Basic Bookkeeping And Accounting Skills That You Must Have
Book Keeping and Accounting is something foreign to many, maybe because they never cared to learn it thinking it is just a dull game of recording transactions using unnecessarily complicated terms and methods. Far from it, book keeping and accounting is a logical way of recording transactions in a professional manner so that the information could be used in the ascertainment of many other vital business criteria such as the profits or losses made, who owes you and how much; how much you owe others, or are you carrying enough cash in the business for meeting immediate commitments etc., just to name a few.
Accounting is something that is useful in your personal as well as professional lives, and it would be worth your while to shed your prejudices and listen! Accounting is nothing complex as you have mistakenly imagined. It is based on one of the most fundamental concepts that if one receives something, then obviously another has to give; and therefore every transaction has a two-fold aspect called debit and credit in accounting terms. Maybe this reminds you of one of Newton’s Laws that action and reaction are always equal and opposite.
Fundamentally, the study of accounting is built on (i) The Accounting Equation, and (ii) Double Entry Book Keeping.
(i) The Typical Accounting Equation:
Assets = Liabilities + Equity
(ii) Double Entry aspect of Book Keeping:
The perfect balancing of the accounting equation is guaranteed by this system.
I think it pertinent now to define Accounting as a system of summarizing financial transactions and recoding in such a manner as to facilitate using such records for later analysis, preparation of further financial statements, interpretation of accounts and communication as required.
Now let’s go a little further with the Accounting Equation enunciated above, and move on to its practical implications:
Assets are your possessions (including what others owe you) while liabilities are what you owe others. The difference between the two is called Equity, which includes capital introduced by you (if it is a sole proprietorship) or by shareholders (in the case of a limited liability company) plus or minus any retained profits or accumulated losses respectively. May I also just state in passing that capital introduced is not refundable to anybody and as such it is not a liability. Hence it is called Equity.
Say, you buy a Motor Vehicle for $40,000 for which you pay $25,000 out of your retained profits (or personal savings) and for the balance you take a loan of $ 15,000 from an outsider.
Substituting these values in the Accounting Equation, we have:
Assets (Possessions) = Liabilities (what you owe others) + Equity (Capital/Personal Savings)
$ 40,000 = $15,000 + $25,000
You see one debit of $40,000 is equal to two credits added together ($15,000 + $25,000) = totaling to $40,000.
There could be more complex transactions requiring distribution to more ledger accounts as well as transactions involving only two ledger accounts. Every equation comprises of the double entry with one or a series of debits on one side of the equation equaling one or a series of credits on the other side.
In the two examples given below you will see how the two concepts of Accounting Equation and Double Entry are synchronized:
(i) Settlement of a liability by paying cash $50.
The liability represented by a creditor receives while your cash account gives.
Creditor (debited with) $50 = cash account (credited with) $50
(ii) Receipt of a debt from a debtor who owed you $75.
Your cash account receives while the debt represented by a debtor gives
Cash (debited with) $75 = Debtor (credited with) $75
Earlier we sited one of Newton’s laws to illustrate the concept of double entry in book keeping. At this point we would like to take you back to your algebra lessons way back in grade 8 or so where you were told that if you add something on one side of an equation, that you have to do the same to the other side of the equation too? It’s fair enough, is’t it? That is exactly what we ask you to do in book keeping too making the double entry equal and balancing.
Double entry book keeping is nothing so complex or weird as to defy fair and reasonable common sense. You can easily grasp the concept of double entry by training yourself to think logically as to who or what gives, and who or what receives in each transaction; and by framing the entries accordingly, while ensuring that the two sides of the equation are in agreement (balancing) and are consistent with common sense.
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Companies Avoid Legal Complications by Using Online Bookkeeping Services
Company owners are often confused by the tangled web of business and financial regulations. To simplify the complicated financial part of the business, many of them choose to protect themselves by contracting for outsourced accounting services. On the other hand, some companies are still trying to handle their own bookkeeping or hiring non professionals to tackle the job in an attempt to save time or money. However, not using a professional is one that can cost a business owners more time and money than they realized they were gambling.
There are several reasons why choosing professionals to handle online bookkeeping services is one of the most cost-effective investments that a company can make.
