What If You Don't Maintain Your Business Accounts?

Book keeping is just not keep Accounting records but it is a tool to manage the business. It is not something you have to keep for paying taxes only but also as an internal support to decision making and grow the business. There are few more factors that prove why every business needs to maintain accounts. 

 

1. Business plan 

If you don’t maintain business accounts you will not have any business plan & without a plan there is no way to see that a business is going in right direction or not. So not having good bookkeeping work is like driving a car with a blindfold on. 

2. Losing Money 

A sole member of business will do everything including invoicing. 

But it's not possible to remember all instances in which it was supposed to get paid on time. Customer will never say "Hey! Do I owe you any money? ".  The bookkeeping records that helps you to manage you’re pending bills & take it follow ups about it.  If business is not maintaining accounts it will also not be able to maintain its cash flow.  Hence, running out of cash is one of the quickest ways to go out of business unless you’re able to schedule its payments to the creditors. Businesses that don’t keep a proper track of who owes them money and who they owe money to, are the most likely to fail on this count. 

 

3. Tax Issues 

Without the proper accounts the tax time will be a nightmare. It will be time consuming for tax professionals to calculate taxes & refunds without accounting or bookkeeping systems being in place in business. 

 

4. Profit elements  

If you do not have any bookkeeping records your business will not understand how profit works. When working out your business profit margins, it’s very important to take into account all the fixed costs as well as variable costs that will affect you’re pricing. If you’ve only looked at the gross profit margin, you’ll find that your business making a lot less than expected. 

 

5. Cost cutting when it needed 

If business don’t have proper bookkeeping records it will not get benefit from a regular cost-cutting review. If your profit margins are tight, wasting precious financial resources by maintaining an over-sized office or paying high salaries incommensurate with the work being done could lead your business to collapse. 

 

6. Growth will be hard 

A lack of financial records will make things difficult to grow the business when your business gets to the stage where it’s time to expand, open a new location or build out a team. No bank will give you loan without evidence of responsible financial practices & without a financial history, growing your small business will be hard. 

 

7. Market Review 

Without records the business will not study the market or their competitors. Your business may be surviving now but if you’re not analyzing market trends and keeping an eye on the competition, the business could get left behind. Good accounting is not just about knowing your own numbers but seeing how they stack up against your closest business rivals.  

 

8. Long Run Support 

Professional fees for accountants, business consultants or tax advisors may seem high, but it can save your business in the long run and should make the initial outlay worthwhile. Every company can benefit from professional accountant with their business accounts, and those that think they’ll save money by doing it themselves may find it costs them dear. You should seek an external support from a professional bookkeeper. 

 

9. Know your Earnings 

At the end of the day, you’re in business for yourself to make a living. If you don’t have an accounting system for you in place, you simply cannot accurately know what to pay yourself. Can you guess based on what’s in your bank? Sure. But that’s risky for obvious reasons.

(Hint: the less you have to guess at anything in business, the more successful you will be.) Regardless of how you put money in your own pocket (i.e.,  owner’s draws, payroll, etc.) 

 

 

So at the end we can say that bookkeeping is the engine that powers sound decision-making through robust accounting practices. Without the right accounting procedures in place, which are supported by standardized bookkeeping, your business could head for a financial ruin. Don’t stick your head in the sand and hope the situation will improve, as it’s unlikely to achieve good books without a professional advice. 

 

 For any queries, feel free to write to info@chartercpa.com or call us.

 

Thanks & Best regards,

Knowledge Base Team

Pankaj Dethariya

Finance & Accounts Outsourcing Specialists

www.chartercpa.com

 

Our Social Media Pages

www.facebook.com/chartercpa

www.linkedin.com/company/chartercpa

www.twitter.com/chartercpa

www.instagram.com/chartercpa

Payroll Services: Complete list of Pros and Cons

Most of the companies use the term “Payroll” to refer to the money that is paid to their employees or the records the detail how much each employee of the company has made. The term “Payroll “, also refer to the company, department, etc. that is used to process the “ pay checks” of the employees and taxes or to the process of calculating and distribution of pay checks. In simple terminology, actually “payroll” refers to the list of employees who is going to receive the compensation from the company side.

