Hot answers tagged accounting
18
Definitely go with cash-basis.
Primary reason: You have to pay taxes with cash. If you use cash-basis accounting, taxes will be proportional to the amount of cash that you accumulate. Because you accumulated real cash, you can by definition afford the taxes. (Set aside ~30% for taxes every month.)
Secondary reason: If you chose accrual and if you grow, ...
14
We do all bookkeeping and payroll ourselves but spend between $1,500-$2,000/year on an accountant to do end-of-year filing. I strongly feel that a good accountant is a must for anyone doing business even if you are just starting out. There are several reasons:
Tax laws are complicated and a good accountant will stay on top of changes, requirements and ...
11
When I first started out in business I had only a personal bank account and a home office. I was audited by the IRS, and they sent two agents who worked in my home office for four days. In the end, I owed nothing, but they told me most of their auditing would have been unnecessary if I had a spearate business bank account.
Get a separate bank account for ...
10
You are missing an important big-picture issue:
To the extent that you fail to segregate corporate funds in a corporate bank account, separate from your personal bank account, you are opening yourself up for "alter ego" personal liability, i.e., you are inviting a court to disregard the corporation - making you personally liable - because you failed to ...
8
QuickBooks is still the de facto standard for small business bookkeeping. What you really need is to keep records in the format your accountant wants them in.
This means you you should hire a qualified accountant before you do anything else on the financial side. A good CPA will help you think through many of these questions and save you from a number of ...
7
The way to do this is to fill out a business expense report and get reimburse from your company. I know it sounds a little corporate but that is the cleanest way to do it since you want to account for the expenses in the business.
Doing it the other way is problematic. From an accounting point of view, that would technically co-mingle your company money and ...
6
I agree with Keith on hiring an accountant.
Quickbooks is the de facto standard but difficult to use if you don't understand well some accounting terms. How many know what a "Chart of Accounts" is?
Have a look at FreshBooks.
I tried it last month and is working very well..
You can send an estimate to customers, have then approve it, track your time and ...
6
You need to know enough to direct your accountant on what to do and to understand your burn rate (e.g. cash in - cash out).
Most accountants will setup your business on the accrual basis which is different than on a cash basis. Accrual means that sales are booked when you make the sale -- not when you get the money.
Cash basis is just that -- when you get ...
6
In the agreements that I work on, the typical approach is that the payee has the right to audit the payer's accounting records. If an underpayment is discovered, the payer pays the underpayment amount plus interest. If the underpayment exceeds X% of the amount due, the payer also reimburses the payee for the cost of the audit.
I don't know whether this ...
5
Is it worth setting up a corporate bank account or finding an accountant?
Set up your business bank account now. It costs you nothing and keeps your personal and business finances separate. Right now you are basically operating as a sole-proprietor (assuming you're the only owner). Not only will this cause you to lose your liability protection, but the ...
5
Yes, it is perfectly legal to do this. In fact many businesses, small and big, play these sorts of games to reduce their tax bills. A good accountant can help you with this.
Something to keep in mind, however, is your accounting method. Are you using Cash or Accrual? The technique you describe mostly makes sense with cash accounting, not accrual. In cash ...
5
PayPal does not care which site is referring users to it. If you use something like a "donate" button, all the PayPal code has is a unique payee code, where to forward donated funds. You can put this button and as many sites as you like. PayPal even provides you with a separate code to include the link into emails.
5
Cash that you put into your corporation can be assigned to either a Capital Stock account or a Loans Payable (from the corporation's perspective) account. The choice of which one is pretty much up to you.
If you go with Loans Payable, the corporation can pay you back at some point.
If you go with Capital Stock, you will receive additional shares in ...
5
S corp can have only 100 shareholders who must be natural people--not corporations and not overseas entities. There are other limitations; just look it up on Wikipedia.
S corp also avoids double taxation of the corporation and its shareholders.
If the shareholder limitations are broken, then it's a problem. You must cancel the S corp election that you ...
5
I think what you are asking is if you should report to the IRS (file an income tax return) small income that you earn every so often. Am I reading your question correctly?