Navigating the Regulatory Maze
The legal landscape changes quickly and businesses struggle to keep abreast of the latest developments. In our increasingly litigious society, ignorance of the law is no protection from significant financial liability.
This is one of the many reasons companies chose to employ outsourced accounting services. Unless a business is primarily involved in financial services, it is difficult to keep track of the changes. By hiring an experienced professional, not only does a company get its books in order, but it also gets financials done in compliance with the law.
Recent Changes Turn the Financial World Upside Down
The past few years have seen some of the most sweeping business reforms since the Great Depression. High-profile financial disasters like Enron and Worldcom have fueled public outcry for legal protection that has put a burden on all companies, public and private. It is harder for companies to use the casual internal bookkeeping services that have served them in the past. They need dedicated, full-time specialists that are familiar with today’s proper accounting practices, not the practices of ten years ago.
Using online bookkeeping services that use highly specialized accountants relieves the company of much of the burden of following frequent regulatory changes. These firms do nothing but financial work, so they can focus on using the correct practices and that protects their client companies.
You’re in Control When Using Online Bookkeeping Services
Although hiring an outside firm to do financial work can provide protection against liability, it doesn’t absolve the company of responsibility. For that reason, some companies are hesitant about using outsourced accounting services. They fear losing one of two things: control or security. If you choose the right service provider, neither of these will be a problem.
Online bookkeeping services give you full, real-time access to all of your financial data. Nothing is done without your permission or behind your back. You get regular financial reports that allow you to keep an eye on the company’s financial health. The service is there merely to process the data; all financial decisions are still yours.
That unlimited access doesn’t mean there is no security. In fact, your data is probably more secure if handled by online bookkeeping services. Professional companies have dedicated systems have hacker defenses, virus protection, and backup capabilities that small or even mid-sized companies can’t match.
Few companies need or can afford to hire a full-time, dedicated accounting staff and yet all companies need those capabilities. Outsourced bookkeeping services give you the benefit of expert financial services at far less cost.
Author is a freelance copywriter. For more information on Online Bookkeeping
Services, visit http://www.osibusinessservices.com
What Does A Financial Planning Consultant Do?
Financial planning is important to any business for many different reasons. These can be in order to protect your business assets, so you can plan for retirement, to extend your investments and many other reasons as well. For these reasons many companies hire a financial planning consultant in order to help them achieve all of these things.
A financial planning consultant will help you protect and get the most out of the money that you already have. This is helpful to any business as they will be able to maximise profits and make wise business decisions.
Once your financial planning consultant knows what you business does, where it is at the moment and where you hope it will be in the future, they can help you make smart decisions regarding your money. This advice can range from how to make the most out of the money you have, investing wisely, how to protect it and how to use financial products that suit your needs.
A financial planning consultant will take into consideration the seven key building blocks needed to run a successful business and will mix and match them to suit you personally. The information from this will then be used to make a financial plan. The information on this plan should summarise your current financial position, list your goals, explain how you will reach them, show any investments, analyse any risks, state costs and reveal any money coming in from investment. Having all of this information to hand is very helpful as it can help a business to run more efficiently.
One of the many advantages of using a financial planning consultant is that you can be assured that you are getting quality advice from someone who knows what they are talking about. If you did it yourself you may be worried that you’re making mistakes or taking too long to do it. Hiring a professional means you know they know what they are doing and can help you get the most out of your money. As well as this, it also leaves you free to concentrate on other aspects of your company that you need to work on as well.
Many businesses realise that having a good financial planning consultant should be an essential member of their team. This is because they can help to coordinate all areas of their financial life and develop the bet strategies for the company.
At Wilkins Kennedyfinancial planning consultant we provide a vast range of professional advisory services to the main, owner managed businesses. These include but are not limited to audit, accountancy and taxation advice.
The Importance Of Risk Management
Risk management for business is a very important aspect of any company. This is because it identifies and treats any risks that an organisation may face. It develops a strategy in order to tackle potential risks and prevent any failures from happening. It is impossible to predict what can happen to a company and when which is why everyone should look into risk management for business in case something does happen.