Knowing the exact definition is not important, basically deep understanding of is not sufficient. Understanding of the current rule and regulations, detail tax knowledge, ensures the proper withholding and filing and a highly organised system on which one can relied upon, to pay to each employee the equal amount of money.

In simple terminology, this is one of the most critical department.  It is basically the total sum of compensations, deductions, benefits of all the salaries, etc.in a company. If any business does not have a fixed system of salary, then it could be chaotic to handle.  In addition to paying salaries, they are payroll taxes which can affects the income of the business. Therefore, all the above reasons indicates that why a business needs to maintain an efficient payroll system. The new norm in recent years is made for larger / big businesses to outsource their payroll services. But, there are few pros and cons of doing outsourcing of payroll services, they are as follows –

Pros of outsourcing payroll services –

• It is cost effectiveness
• If any business has their own payroll system which means they have their payroll department. It means that they have to manage a different department and hiring accountants and other helping staff. But outsourcing will helps you a lot in saving your money as well as it will saves your department.
• The man power and money invested in to the in house payroll department will be safe and should be used in some other productive works.
• It can help the business to keep a track record about the expenses and earning and expenses.
• Helps to a keep a detailed report of payroll services
• It streamline the whole payroll management into the hands of experts.
• They give excellent results along with the high performance.
• Along with the pros of outsourcing of payroll management, there are few cons also.

They are as follows –

 Cons of outsourcing payroll services –

• Payroll services involve allowing access to sensitive, private information of the employees to a third party. This type of activities could not be safe to do.
• The employees may not like the idea of adopting outsourcing payroll services outside of the business because everyone is very conscious about their private information.
• Not all outsourcing deals are cost effectiveness.
• First do proper R&D then opt this type of outsourcing services.
• Your returns may not worth the money you spent if you do not hire an inexperienced company
• Having the threat to their private information.
• The lack of direct control over the company's payroll services and fear of stealing of information is always in mind. In other words, every outsourcing service having their pros and cons. Still, as compare to other services outsourced payroll services are best.

Importance of Bookkeeping in Businesses

 

When we hear about the word “bookkeeping”, the very first question that comes into our mind is what is bookkeeping? Bookkeeping is just a tool for the owner of the business to identify whether his business is generating profits or making losses. Bookkeeping is very essential for all businesses.

 

Bookkeeping Services -

Basically, bookkeeping is the procedure of recording, storing, and retrieving all the financial transactions of a company, individual, person, non-profit organization, etc.

It can include –

•          Bills of goods sold to clients

•          Billing of services provided

•          Paying suppliers

•          Recording invoices

•          Processing payrolls

•          Financial reporting

•          Monitoring accounts receivable

•          Recording depreciation, and many more

 

Is Accounting and Bookkeeping the same?

The answer simply is NO. Both Bookkeeping and Accounting are definitely not the same.

In simple terms, bookkeeping is all about recording financial transactions. Whereas accounting is about interpreting, classifying, reporting, analysing, and summarizing financial data.

If we differentiate both of them, then we can say that accounting is simply interpreting and analysing of data while bookkeeping is not.

In the big picture, bookkeepers handle all your recorded aspects of accounting processes, whereas accountants handle all parts of accounting and related processes.

 

Types of bookkeeping systems –

Mainly, there are two types of bookkeeping systems, one is single entry and the second one is double-entry bookkeeping system.

Single entry bookkeeping system – it is mainly used for those companies that have either few or uncomplicated transactions. This type of system simply records business expenses and sales (cash sales) that are paid when incurred. It typically consists of cash sales journals, cash disbursement journals, and bank statements. Basically, not used in companies where complex transactions take place at every minute.

In simple terms, in businesses mostly double-entry bookkeeping systems are used. In the double-entry system of bookkeeping, single transactions are recorded as an expense or income item. Then the other entry is created just to trace the transactions to a corresponding entry to the other side.

 

Bookkeeping Software for Small Businesses

Instead of using traditional bookkeeping systems, nowadays, many businesses do most or almost all of their bookkeeping work by using software. They are specially designed software, focused on ease of use, and also helpful in reducing bookkeeping mistakes.

