Starting a business

One startup decision that seems to cause entrepreneurs heartburn is whether to set up their accounting system on a cash basis or on an accrual basis. Although this sounds like secret accounting code, the implications are straightforward, and, for most businesses, the right method is easy to see.

Cash or Accrual Basis of Accounting? Which Should You Select When Starting a Business?
Author: K. MacKillop
One startup decision that seems to cause entrepreneurs unnecessary consternation is selecting the right accounting method -- cash basis or accrual basis. The primary purpose of the accounting method you choose is to calculate your business's taxable income for federal (and state) income tax purposes. Of course, if you register as an LLC and elect not to be taxed as a corporation, your business does not pay federal taxes, but choosing the right accounting basis is still important. Financial management is a critical key to success in small business, and the accounting method you use is an important tool for keeping you on track. What Are the Two Accounting Methods? The difference between the two methods is simply a matter of timing -- when business transactions are posted to the accounting system. With the cash method , income and expenses are recorded when money changes hands. That is, no matter when you close a sale or place an order, it does not go on the books until you get paid or the bill is due. Cash basis accounting is basically managing your business finances like you do a checkbook -- money only exists once it is deposited, and expenses only exist once money is spent. With the accrual method , the transactions are recorded when they occur, regardless of when you actually get paid or pay the bill. That's pretty much all there is to it -- when the transactions are posted on the books! If You Sell Products, You Must Choose the Accrual Method Deciding which accounting method is best for your business is not particularly difficult either. First, if you carry inventory that your business sells to customers, the IRS requires you to use the accrual method, for good reason. Because the accrual method accounts for all income and expenses when they occur (and not when money changes hands), your financial statements reflect a more accurate picture of how your business is doing. If you sell inventoried products of any kind, the expense of making or purchasing those products occurs in line with your ability to sell them (at least on the books). The accrual method keeps these income and expense accounts in line. Otherwise, if you buy inventory on credit but make cash sales, your books will look like you bring in a substantial income with no expenses during the grace period for payment. Then, when payments to your suppliers come due, the books will show enormous expenses all at once compared to income. By using the accrual method, a financial report for any given period will be a substantially more accurate reflection of the overall health of your venture. If You Only Sell Services, You Have a Choice For micro-businesses (consultants, self-employment, etc.) that sell only services, the cash method of accounting can be a good choice. Because income and expenses are recorded only when money is exchanged, the cash method gives a more accurate view of how much cash is available at any given time. Keeping the books for cash basis is like keeping a checkbook, money in and money out. The downside of using the cash method is that it can reflect a misleading picture of your business's overall profitability and health. For example, if you extend credit terms to your customers, your income at a given time will not necessarily reflect the actual sales volume during that time. Cash can still be moving in and out of the business during periods of no sales, as customers pay invoices and bills come due. Plan for the Long Term Growth of Your Business Think ahead when you are setting up your accounting system. Choose the cash method only if you plan to stay small and you only plan to sell services over the long term. Otherwise, use the accrual method and work on learning how to manage all aspects of your business's financial health. If your plans are to grow a company rather than own your job over the long term, the accrual method is a better tool to show the ebbs and flows of the business's transactions. Of course, you will still need to review and analyze cash flow to verify the health of your venture. Your small business accounting software (Peachtree Accounting is a great choice!) allows you to select either cash or accrual basis for handling your books. However, once one is selected, you are stuck with it unless you start over with a new company file and migrate your data. The reason for this is that the federal government's rules are the same -- if you want to change your accounting basis, you have to file paperwork with the IRS. Successful entrepreneurship means knowing how to read and analyze the entire financial picture, and neither accounting method ensures that on its own. Don't rely on a single financial report to tell you how your business is doing, but learn to use multiple financial management tools to keep an eye on the bottom line.
Article Source: http://www.articlesbase.com/accounting-articles/cash-or-accrual-basis-of-accounting-which-should-you-select-when-starting-a-business-1398516.html
About the Author:
K. MacKillop, a serial entrepreneur, is founder of LaunchX and authors a small business startup blog. The LaunchX System helps entrepreneurs who are starting a business . Visit LaunchX.com to learn more about the financial management of your business startup .

debt relief

When there were people suffering with problems during economic crisis time and most people are finding it difficult avoiding going into debt.

Simple Notes in Regards in Fixing Debts - Two Steps to Debt Relief
Author: Gilbert Bermudez
When there were people suffering with problems during economic crisis time and most people are finding it difficult avoiding going into debt. Like most people, we probably have our fair share of debt and expenses. When these two sources of spending are not properly managed, we can easily end up with debt problem. It should be no surprise that getting out of debt problem is more problematic then getting into. But solving both will take a concerted two–pronged approach. And this is how it works: First, consolidate as much of our debt as we possibly can, then reduce the overall interest rate associated with that debt. The process requires that we gather all of our financial details and organize it accordingly. Review and examine each of the debts to make sure that the amounts we owed are accurate. An optional way to do it is to let the debt counselor know the details of the dispute and seek for advice and let him educate us. There are many non-profit organizations that are ready to listen to our problems and if usually offers free debt consultation (ie Total Debt Services). Just remember, the last thing creditors want to see happen is that we are being forced into filing for bankruptcy. In that scenario, our unsecured creditors stand a very good chance of receiving nothing. And second, examine our life style and begin cutting down on our personal living expenses. First consider which of the larger living expenses we can reduce or eliminate. For this we need to examine where we live, what and where we eat, what we wear, what we drive and what we do with our time - all are choices that can have a major impact on our financial picture. Planning with budget, execute and live in a minimalistic way of living is the second key in acquiring success in getting debt relief . The good news is that both approaches are totally achievable. Financial recovery is just a matter of following the plan and sticking to it. In time, we will not notice that we are actually out of our debts. For more questions and for people who seeks answers on how to get out of debt, visit totaldebtservices.com for more details.
Article Source: http://www.articlesbase.com/credit-articles/simple-notes-in-regards-in-fixing-debts-two-steps-to-debt-relief-1371256.html
About the Author:

