Having the basic understanding of bookkeeping and financial management ensures that the books are always reliable, and being able to generate financial reports and analyze those statements, will give you a deeper understanding of how you’re doing on many different levels.

The financial management you’re going to be getting into with a nonprofit organization is basically like any other companies. Preparations for a third party audit, basic methods of internal controls, a firm grasp of a solid accounting system, budget cycles and annual filings… this is all indispensable to your board of directors, and audit committee, not to mention the overall financial well-being of the organization.

Because each organization is different in the financial issues they fast and the fund-raising methods they have, every organization will be treating their reporting and statement creation a little bit differently. Different situations calls for different analysis of different elements not being able to create the reports needed because of a lack of accounting structure can be very bad. These reports show if the organization itself is financially stable, what financial obligations it’s facing, how much it’s spending on staff, as well as recent financial changes the organization has experienced.

What sort of reports would be needed by a nonprofit organization?

What’s Common Monthly:
- Balance sheet, or statement of position
- Income verses expenses sheet, showing actual, up to date information
- Strong report showing tax and financial highlights, including grants received and short term loans. This report is essential for managing cash flow

What’s Common Quarterly:
- Detailed fundraising reports. These should include status reports of foundation proposals and actual vs. projection regarding donations
- Cash flow projection
- Fee for service report, which details fee-paying clients and revenue
- Payroll tax report

What’s Common Annual:
- Federal forms, which include state reports, schedule A, and 990
- Statement of activities
- Statement of position
- Income statement for each and every program
- Draft of financial statements for the year
- Audited financial statements for the entire organization
- Management letter from the auditor

Tired of trying to figure out where the money is and where it should go? Let KJ Accounting and Consulting Group, a Bloomfield bookkeeping firm, help you with your accounting and book keeping needs. We have set up My Simple Accounting as your one-stop resource for our consulting services, trainings and products to help you with all of your accounting needs.

Bookkeeping doesn’t have to be scary. Here are the basics of bookkeeping to help you get your foot in the door if you’re thinking of tackling your business’s records.

Always have the Proof

This is something many people forget, but it’s so obvious you always have to make sure that you get receipts for any business related expense. If you don’t have the receipt, then the government won’t allow the expense! Anything not backed up on paper is automatically a personal expense, and taxable to you. It doesn’t matter if it’s small or large, every single expense needs a receipt.

To keep track of your expenses, you need to make sure that they’re entered properly in your bookkeeping system. Don’t have a system? It really can be anything you can use a computer program specifically for bookkeeping, like Quicken or Simply Accounting, or if you know what you’re doing, just using a simple Excel spreadsheet can work.

If you’re just starting out, using software is the best option, as it streamlines the process a lot. Remember that it also depends on the size of your business if you have $1 million in sales, you’re probably too big for a simple spreadsheet. And you don’t need $1,000 software if it’s just you!

Keep it Balanced

Making sure everything is balanced is vital to your entire business. Your bank balance entries in your bookkeeping system must match your bank account statements. This is how you know if you’ve somehow missed entering something in if it doesn’t match, something isn’t right.

With cash transactions, remember that they should be entered into a separate ‘Cash’ account, just like it would be treated at the bank. Always keep the receipts for your cash transactions as well, because it’s just another part of keeping track of everything.

You should always have a separate business and personal account as well. The IRS has rules against mingling accounts, and it makes everything so much easier when it’s separate!

Debits and Credits

If you don ‘t know the debits and credits system, it’s going to take a lot more room then what I have to explain it all to you. The concept is so confusing, even the pro’s get confused now and again.

Basically, what I mean with this point is to just understand the concept of costs and revenues. Any cost is something you’re paying for, and any revenue is something that is coming into your company. All of this is without taxes, because they should be tracked separately.

Let KJ Accounting and Consulting Group help you with your accounting and book keeping needs. Whether you want us to help you set up your books so you can manage them or you would prefer to have us as your trusted expert to do it all for you, KJ Accounting and Consulting is your answer and solution to your needs. Get your bookkeeping service today!