Advantages of using Bookkeeping Software

•          Increase accuracy

•          Process accounts faster

•          Provides all necessary accounting reports

•          Ease in filing business taxes

•          Take backup of your data and many more…

In today’s era, the use of bookkeeping software has become popular especially in small businesses.  It is an effective way to retrieve your financial information at any time.

 

How proper bookkeeping helps you?

Proper bookkeeping means to collect all your financial records in one place and organize them according to their category. The more organized your financial books, it will reduce your headache of tax filing.

An organized financial book is helpful to keep track of all their financial activities. It is helpful in reducing your stress and last-minute scrambling.

To keep your financial data up-to-date, hire an accountant for help. An accountant only uses to enter the given data which you provide them. So it is better to inform them about any error or changes as soon as they are realized.

In simple words, bookkeeping is the essence of business. A well-organized financial book, i.e. bookkeeping, which is helpful for business and for tax filing.

 

 

 

What are the types of Accounting Firms?

Every business has a department to handle all their financial activities which is known as an Accounts department. Companies have to follow some protocols those are prescribed by the Securities and Exchange Commission (SEC) and following GAAP - Generally Accept Accounting Principles. According to SEC, all the public companies have to hire an external accounting firms to audit all their financial statements. Accounting Firms are specialised in handling all types of financial data and activities such as tax handling, acquisitions and mergers and forensic accounting. The type of accounting firms depends upon the work and nature of their business services. There are wide variety of accounting firms like – public accounting, tax accounting, forensic accounting and many more.

Variety of Accounting –

The types of financial accounting, are explained in the below article –

Public Accounting - Typically, Public accounting firms are hiring CPA that is, Certified Public Accountants. They are expert in auditing, tax consultation, and many more. Public companies hire these type of accountants to manage their task, required by the SEC. Both, local and regional accounting firms are capable to handle auditing and other related accounting tasks for their clients.

Tax Accounting -  Tax accounting firms are fully focussed on tax preparation and planning for firms of all sizes, and for individuals. Tax accounting firms normally hire CPA. Upcoming tax accountants must keep up with current laws of tax. Most of the accounting firms require their respective employees to keep updated with the latest trend and changes. During tax season, these accounting firms work all day and night to provide ease to their clients.

Forensic Accounting - Forensic accounting firms are basically, uncover all illegal and fraudulent activities related to accounting. When an agency or employer takes legal action against any company or individual involved in any type of corporate fraud, at that time court will call upon forensic accountants to verify the truth. In that kind of scenario, forensic accountants may need to present all the collected evidence related to the case.

Accounting & Bookkeeping – In this list, the last but not least, name is Accounting and bookkeeping. They complete all the fundamental accounting tasks for their client. For bookkeeping, person must have strong fundamental knowledge about their work. These type of firms are usually small or medium-sized companies with a few employees. Services provided by bookkeeping firms include accounts payable, accounts receivable, credit sales reconciliation, bank reconciliation, financial statement preparation and many other related work. They are also provides you some additional services like small business tax preparation, payroll, and loan subscriptions. These type of firms may handle clients' all accounting and related tasks.

In the above we can find that there are multiple number of accounting and each & most commonly used type of accounting. Bookkeeping is the essence of every business. CharterCPA Inc. is the renowned accounting outsourcing company situated in New York (US) 11021. They have accounting & bookkeeping services, VirtualCFO, Taxation (Business & Individual), Controller services and many other outsourcing services.

To learn more about Outsourcing your Accounting function, schedule a call with us today!

Role of Virtual CFO in Small Businesses

 

 

 

In today’s era, every business are moving towards cloud based technology as it is cheaper as well as efficient in doing their respective works. In this trend of using cloud technology, even accounting firms are not untouched. Top accounting firms are providing you all types of accounting services like bookkeeping, payroll management, taxation, financial management, and many other related services. Apart this, they are also providing you the facility of virtual CFO.  Actually, they are doing the same work as your back office accountant do for you, but remotely.

 

What is virtual CFO?