health insurance

If you have been worried about getting good health insurance, you need to stop worrying. That’s right, there is help out there that you can take advantage of today and for a long time. You don’t have to succumb to clever marketing pitches and other things if you simply move forward in good faith to the overall better good that is out there.

United Health Insurance To The Rescue
Author: Allen Jesson
If you have been worried about getting good health insurance, you need to stop worrying. That’s right, there is help out there that you can take advantage of today and for a long time. You don’t have to succumb to clever marketing pitches and other things if you simply move forward in good faith to the overall better good that is out there. Seriously, get yourself something better and make sure that you’re doing what is right for you and your family. If you’re looking for United Health Insurance, you’re luck, they are there waiting with open arms and simple terms so that you can understand your policy and make sure life is sweeter than the rest. If you’re interested in United Health Insurance, good for you, they are ready to help. You need to make sure you get the right coverage at the right price, which is impressive in these modern times, because there are so many brilliant things out there that can be said in regards to the greater good that exists overall. If you’re looking forward to getting coverage, than help is on the way. United Health Insurance is not some fly by night operation out there. It’s important to remember that overall. You need to remember that your health and that of your family is important in a lot of different ways. Health insurance is important to everyone, and if you’re not getting the right plan, you’re going to kick yourself when the chips are down and you need help.
Article Source: http://www.articlesbase.com/insurance-articles/united-health-insurance-to-the-rescue-1302150.html
About the Author:
Please follow the links for exclusive special offers on united health insurance and united health care insurance .

CPA

All organizations, whether private, public, or non-profit, need to prepare financial statements on their performance to provide fiscal accountability and accuracy to their stakeholders and people with an interest in the company. Reviewed financial statements provides limited assurance that the financial statements are free of material misstatements or false/missing information and are found to be accurate, complete and fairly presented to meet the
What are Reviewed Financial Statements?
Author: Neil Rischall
All organizations, whether private, public, or non-profit, need to prepare financial statements on their performance to provide fiscal accountability and accuracy to their stakeholders and people with an interest in the company. Financial statements enable management to make business decisions, enable creditors to evaluate loan applications, and provide individuals with information to make investment decisions. Financial statements provide information from an organization’s accounting documents about their economic resources and obligations on a specific date, as well as their financial activities over a period of time. Financial statements are usually prepared in accordance with Generally Accepted Accounting Principles (GAAP), which are the standards issued by the American Institute of Certified Public Accountants (AICPA), but they may also be prepared on other comprehensive basis of accounting, such as cash basis or tax basis, depending on the needs of the users of the financial statements. The middle level of assurance in regards to financial statements is reviewed financial statements . A Certified Public Accountant (CPA) must obtain a reasonable basis for expressing limited assurance that the financial statements meet the requirements of the US GAAP are free of material misstatements or false/missing information. To perform the review, the CPA must obtain a general understanding of: the organization’s industry as well as information about their operations, products, and services, their accounting records, qualifications of their accounting personnel, the accounting basis on which the financial statements are presented, and the form and content of the financial statements. The auditor then reviews the information supplied by the client and makes specific inquiries relating to accounting policies, record keeping and accounting practices, actions of the Board of Directors, and changes in business activities. The specific inquiries required to perform a review should address the following areas: related party transactions; accounting policies, problems, and areas of greater risk; uncertainties, contingent, current and long-term liabilities and assets; qualifications of accounting personnel and division of accounting duties; inventory; any departures from GAAP; revenues, expenses, accounts receivable, cash and equity accounts, and investments; and property, plant, and equipment assets and liabilities. The auditor then applies various analytical procedures to identify unusual items or trends in the financial statements that may need explanation. If any material errors or misstatements are noted, the CPA will discuss these items with the organization's management for clarification or adjustments to the financial statements. Upon completion of a review, the CPA will issue a report that provides limited assurance that the financial statements are free of material misstatements or false/missing information and are found to be accurate, complete and fairly presented to meet the requirements of the US GAAP. Since the financial statements were reviewed and not audited, no opinion about their nature is expressed. The report also notes that the financial statements are a representation of management. Reviewed financial statements can also be done on Other Comprehensive Basis of Accounting (OCBOA), such as a tax or cash basis, as long as the basis used is documented in the report.
Article Source: http://www.articlesbase.com/accounting-articles/what-are-reviewed-financial-statements-1291090.html
About the Author:
Neil Rischall is the CPA behind the CPABookkeepers site which has a wealth of information about audited financial statements as well as all services provided by a Certified Public Accountant .