1. Keep Your Business and your Personal Separate

If you haven’t done this already, then you need to set up a separate checking and savings accounts specifically for your business. Many new business owners don’t realize how important this really is, and how much of a difference it’s going to make.

If you’re doing your own book keeping, as your interest in this suggests, you probably think that the entire idea of keeping your personal records separate from your business records is just going to give you one big headache. But trust me, it’s going to save you time. When you go to gather all of your information at the end of the year for tax purposes, having everything separate right from the start will make the entire process run smoother.

Signing up for online banking, as well as getting a paper statement every month, can save you time. It’s very safe to check and bank online, and you can do things like pay bills and look over statements with a few clicks. While you should always have paper information, too, going online makes the processes of banking more efficient

As a personal recommendation, having your personal accounts in a completely different bank then your business accounts can be easier. You always know what statement you’re looking at, and you don’t have to worry about confusing things. While this is obviously your choice, it can make things easier.

2. Find a Good Software

Do your really want to spend all the time it takes to manually write out your bookkeeping? Most people don’t – using a computer software program specifically for bookkeeping can make your life a lot easier.

There are a lot of great programs out there, but for your business, there are a few that I can tell you from personal experience that won’t help – MS Money being one of them. While it’s a great program for personal finances, it doesn’t do well with handling a business.

One mistake some businesses make is going with Quicken, which is oversimplified. While it’s an alright program if you’re doing your personal finances, or if you’re keeping things small, as you grow, it won’t be a good program to grow with you.

3. EIN is your Friend

Getting a federal tax identification number, or an Employer Identification number, is a great safety precaution, and something most small businesses don’t think about. It doesn’t matter if you have an employee, or plan on hiring one anytime soon.

If you don’t have one, you have to use your personal SSN for all of your business matters – and having that number just laying around isn’t a good thing at all. An EIN number protects you and your family.

Applying is easy. The fastest way is to go online and apply through the IRS. It’s easy, won’t take you very much time, and can save you a fortune.

Let KJ Accounting and Consulting Group help you with your accounting and bookkeeping needs. Whether you want us to help you set up your books or you prefer to have us as your trusted expert to do it all for you, KJ Accounting and Consulting is your answer and solution to your needs. We have set up My Simple Accounting as your one-stop resource for our consulting services and training.

Calculating actual wages and withholding taxesnâ?¢ Tracking vacation and sick pay

Figuring deductions for employee-contributed benefit payments

Providing year-end wage reportsnâ?¢ Ensuring accurate and timely bank transactions

Complying with legal obligations

Keeping up with new laws and regulations regarding payroll and taxes (that almost always require immediate compliance)nâ?¢ Computing commissions and bonuses

Dealing with tedious paperwork
Enlisting the services of an outside company to handle all of the above (and more) can definitely save you time, money, and aggravating frustration in the long run. You would not need to employ a full-time payroll manager and/or staff (depending on the services you choose to delegate to the outside firm), and your precious time could be spent on more important things, like expanding your enterprise. Consider the following beneficial aspects of outsourcing your tedious payroll tasks:

Payroll services for small business offer convenience.
When you enlist the services of a payroll company, you simply phone in, input online, or e-mail your payroll information and the firm handles all the rest.

Payroll companies are undeniably accurate.
Payroll firms are aware that in order to keep your business, they must make an unprecedented effort to “get it right” the first time, as well as stay abreast of all the new tax laws and regulations.

Outsourcing can assist you with myriad other employee-related matters.
In addition to cutting checks, many payroll companies also offer services that relate to direct deposit, employee benefits, and even retirement plans. Many of them also provide you with supplemental management reports and will handle all payroll-related tax obligations.

A good payroll service company will offer peace of mind.
Payroll functions encompass a complicated array of legal obligations, both state and federal. A reputable company can ensure compliance and ultimately save you money on possible legal fees.