An exposure to a risk could lead to disaster for any company which is why it’s important to assess the probability of it happening. This process uses the correct tools, methods and processes needed in order to manage risks and control them. Employees and employers can feel a lot more safe and confident knowing that these steps have been implemented because with them there is less chance of a disaster occurring.
The reason why risk management for business is so successful is because it identifies the risks before they occur. This gives companies the time and space to prepare for it and to put solutions in place if needed. If a business is aware of any risks they have then they can do things to prevent them from occurring so there is less chance of a downfall.
There are many different processes involved in risk management for business to help ensure that the job has been done correctly and accurately. Some of these steps include identifying the risks relating to the business being analysed, reviewing the probability of these risks occurring, understanding the risks and how to respond to them and implementing the tools required in order to prevent the risk from happening.
All of the steps involved in risk management for business result in improved decision making, planning and prioritising skills. As well as this it allows company owners to anticipate any problems before they happen. All of these things help to improve delivery within a businesses time frame and budget and help improve the overall running of the business.
Risk management for business is extremely important if you are venturing into a completely new market and business. This is because it is imperative to know how well or bad a market is doing before investing in it. If you open up a business in a market that is in a decline you are very unlikely to succeed.
It is no surprise that so many companies look into risk management for business. It can mean the difference between succeeding or not and also helps people feel more secure about the future.
At Wilkins Kennedychartered accountants london we provide a vast range of professional advisory services to the main, owner managed businesses. These include but are not limited to audit, accountancy and taxation advice.
What Is Customer Relationship Management?
Customer relationship management (CRM) is an important part of any business in order to keep clients happy. It is imperative to ensure that customers are happy otherwise you will not have a business.
Customer relationship management is the strategies, processes, people and technologies that are used by companies in order to successfully attract and retain customers. If this is achieved then a company can enjoy maximum corporate growth and great success. Obviously this is what any business wants which is why it is an important aspect of day - to - day business operations.
The different types of this management can range from simple off the shelf contact management products to high - end interactive systems that combine sales, marketing and executive information systems. The type of management that a company uses is most likely to depend on the size and type of business. For example, a small business with only a few customers will only need a simple system as it’s easier to monitor customers.
However, a large company with thousands and thousands of customers is going to find it near impossible to know every single one of their customers. For this reason a more complex system will be required in order to help them achieve a satisfactory level of customer relationship management.
Customer relationship management is important because it is vital that all businesses know everything they need to know about their customers. This can range from their spending habits, the budget they have, areas of interest and what they want in the future.
The reason why this information can be so beneficial to a company is because if you know how your customers are thinking then you know how to target your products at them, for example, if 90 percent of your customers watch television between 8pm and 10pm every night then you know this is a good time to advertise you product. If you don’t know this information you could be advertising at 6pm when none of your customers will see your advertisement.
Customer relationship management also allows a company to monitor whether they are losing or gaining customers. If they are losing customers they can find out why and try to come up with ideas of getting them back and keeping their current customers loyal to them.
There are so many advantages of maintaining customer relationship management that every company should do it. It is by far the best means of ensuring that you have a happy and loyal clientele.
At CPiOcustomer relationship management whether you are looking for a fully integrated ERP solution or taking your first steps into CRM, CPiO is ideally placed to guide and support you.
Customer Relationship Management For Businesses
No matter what business you’re in, unless your customers are happy, you won’t succeed, and this is why Customer Relationship Management (CRM) is so important. More important than sales, or marketing, or any other part of the company that wouldn’t survive without customers; yet customer relationship management is still low on the priority list of so many companies today.
To know how to maximise your businesses potential, you need to know what your customers are thinking. After all, if you feel that your customers are happy because profits up, it may have more to do with your recent price rise, as opposed to them actually buying any more. Additionally, if you have a change in personnel, is this going to affect a relationship with an existing customer?
This is where good management skills come in. If the result of a salesperson leaving means your company is going to lose business from a particular client, you can stay one step ahead of this by smoothing the waters with that particular client, assuring them their service won’t suffer accordingly.
Depending on the size of your company, you will obviously have different priorities and goals. A small company, for instance, may be focused on building its existing client base, whereas a larger company may have its priorities in expanding globally.