The concept of virtual CFO is not new to the market. Actually, it is a simpler way to offer someone CFO support for their work. In current scenario, every small business are looking for virtual support as it is available into a fraction of cost. In this article, you will find that how virtual CFO works? Read below –

          They handle all your work of a traditional accounting but work for you remotely.
They check your financial health and business with the help of cloud computing technology.
They offer you all necessary guidance and financial insight about your company same as your back office accountant.
 Provide you all back office services and functions such as managing ledgers, accounting books, and rest is depending on their client and needs.

 

Role of Virtual CFO in small businesses:

Not all small businesses can afford an experienced CFO for full-time basis. The concept of virtual CFO will help them up to an extent. Many businesses are failed within their first three years. Reason behind this, is they set themselves apart from the competition and not a proper ability to find a profitable business model. Virtual CFO will help you in achieving your financial goals at most reasonable pricing.

Virtual CFO is an alternative and affordable hiring of a full-time back office CFO. It has an ability to make a vast difference to your small business, by –

·         Creating budgets

·         Making forecasts

·         Validating your business decisions

·         Make proper financial decisions for your business.          

Major Challenges:

In this pandemic, each sector facing problems in doing their business but despite this accountants are ready to solve your problem at cost. There are multiple accounting firms which are competing with each other.

Small accounting firm have so much services to offer you like tax preparation and its filing, basic bookkeeping, payroll management and many other finance related services. But, in today’s era everyone trying to opt cloud technology and higher virtual CFO for their work. All the firms which are using cloud based accounting technology are working more productively and providing excellent productive results.  That become the reason of many time and labor – intensive tasks can now be automated.

Top accounting firms in US:

There are multiple accounting firms working in US but some are still on top. There is a reason behind this, is that they are giving you best services and nominal prices as well as they are ready to opt all new technology on time. If we are talking about top accounting firms in US, then one name always comes to mind that is CharterCPA Inc. . This accounting firm is well renowned in their respective field for their outstanding services. They have wide variety of services such as accounting and bookkeeping, payroll management, taxation, and many other related services. Apart this they are excellent in providing you Virtual CFO and controlled services.

 

 

 

Learn How to Evaluate a Top Accounting Firm?

 

 

Learn How to Evaluate a Top Accounting Firm?

No matter in which sector you are in business, most essential thing is that, make sure that your books of accounts are properly managed. Without managing them properly, your business will inevitably face a wide variety of financial and legal risks over a time period. In this, top accounting firms can help you by providing best accountants to handle your work with full efficiency. They are highly capable of handling your entire accounting service requirements such as bookkeeping, payroll, taxes, and much more. Apart from these services, some of the top accounting firms are also good in providing Virtual CFO and Virtual Controller services, Virtual Executive Assistants, Company formation and business planning.

Evidently, various businesses consider opting for outsourcing of their accounting services. However, it’s quite difficult for them to choose from the multiple options of accountants like – whether to go with independent freelancing accountants or go with the online virtual accounting firms. It might be difficult to select from where you should exactly begin evaluating.

Before starting, you should know what exactly you want from accounting firms, for instance, whether you want payroll, tax filing, or any other accounts related services. The best option is to hire a top accounting firm providing the best accountant and resolve your business reporting issues systemtically.

Apart from this, how you should know whether it is a top accounting firm?  For this, you have to be very careful before making any decision and keep a few things in mind like:

• Check the reviews of their previous clients
• How long they are in this field?
• What is their specialisation?
• What extra benefits they are providing to you?
• How they are different from other firms?
• In how many fields they are working?

One should be considered as a top accounting firm if they are offering you a complete package of accounting services like payroll management, tax filing, bookkeeping services, and many other related services. But before making your final decision, just relax and take time to understand their expertise and patiently check the pros and cons of your choice. It will automatically lead you to the right choice.

Working with business

There are seemingly large variety of businesses and each one have faced unique financial issues. Though it is very necessary to keep track of their pay, expenses, taxes and the ways in which they manage their accounting services.

If you are going to hire a top accounting firm, you must check their previous accounting services history like payroll, bookkeeping, taxes and many other related services they have provided in past to similar clients such as yourself. Before hiring anyone you must check their previous work experience in accounting services.