As with other service-oriented companies, it’s wise to do some research on different payroll companies and get at least three quotes before committing to one. Choosing the right payroll services for your small business is important not only because said vendor will have unlimited access to sensitive information, but also because they will be the ones responsible for all employees getting paid accurately and on time. A miscalculation on either front can result in irate staff members and unwanted tax penalties. It’s a good idea to get recommendations from your business peers, thoroughly check out all references, and investigate all you can about the enterprise before making a decision.

The internet is a great resource to use when doing your homework. Check out different firms’ websites and compare what they offer to see what would work best for you. Whichever route you decide upon, the benefits offered by a reputable firm will far outweigh any risks you may be worried about when it comes to taking on outside payroll services for your small business.

If you need a small business payroll specialist then you can do no better than Haung Kan and Co. They will keep your payroll tidy and compliant.

TIGTA has confirmed a steady increase in the number of cases in the prosecution pipeline since 2003 as well as the adverse impact that this elevated backlog has had on CID’s resources. The number of criminal cases in the pipeline has risen over 43% since 2002 increasing to 3,915 from 2,733.

CID has taken the position that the pipeline’s increase is the result of shifted operational priorities at the Justice Department including an emphasis on drug, currency and money-laundering cases as well as those with time constraints due to statutory limitations periods.

TIGTA Inspector General Russell George admitted that criminal tax cases do sometimes compete for attention against cases involving other high-profile felony charges and national security issues, but that their value in deterring criminal tax fraud is significant. George stated “Our review found that the Criminal Investigation Division can do its part to bring such matters to trial by adopting practices that will permit more strategic management of its caseload inventory.”

TIGTA has made numerous recommendations to CID as to how they may more effectively manage their caseloads. They recommend that IRS create a structured oversight system to monitor and more effectively manage the pipeline process. They have also advised IRS to create a strategic management team to develop innovative policies and procedures to ensure that tax cases receive the required attention and resolution by the Justice Department.

The team would be tasked to develop additional techniques that refine performance measures for the pipeline and ensure that the Commissioner of the IRS receives the information necessary to have a clear depiction of the investigative resources devoted to prosecution pipeline inventory actions.

IRS has agreed to evaluate the creation of a structured oversight and coordination system to monitor and more effectively manage the prosecution pipeline process and to create a strategic team to determine methods by which improvements may be made to its pipeline inventory management system, but has stopped short of endorsing the remaining TIGTA recommendations.

One caveat is that we have seen an increase in criminal tax investigations and prosecutions since President Obama took office in January, 2009. This trend is expected to continue as the President executes his pledge to close the tax gap.

Rizzolo Group has many years experience helping small business owners decrease taxes and improve profitability. You need the fight financial data and the right tax preparer who knows accounting bookkeeping, payroll services and gives you timely advice. Rizzolo Group does that!

www.rizzologroup.net

Audit Trail. This sounds complicated, but trust me, it’s not. Basically, an audit trail is a record of every invoice and check in numeric order. Making sure that you never skip a number can really mean the difference between a good paper trail and one that’s missing a vital part. Record every voided check with the others, just make sure to make note that it’s ‘voided’!

Purchase a Deposit Ticket Book. If you’re not using a deposit ticket book, you’re probably having problems handling your bank deposits, or, you’re doing it in a way that’s harder then it needs to be. Most of the books comes with 50 top copy’s and 50 bottom copy’s, the white top copy is the original that you give to your bank, and the bottom yellow copy is what you keep for your records. Nothing gets lost, and a small order of 200 deposit tickets could easily last you 2 years or more, depending on how often you make deposits.

Consistency is Key. This should be a no brainer, but many people like to switch things up and try something new. With this, you lose money by wasting time. When you’re keeping your books, make sure to use the same headings and columns throughout the year, don’t get the brilliant idea to start labeling something differently halfway through. You’re going to give yourself, and your accountant, a headache in the long run if you do, and end up paying him for more time spent on your books!

Bank Statements. Requesting a statement with a month-end cut off date when you first open your business checking account can save you a lot of time, frustration, and headaches.