But without a strong existing and loyal customer base, these plans and ideas would simply be that - plans and ideas, difficult to implement with the current climate. However, by using customer relationship management, you can ensure that you have a strong customer base to build from. After all, the best form of advertising is still word-of-mouth; keep your customers happy, and you’ll soon see your business grow.
Since Customer Relationship Management is all about customer relationship management, the good thing is that is can be used in so many ways, and it isn’t limited to just the service side of your company. No matter what department you use Customer Relationship Management in the options are endless:
- Sales teams can see what sales opportunities weren’t closed, and determine the reason for that to improve upon the next time
- Accounting can see what accounts were closed, and use the feedback from customers to try and win them back and ensure that whatever the problem was is not repeated
- Customer services can make better use of their time by identifying why a certain problem customer is continuously having problems, and come up with a solution to that problem
At CPiOcustomer relationship management whether you are looking for a fully integrated ERP solution or taking your first steps into CRM, CPiO is ideally placed to guide and support you.
What Is Supply Chain Management?
Supply chain management software UK can help a business with the day to day running of their business in order to make it easier and more effective. It can be hard to find the time to do a lot of things and a lot of people new to the business also don’t understand a lot of the terminology. It helps you to get jobs done quicker which leaves you with more time to concentrate on other aspects of your company.
Supply chain management software UK can help businesses because it improves the way that a company finds the raw components it needs to make a product or service and then deliver it to its customers. This is one of the most important aspects for any business.
The first basic step of supply chain management software UK is to develop a strategy. This is so that you can manage all of your resources that go toward meeting customer demand for your product or service. It is your aim to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers. If a company can achieve all this then they are highly likely to be successful because customers are going to be happy with what they receive and therefore use the company again.
The next step is to choose a supplier or suppliers that can deliver the goods and services you need in order to create your product. From here you can develop pricing, delivery and payment processes with suppliers. All of this can be achieved with supply chain management software UK as it can assist you in making your job easier and more straightforward.
Manufacturing is the next stage for your product or service. You are likely to need production, testing, packaging and delivery if you are supplying a product. This software can help to ensure that this is a quick process so that you are producing maximum output and therefore making more profit as you can reach more customers.
Finally, supply chain management software UK can help with the delivery process for any business. There is quite a lot to organise from receiving orders and processing them to hiring people to deliver them and take payments. It is also important that this stage is quick because customers will get annoyed if they have to wait a long time for the delivery of their product or service.
At CPiOsupply chain management whether you are looking for a fully integrated ERP solution or taking your first steps into CRM, CPiO is ideally placed to guide and support you.
Why Use A Tax Consultant?
Tax can be a tricky and confusing subject - are you paying too much? Too little? Are you on the right tax code? These are the very reasons why so many companies hire tax consultants London. It is so much easier than trying to understand everything yourself and you can be guaranteed that the job is going to be done correctly.
Tax consultants London offer tax and financial advice to businesses regardless of whether it’s one person running it or if it’s a large multinational company. They come as a great benefit to any business because they can help to reduce your tax liability which is a massive advantage. As well as this it will undoubtedly save you a lot of stress and frustration trying to work everything out for yourself. It is also a very time consuming task so hiring tax consultants London to do it for you saves large amounts of time which leaves you free to concentrate on other aspects of the business.
The person or company that you employ will work hard to balance your books whilst reducing your tax liability at the same time. As well as this they will provide you with a financial service that will minimise your taxes and therefore maximise your profits. Initially you may think that you can’t afford tax consultants London or you just may not want to pay for one, however, when they are maximising your profits for you in time they will pay for themselves and you will probably wonder why you didn’t start using the service earlier.
One of the most important aspects of what tax consultants London do is to advise their clients on all aspects of tax. This is to give them a clear understanding of what they’re dealing with and what they have to do. Once people have become more knowledgeable about tax and how it works they find it easier to run the financial side of their business.
Files will be analysed, problems will be solved and opportunities will be pointed out. This helps to ensure that a company gets the most out of what they are doing and are more likely to make a profit. Tax consultants London can help make a business so much easier to run because people will be more clear about what they are doing. This will help to improve any company no matter what sector they are in as the owner will be more knowledgeable.