Always go with the a highly rated top accounting firms as they have significant experience in their domain. Any firm in this field must have multiple employees for handling their various assignments like payroll management, tax filing, bookkeeping services etc. If you want to hire a single person for managing your whole accounting services, top accounting firms can help you with dedicated full time best accountant as well enabling you to stay hassle free from issues of hiring, training or attrition. An experienced accountant can handle your work very easily and efficiently.

For any queries, feel free to write to info@chartercpa.com or call us.

Thanks & Best regards,

Knowledge Base Team

CharterCPA Inc.

Finance and Accounts Outsourcing Specialists

www.chartercpa.com

Our Social Media Pages

www.facebook.com/chartercpa

www.linkedin.com/company/chartercpa

www.twitter.com/chartercpa

www.instagram.com/chartercpa

Outsourcing in COVID-19 Era – An Accountant’s Guide

The COVID-19 contagion has toppled our worlds not just personally but professionally as well. A lot of US accounting firms are currently functioning as remote firms working virtually to steer their clients during this financial crisis due to the pandemic.  The situation has led to accounting firms getting swamped with work that is difficult to manage in the current scenario.

As leaders of your own Accounting firms, you surely realize the heavy and varied workload you and your team is trying to overcome, ranging from year-end accounting, bookkeeping, financial reporting, taxes, and more.  While you adjust to the new normal of working from your house and supervising your teams remotely, it is becoming clear that functions such as accounting and bookkeeping, payroll, AR and AP, etc., basically all those activities which are resource-intensive are striving and warrant a lot of your time, energies and money being invested therein trying to manage your staff effectively and yet things not delivering to satisfaction.  Non-availability of your junior staff due to personal reasons arising out of Covid-19 situation too is a prick in the path to successful client delivery.

Hence the golden question – why not share your workload during this raging era?

As an expert Outsourced Accounting Service provider, we CharterCPA have the experience and proficiency to offer in-depth insights that will help you productively outsource your client’s accounting and book-keeping, payroll, and a lot of other functions that you serve your clients within a routine. This article will serve as an escort to assist you during this hour of disaster so that you can leverage the efficiency and skill from offshore accounting partners and make time to advise and help your existing and new clients.

We have chalked this article to cover some of the vital points that US Accounting firms would feel the need to be addressed in deciding upon an offshore partner.

1. Does the size of an Accounting firm have bearing on the decision to outsource?

Cost reduction and process efficiency are the primary advantages of Outsourcing. Both of these benefits will be important as a part of your business contingency plans during such times, no matter how large or small your firm is.  Notwithstanding your firm’s size, you can opt for outsourcing. If you know there are certain activities that you cannot manage effectively, which is resulting in delays and inaccuracies, outsourcing them makes sense for all kinds of firms, regardless of size.

2. Activities to outsource?

It depends on your firm and its current efficacy levels in an onshore setting. You can either outsource the entire gamut of functions or certain specific tasks. If you think you are finding it difficult to manage your simple but voluminous tasks like banking, invoicing, bill booking, and tax return filing on time and precisely, you can outsource this task to an Outsourced Accounting Service provider. If tasks like processing information, payroll submissions, timesheet processing are eating into your man-hours, or Invoice/Bill management is taking a toll in absence of your local resources available, outsourcing these make a great business decision.  Our last suggestion is - identify what to outsource keeping in mind the resource-intensive and challenging nature of the tasks.

3. Selecting the correct Outsourced Accounting Service partner

This is your most important question! The search for the apt Outsourcing partner might seem like a difficult task initially, but in fact, it is very simple. When you are searching for an outsourcing partner you need closely evaluate their experience and expertise in the domain. You must also assess their ability to scale based on the number of employees with core accounting/payroll/tax expertise. Another significant factor to consider is data security. You will be sharing sensitive financial information with your outsourcing partner. It therefore should be able to meet with the custom data protection and privacy norms and must maintain an excellent cybersecurity posture to ensure the safety of your information at all times.

4. The Engagement options

Your plan towards outsourcing will require a choice of the method through which you want to engage the services of the provider. More often than not, you will be presented with these three most popular options.

Models of Outsourcing?

