CPA Accountant

 

An accounting package is for communication and maintaining your financial records. The package produces information that tells specific things about the company. An accounting package provides the information regarding the finances of the business at the owner’s fingertips. The software should include accounts receivable, accounts payable, order entry, inventory control, cost accounting, payroll and fixed assets accounting. The general ledger should show transactions in four different categories. These categories include the account assets, liabilities, income and expenses.

The type of information needed from an accounting system should be accurate, fulfill management’s needs and be easy to use. As well as accuracy, relevancy and simplicity an accounting system should be set up so that it does not require an inordinate amount of time to maintain. The accounting system should be easy enough to understand so that a CPA is not required to operate it or interpret its output. Many small business owners are going to Quickbooks as this is a relatively easy system to use. This software is very user friendly. Files can be transferred easily and the reports are easy to read. Quickbooks is one of many options offered. You should select the accounting package that best suits your business needs.

When searching through accounting software for small businesses, it is best to make sure that whoever is going to be running your accounting system has some knowledge of computers and accounting. Even though Quickbooks and other accounting software can be very user friendly, the person running it will still need a certain amount of accounting knowledge. It might even be beneficial for the person running the accounting system to take a class or two in basic Accounting at your local community college.

If you are just starting your business and are looking at different accounting software for small businesses, know that many offer a 30 day trial or a demo version so that you can see what will work best for you.

If you have any question about accounting software for small businesses, contact us today.

IAC Professionals is a single source for contracting qualified professionals to assist you with your most critical business needs.   They offer a wide range of outsourcing solution which include Accounting, Bookkeeping, Virtual Assistants, Company Formation and Business Consulting.

Starting a new business? You’ve got all sorts of ways you can complicate your accounting and your taxes. But if you want to keep your small business finances clean, lean, and low-cost, follow these five tips:

Accounting Tip #1: Don’t Incorporate

Yes, incorporation may reduce your taxes (in same cases). And, true, incorporation typically reduces your legal liability. But unless you really need a standard, old-style corporation, you should keep your accounting and your taxes simple and more straightforward by staying “un-incorporated.”

Here’s why: Incorporation means annual corporate income tax. And even if you’re the only person working in the business, incorporation means annual and quarterly payroll tax returns. That’s just too much paperwork for your new business.

By the way, if you are concerned about your legal liability, know that you have another great option for protecting yourself. You can set up a limited liability company. You should get the same legal protection. And if you’re a one-owner LLC, you’ll be able to treat your business just like any other sole proprietorship, which means no corporate income tax returns and maybe no payroll tax returns.

Accounting Tip #2: Setup a Simple Accounting System

If you own and operate a business, you really do need a simple accounting system. Don’t fool yourself. Invest the time (an hour?) and the money (about $100?) to get a simple accounting system like Quicken Home & Business or Microsoft Money Home & Business.

You’ll need an accounting system to track your profits anyway. That’s actually the law. Furthermore, by starting out with a good accounting system, you’ll much more effortlessly capture tax deductions that will later save you money.

Accounting Tip #3: Use a Separate Bank Account for Your Business

You don’t want to co-mingle your personal and business accounting. Get your business its own business bank account. Use that account for your business’s deposits and for your business’s payments.

Only bad things happen, accounting-wise, when you pay personal expenses out of your business account and business expenses out of your personal account. For example, you’ll miss tax deductions. You’ll inappropriately count personal expenditures as business expenses. And you’ll lose your ability to precisely measure how much money you’re making or losing.

Accounting Tip #4: Make Quarterly Estimated Tax Payments

One of the responsibilities you shoulder when you become self-employed is paying quarterly tax payments using the 1040ES form (both form and instructions are available from www.irs.gov). But this makes sense.

Someone who is an employee doesn’t have to worry about paying income taxes on their wages. Their employer automatically deducts taxes from their payroll checks and then remits that money to the Internal Revenue Service.

But you need to pay the income taxes on your business profit. And you should do so in quarterly chunks as the year progresses: one-quarter of your tax bill on April 15, another quarter on June 15, another quarter on September 15, and, finally in the next year, the last quarter on January 15.

In general, you’ll owe a combined tax of about 20% to 25% of what your business makes.  So you want to use your accounting system to regularly estimate your profits and then you want to set aside 20% to 25% of that profit in a savings account for later paying your income taxes.

If you make $80,000, for example, you’ll owe $16,000 to $20,000 in tax. And you would pay $4,000 to $5,000 a quarter in estimated taxes.

By the way, the big crisis you want to avoid here is not a penalty. That’s the least of your troubles, in a sense, if you don’t make quarterly payments.

The big crisis is having April 15th roll around and then finding you need to pay a surprise $16,000 or $20,000 tax bill. Ouch.

Accounting Tip #5: Don’t Put Personal Assets into the Business

And a final tip for keeping your accounting clean, simple and low-cost: Don’t put personal assets like cars or home computers into your business and then think or try to write off the purchase.

The accounting rules for expensing these kinds of “easily-used-for-personal-stuff” assets are cumbersome. You’ll find the rules hard to follow and easy to break. And if your accountant charges for the extra work he or she needs to go to on your tax return, the money you save is embarrassingly modest.