At the end of the tax year you will add up all your small revenue streams, and subtract any business expenses. If your net profit is over a certain dollar amount you must file a tax ...
5
Your accounting needs are pretty simple since you aren't sending invoices, receiving payments on invoices and are the only person who needs to get paid.
Essentially all you need to track is money in and money out, some people do this in an Excel sheet or Google doc when small. When it comes down to taxes it's important to know what money spent is tax ...
4
We manage our business finances with the software version of QuickBooks. It's not perfect but it has worked reliably for our software company as we have grown over the past 12 years.
The big plus with Quickbooks is that it allows us to easily exchange data with our accountant. I'd contact your accountant for a recommendation.
4
Definitely start with the CPA to get the Chart correct and organized, then use a bookkeeper for the data entry.
Since the new bookkeeper will still be getting used to what goes where, especially if the old books and new books have different account lists, have another entry called "Uncategorized" and encourage its use. Then you and the bookkeeper can go ...
4
Leaving the option of outside financing on the table isn't doing you much good, unless you systematically pursue outside financing. At least experienced financing such as VC, high-caliber Angel etc rarely if ever drops into your hat just by happenstance.
If you're not really pushing for outside investment:
Then my inclination would be to go with a small ...
4
You do have to fulfill CPA supervised general accounting experience requirements before you can sit for the exam. The California Board of Accountancy website and this booklet will answer many of your questions.
Relationships and contacts are really important in this field so I would recommend a brick and mortar school rather than an online pursuit. I don't ...
4
1.What are pros/cons of having separate bank account for LLC.
You need to get a separate bank account for your LLC. You are risking your company's future by using one bank account for both personal and business funds. Getting a business bank account costs you nothing, and is a quick and simple process.
If you don't separate your business and personal ...
4
Xero, Freshbooks, InDinero. I'm not sure how they compare to Quickbooks feature-wise. Xero and InDinero import bank transactions automatically which is very handy.
4
The Internal Revenue Code requires businesses to report payments of $600 or more for services on form 1099. They actually want you to send them a Form W-9 that has your information on it so that if they end up paying you that much during the year, they can issue a 1099 to you. It's no big deal unless you don't report your income. For a number of reasons, ...
4
You are right to be suspicious. You have the right to interview an accountant (or any other professional) before engaging in a business relationship. Asking about certifications is perfectly reasonable, and I can't think of a reason why he would be so defensive about it, unless he is trying to hide something.
My advice is to walk away and find another ...
4
I figure, from the IRS standpoint, they just want me to show profit/loss. As long as I keep track of this, they don't care what i do with my revenue, correct?
That is a very dangerous statement. The IRS most definitely cares what you do with your business revenue.
You cannot use your business income to directly pay for your personal living expenses. ...
3
To a large degree, I think it depends on who your customers will be. In general, consumers will be less happy with prices in currencies that are not their own than businesses. More generally, the more web-savvy the customer, the less likely they are to be put off by foreign currencies.
Beyond that -- in my industry, with primarily business customers, I ...
3
I have asked a similar question, and the general answer is that Americans prefer USD prices.
We'll have prices both in USD and EUR, and keep this in mind: there's no reason why the USD and EUR prices need to be connected.
3
I would choose Euros since you are based in Europe. Even if you have US customers, the conversion would be simple to do at checkout and you would not have to worry about price changes as much.
The Pound is a pain and if you are already thinking of moving, the Euro is the better way to go. Most US customers will get the Euro but be befuddled by the Pound.
3
Whatever you choose, here's my advice (as a business owner and a no-longer-practicing CPA): keep it simple. Select a short list of expense and revenue accounts to begin with, and resist the temptation to add more and more detail by having more and more sub-accounts. Even with decent small business booking software like QuickBooks, it's a lot of work if you ...
3
The type of business, the complexity of the transactions, complexity of adding funds, number of investors and types of assets all go into if you need or don't need an accountant. Also of course your own ability to do accounting. A cash recognized business with no employees, no complex debt or equity funding and that has simple assets (not land) can be done ...
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