The key with this really is to remember to review it every single month, not just toss it unread into a filing cabinet. Go over everything closely, before your bookkeeper or accountant, and make sure there are no unauthorized checks or suspicious spending. You may trust these people you work with, but knowing for sure can save you a lot of time.

Resist the urge to go paperless and keep information only stored online. Having it in paper is solid, unchangeable, and makes a world of difference.

Keep Good Records. Duh! This one is the most obvious on the list, but constantly needs to be repeated! Keeping good records of your businesses financial dealings does make a difference. Bookkeeping should be a top priority for you, no matter if you’re afraid of what the numbers are telling you or not. Solid bookkeeping is like the glue that holds your business together. You just won’t get very far without it!

http://www.MySimpleAccounting.com Let KJ Accounting and Consulting Group help you with your book keeping and accounting needs. Whether you want us to help you set up your books so you can manage them or you would prefer to have us as your trusted expert to do it all.

It is important to spend some of your EA practice time on actual EA problems from past exams to develop a familiarity with the question format and some of the common tricks. Here are some examples of what to look for as you review each question.

Logical Qualifiers — NOT, EXCEPT, EXCLUDED, INCLUDED, and ONLY. A qualifier is a word that determines the scope of the question. These words apply logic to the question, and can alter the answer dramatically. The IRS may use Logical qualifiers alone or combine them with additional indicators to direct the test taker to the correct answer. Be careful here as each qualifier, or indicator can affect the outcome of the question.

Quantity Indicators — ALL, NONE, ONLY. These indicators refer to the amount or frequency of an occurrence. A quantity indicator states the amount involved.

Probability Indicators — MUST, ALWAYS, NOT ALWAYS, NEVER, COULD, LIKELY, and MAY. This indicator refers to the likelihood or frequency of occurrence.

Example Question: Which of the following applies to the allowable credit for prior year minimum tax?

A. Any unused portion may not be carried forward.
B. It is allowed in full against the current year’s tax.
C. It may only be carried forward for five years.
D. The allowable credit cannot reduce the current year’s tax below the current year’s tentative minimum tax.

In this question, answer C is incorrect because of the word ONLY. A taxpayer has other choices, for example, a carry back period can apply. If an answer rules out the possibility of other outcomes, or states that there can be only one outcome you should question if that is always the case.

Example Question: The following statements about dividends received from a dividend reinvestment plan are correct except:

A. Reinvested dividends are not taxable if not removed from the plan.
B. Reinvested dividends are taxable in the year paid.
C. Reinvested dividends are taxable and are added to the basis of the stock or mutual fund.
D. Reinvested dividends are treated as ordinary or qualified dividends.

In this question, the phrase “correct EXCEPT” implies that the answer is the only one that is FALSE (not correct). Do not get caught by the wording of the question. The correct answer (A) contains two qualifiers, which can easily trick you. While two qualifiers are used, this is not a double negative. A double negative is occurs when two negatives are used in the same sentence for emphasis. The two negatives cancel each other. A double negative changes the answer to a positive, for example “The following statements about dividends received from a dividend reinvestment plan are not correct, except.” In this case, the correct answer would be a true statement. EA guidelines allow for the use of double negatives in test questions. Careless mistakes occur when a prospective EA forms a quick opinion about a question without carefully reading it through. Rushing through the questions does not produce optimal EA results.

Rain Hughes is the co-founder of Fast Forward Academy, a leading publisher of IRS EA course materials, ea practice questions and continuing education for all tax professionals.

The self-employment tax issue is important because how much self-employment tax you pay is based on what kind of business structure you use to operate your business. Also, each type of business structure has a different level of risk associated with being audited by the Internal Revenue Service. A quick example of how this works.

Jim is a construction contractor in Connecticut who works on commercial projects. He is the sole owner of the company which has 10 employees on payroll and is organized as a limited liability company (LLC). He earns about $200,000 per year before taxes.