Variable model: Here, you only pay for the number of hours the Outsourced Accounting service provider has worked on your tasks. The provider assigns a staff member who is your single point of contact and who liaises with the accountants assigned to your tasks. This model is best suited if your plan is to not sign up for a long-term commitment or when you simply want to run pilot projects to test the offshore waters. It’s also ideal for the smaller accountancy firms, that have seasonal work or when they want to grow by focussing on more client acquisition and business advisory.

Fixed model: Also known as the full-time employee (FTE) model, this is the model everyone thinks of whether they want to work with outsourced service providers in India. Here, you are assigned a dedicated team or an individual who only works on your projects. It’s like your extended accounting team that works offshore in India. Regular reporting helps you stay on top of your projects and become more actively involved in project delivery. If your firm has large volumes of work on a consistent basis, this is the best engagement model.

The Mix Model: At times, it may so happen that you cannot clearly define the volume of your work, whether the same would increase beyond the committed volumes.  In such situation, the Mix model, as the name suggests is a combination of Fixed and Variable model, wherein you may commit an estimated fixed price for the full time dedicated employee you may need and if the work increases beyond the full-time employee hours, you pay as per the variable model i.e. only for the hours spent in excess.

There are two mainstays to your outsourcing strategy – the quality of the services you subscribe to and the engagement model. Outsourcing Providers like CharterCPA have reduced their rates as per outsourcing models to help accounting firms out with sharing their accounting work. Contact us or Book a Call with us to know more about CharterCPA’s special Covid-19 offers.

5. The Other Mainstays

Business Continuity plan:  

You have to assure your Outsourced Accounting Service provider is completely aware of your cost pressures and operational bottlenecks in the existing times.  When you pass the work offshore, you cannot afford any downtime in the operations of your service provider.  So, when considering outsourcing during COVID-19, there are some questions you must ask your outsourced accounting service providers like:

- How do you ensure business continuity in Covid-19 times?

- In case of emergency, can you move operations to other designated sites so that project timelines are not impacted?

- Whether you have all the necessary resources – people, processes, and platforms that assure uninterrupted delivery irrespective of events?

Success Timeline:

- What is your track record? Do your clients improve profitability in the long run?

- Have your outsourcing services improved the productivity of an accounting firm?

- Consider asking Client testimonials.

It is necessary to aware that there are some poor service providers out there and you need to avoid them anyhow.  It pays to be extremely sure of the offshore provider’s capabilities.

Continuous professional learning:

This is an absolutely critical aspect to be verified that the staff of your chosen offshore partner is made up of qualified accountants, either CAs, CPAs or ACCAs or accountants with any other equivalent qualifications and are familiar with prominent accounting software tools such as QuickBooks, NetSuite, Sage, Xero, etc.  Accountants handling payroll may also be familiar with US Payroll management software tools.  You should ask if the staff is trained regularly and their skills are updated in step with the latest developments in the fields of accounting, payroll, and tax.

As a prominent Outsourced Accounting Service Provider, CharterCPA is helping the US Accounting firms to increase proficiency by setting up a successful extended offshore team for them in India without having to invest in infrastructure or bicker about hiring or attrition of resources.  We encourage leaders of US accounting firms to step up as consultants or advisors to their clients during such times and leave the non-core functions to our offshore teams for fraction of a price.  We assure the same quality and delivery of work as onsite accountants and free up time for US CPA/Accounting firms owners to focus on increasing business opportunities with existing clients and acquire new clients.  We provide by giving access to a pool of skilled and trained resources readily available to help.

Conclusion

This article allows you to identify challenges faced with outsourcing and find a solution to them. Further, a rock-hard, workable, and future focussed strategy pledges that you are able to meaningfully justify outsourced service providers and choose the partner who is best placed to deliver the benefits of outsourcing to your accountancy firm while you function as a remote firm locally during Covid-19.

It is also important to watch out for breakdowns in your current local accounting teams and make sure to protect the psychological health of your employees during this time and outsource wisely to share the workload by cost-effective means. We know that accountants are at the frontline of this financial crisis and outsourcing workload whenever possible would prevent possible burnouts.

Contact us or Book a Call with us today to learn more about our services.

Thanks & Regards,

Knowledge Base Team

CharterCPA Inc.

Finance and Accounts Outsourcing Specialist

www.chartercpa.com