workplace retirement savings accounts have really made it trouble-free for a lot of workers to save for their retirement. The various benefits of workplace retirement savings account include:

1) You are sure to build regular involvements to your savings account because it is automatically deducted from your weekly or monthly pay check.

2) If you use the workplace retirement savings account where your contributions is received from your pay check, your contributions comes out before taxes are figured. This represents you dig up to pay a lower income tax.

3) You can defer your income taxes over a long period of time, but you have to identify with that deferring your taxes means that all your money will compounds in the future.

PROSPECTSOF OPENING A RETIREMENT SAVINGS ACCOUNT

a) Excellent for saving money because there might be a penalty for withdrawing money from your retirement savings account(without approval). You will assume to pass up penalty for withdrawing money from the account before you get to the age of 59 and half years.

Are you considering "what are my options for saving for my retirement?" Well you have the following alternatives:

I. Discover your other options at your place of work. For example, retirement savings accounts like superannuation plans and you are able to use your own account to get the tax benefit from the Government, in which you could pay lower tax.

II. You can look into your social safety benefits. Ensure you peruse your annual statement so that you are able to confirm the records of your wages are spot on.

III. Setup an bank savings account, that is, if you do not have access to a retirement plan at your business place (Phillip Jones)

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Three Steps to Audited Financial Statements

Does your company need to present your stakeholders with an accurate report on your financial performance? The best way to prove your company’s financial credibility and accountability is to present your stakeholders with an audited financial statement.

There are three easy steps to obtain an audited financial statement for your company. First, contact an independent Certified Pubic Accountant (CPA). The CPA will then advise you on how to prepare for an orderly and efficient audit. Second, collect the information requested by the CPA and submit it to them. The CPA will examine documents which support figures within your company’s financial statements, assess the accounting principles used, and evaluate the financial statement presentation. From this information the CPA will create an audited financial statement for your company. The audit will give your stakeholders an unbiased opinion, either qualified or unqualified, regarding the nature of the financial statements and practices within your company. Lastly, review your audited financial statements, contact your CPA if you have any questions regarding the audit, and then submit the audited financial statements to your stakeholders.

An unqualified opinion indicates that the audit is found to be accurate, complete and fairly presented to meet the requirements of the US GAAP (Generally Accepted Accounting Principles). The audit provides the CPA a reasonable basis for their opinion that the financial statements are free of material misstatements or false/missing information. A qualified opinion indicates that the CPA is not in agreement with aspects of the financial statements and/or methods used to prepare their financial documents. A qualified opinion indicates that the CPA is not confident that the financial statements are correct or accurate. If no opinion is given, this usually indicates that a company needs to improve their accounting practices so they can meet the requirements of the US GAAP (Generally Accepted Accounting Principles) before an audit can be performed. (Neil Rischall)

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Preparing State Corporate Tax Returns

The key to efficient corporate tax returns is to utilize a Certified Public Account (CPA) who will develop a tax strategy that will minimize your company’s tax liability in the short and long term while minimizing the impact on cash flow.

A corporation can file their tax return based on either a Calendar year, beginning January 1 and ending December 31, or a Fiscal year, any 12 month period ending on the last day of the 12th month, except for December. Many corporations that use a fiscal calendar year start in October and end in September.

When preparing for your tax returns, the corporation must report income and deductions based on the annual accounting method used for their calendar year. The general accounting methods used is either Cash Basis or Accrual. The cash basis method of accounting reports income in the tax year it was received and deducts business-related expenses in the tax year it was paid. The Accrual method of accounting reports income in the tax year it was received and deducts business-related expenses in the tax year those expenses accrued.

To prepare for your state corporate tax return, you will need the following documents: A copy of last years state tax return, the filing receipt from the state where your company is incorporated as well as the State Identification Number, the documents filed and accepted by your state if the corporation files as an S corporation, and a copy of your state sales tax certificate. You will need supporting documentation for all gross business income received including interest earned in all business savings, checking, and investment accounts. You will also need either a year end worksheet which includes a trial balance, adjustment entries, income statement, and balance sheet, or a list of itemized business-related expenses which the company has paid or incurred during the year. The itemized expenses would include employees W2 and W3 forms, 1099 forms, and copies of sales tax returns and the corresponding payments. (Rischall)

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How a Chartered Accountant Can Help Your Business Succeed

Choosing a reliable and efficient chartered accountant is crucial for the growth and success of your business. You need someone who well understand your underlying vision, business objectives and can assist you in several financial and legal matters. The advice given by chartered accountant influences your business decisions to a considerable extent.

A chartered accountant should not only be experienced but also possess huge wealth of knowledge to serve your needs. He should have the ability to plan short and long term investment plan that best matches the structure of your business. In addition he should be well versed with business ownerships, retirement plans, organizing payrolls, expense management and state-of-the-art software to facilitate flexible bookkeeping.

Before appointing anyone as your chartered accountant or tax advisor fix a meeting with him and discuss the issues and challenges before your business. The discussion will help you to ascertain to what extent he understand your needs and interacts with you. You should also discuss your future plans with him. He should possess the ability to plan short and long term investment plan that best matches the structure of your business.

A chartered accountant prepare your personal and business income tax returns and help you in minimizing the amount of tax you need to pay. You just need to provide them all the details and leave the rest to them. They will use the information and plan a long term strategy for you. They also advice you on a wide range of issues such as, sale of shares or property, business acquisitions or disposals and determining the best tax structure.

A chartered accountant also help you in business valuations, payroll services, accounting services, strategic planning and salary packaging, financial statement preparation and computer accounting software. A chartered accountant is of immense help. They not only help you in financial planning but also assist you in setting up your business and its future expansion and diversification. (Gardner Wilkinson)

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The Importance of Cost Accounting

Managers rely on cost accounting to provide an idea of the actual cost of processes, departments, operations or product which is the foundation of their budget, allowing them to analyze fluctuation and the way funds are used socially for profit. Cost accounting is used in management accounting, where managers justify the ability to cut costs for a company in order to increase that company's profit. As a tool for internal use, versus a tool for external users like financial accounting, cost accounting does not need to follow the GAAP standards (Generally Accepted Accounting Principles) because its use is more pragmatic.

Cost accounting creates a financial value out of the production of a product, measuring currency that is nominal into units that are measured by convention. By taking recorded historic costs a bit further, cost accounting allocates a company's fixed costs over a specific time period to what items are actually produced during that period of time, creating a total cost of product production. Products that were not sold during that period of time produced a “full cost” of those products, recording them in a complex inventory system that uses accounting methods of its own that are in compliance with the GAAP standards. Managers are then able to focus on each period's results as it relates to the “standard cost” of any product.

Any distortions in cost that were caused by calculating what the overhead of a product is versus what a unit cost is for companies that specialize in only one specific product are very minor in industries that mass produce that product with a low fixed cost. Understanding why costs vary compared to what was actually planned helps a manager to save a company money by taking actions that are appropriate to correct that variation in the future. Variance analysis is a very important part of cost accounting because it breaks down each variances into many different components of standard cost and actual cost. Some of these components are material cost variation, volume variation and labor cost variation.

Cost accounting is a very important part of the management accounting process. In order for managers to determine the best methods to increase a company's profitability, as well as saving a company money in the future, cost accounting is a necessary system in the management of a company's budget, providing important data to analyze fluctuation in company production costs. (Uma Ilango)

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