At Wilkins Kennedychartered accountants london we provide a vast range of professional advisory services to the main, owner managed businesses. These include but are not limited to audit, accountancy and taxation advice.
Advantages Of Using Accounting Software
Whether you are a large business or a small business there are many advantages of using Sage payroll accounting software. Not only can it help you to stay more organised but it can also help you get certain jobs done quicker and more accurately.
Many people who are in charge of doing the wages hate doing them because it can be a very time consuming task and it’s hard to find the time to do them. However, with a package such as Sage payroll accounting software, once it has been set up its quick and easy so won’t take up much of your time.
This software can also help to ensure the accuracy of the wages you are putting through. If you currently have a system where you manually have to work everything out it can be very easy to make mistakes, especially if you’re rushing. However, if you simply need to enter in the number of hours an employee has worked and the software does the rest for you, it is very unlikely that there will ever be mistakes.
Using programmes such as Sage payroll accounting software enables you to process your employees’ wages without you needing to understand the complexities of payroll legislation. It is very unlikely that many employers know much about this or understand how it works which means you could run into problems if you are doing the payroll manually. This is just one of the many reasons why so many companies are now using a computer programme that already takes this into consideration.
If employees have varying hours it can be a very long process to do the payroll system. However, programmes such as Sage payroll accounting software makes information such as this easy to input which saves so much time.
One of the main reasons why businesses have started to use accounting software is because they are able to project salary costs with Salary Review Forecast. This means that costs can be projected in order to help you stay in budget. The effect of proposed salary increases or decreases can be analysed, you can forecast for the next month, quarter or year and you can view the impact of things such as pension and National Insurance payments.
It is no surprise that so many companies have started to use Sage payroll accounting software because it doing the wages quicker, easier and much more enjoyable.
At CPiOsage payroll accounting software whether you are looking for a fully integrated ERP solution or taking your first steps into CRM, CPiO is ideally placed to guide and support you.
Bloated File Cabinets, Where to Store the Hard Stuff
The times we live in are quite convenient in terms of communication whether you hail from a cubicle dwelling or man an oil rig in the gulf. Communication happens at the speed of a key click and the office vernacular these days typically revolves around abstract virtual talk. When someone means folder, typically they’re speaking of something found on a computer hard drive rather than on a shelf. Yet we still find the need for hard copies though. And some artifacts simply can’t be stored and still retain the same value at the same time. So, proper record storage facilities are in demand.
The following will be a bit of a brief on what kinds of records are often stored and, if those records are to be archived, where many companies choose to put the overflow.
Record Storage: What it is and Where
It probably seems like a no brainer thinking that if one has a stash of records that they should simply get a big old file cabinet and to assume that is going to be home for the stuff — out of sight out of mind. Well it may still be on someone’s mind, just that certain someone may be an untrustworthy sort who can do some serious damage to your business or lives whose personal data is printed on those pages. Also, in some industries keeping records in a typical building atmosphere will most certainly destroy it physically (think of the yellowed and crumbling U.S. Constitution left in a library drawer for 200 years unshielded).
Records that are stored long term tend to be because of their value. So, first off it’s necessary before archiving to identify if the document is worthy of storage. The record needs to be verified for its relevance and authenticity. Museum record storage is a prime example. It’s not usual to get a radiocarbon date on some of that stuff to ensure it’s the real deal.
To touch again on where records storage is in relation to environment, it’s necessary to determine how well the records will fare if left in a typical open air setting. Some documents do not do well in a file cabinet. Where the records are stored hinge strongly on two points: the ease of access to retrieve them and to make sure they are well kept from environmental forces. Temperature and humidity controls are often a factor to determine and well as disaster proofing the storage facility. Many private companies are employed to manage these tasks in their warehouses.
Another point is that records will often simply not be needed again or a security issue comes up where the information needs to be disposed of. Simple shredding of documents can lead to incriminating circumstance (Enron rings a bell). So standards are a big issue that companies have to comply with before paper is fed to the blades.
North Western Warehouse (http://www.nwwcom.com/records/records.php) is a private record storage group who provides secure space for storing a variety of records material as well as adequate shredding options for businesses both public and private. The author, Art Gib, is a freelance writer.