Charlie runs a different construction contracting business in Connecticut that is very similar to Jim’s except his company is organized as an S Corporation. He earns approximately the same $200,000 per year before taxes.

Here some amazing facts– Charlie pays $6,000 less in taxes every year compared to Jim. Plus, Charlie’s risk of getting audited by the IRS is far less than Jim. According to a recent IRS study, contractors operating as a one-owner limited liability company are six times more likely to be audited than those contractors operating as an S-Corporation.

Why? According to an IRS spokesperson interviewed for this article, it is because the IRS has determined through extensive studies that anyone who reports gross income on Schedule C of Form 1040 in excess of $100,000, (the business form within a person’s individual income tax return where LLC owners report their business income and expenses), is more likely to be “cheating” on their taxes. As a result of this IRS study, they have allocated more audit resources to businesses operating as limited liability companies.

Here’s another fact. Contractors (by the nature of their business and a few bad apples) are already open to greater audit risk. If they are using a business entity such as sole proprietorship or single member LLC that requires them to report all of their income and expenses on Schedule C of their individual income tax return, they are exposing themselves to maximum audit risk.

What a nightmare! An “audit” by the Internal Revenue Service or State Tax Authority is a painful, time-consuming, money draining event that all business owners should be happy to avoid.

John, a Connecticut construction contractor is a perfect example of why you do not want to be audited. He operated as a limited liability company which increased his chance of being audited six-fold. He received a letter from the Internal Revenue Service that he had been selected for an audit. The letter included a three page list of all the documentation he was required to put together.

John spent a whole week gathering this information (about 4 file boxes full), spent $5,000 in professional fees to have his CPA assist him with the information gathering and represent him at the audit, and was interviewed by an IRS auditor.

John subsequently was found to have committed no wrongdoing and no additional taxes were required to be paid. It could have been much worse. John was fortunate that he was honest, kept good records, and operated his business properly. However, it cost him a lot of wasted time, energy and money.

How can this be avoided?

It starts by making an election to be taxed as an S Corporation.

Here’s the information that construction contractors in Connecticut need to know! 7 Reasons why most construction contractors should be taxed as an S-Corporation:

1. Your annual net income from your S-Corporation appears on one line of Schedule E of your individual income tax return. Accordingly, there is no income or expense detail showing up that would trigger a “red flag” like there is on a Schedule C used for a single member limited liability companies (LLC).

2. There is no disclosure of home office expense similar to that used on a Schedule C. On an S-Corporation tax return, home office expenses are combined with other expenses and no separate disclosure is required.

3. If you are a subcontractor for another construction contractor, use of the S-Corporation will help you avoid being issued a 1099-MISC which detailed the income you received from the other business. As a sole proprietor, that 1099-MISC is sent to both you and the Internal Revenue Service giving them an opportunity to match-up your income.

4. The typical “red flags” such as travel, entertainment, and automobile expense receive less attention on an S-Corporation return because the audit rate for S-Corporations is substantially lower that for individuals.

5. The Internal Revenue Service is paying less attention to S-Corporation returns currently because of the limited number of auditors they have. Most of the audit resource for corporations is being directed towards big corporations because of the opportunity to extract larger amounts of tax dollars.

6. You can substantially reduce the amount of self-employment taxes paid with an S-Corporation. A LLC requires that the owner pays self-employment taxes on all of the net income. An S-Corporation is allowed to pay its shareholders a reasonable salary and the remainder of the net income can be taken by the shareholder free of self-employment taxes. This is the reason Charlie (the S Corporation contractor) paid $6,000 less tax than Jim (the LLC contractor).

7. It is easier for an owner of an S-Corporation to sell the business because there is no corporate level tax to be paid upon the sale similar to a C-Corporation.

To summarize, construction contractors who are currently organized as an LLC or a Sole Proprietor can reduce their risk of a painful Internal Revenue Service audit and save a significant amount of taxes by electing to be taxed as an S-Corporation.

Ted Lanzaro, CPA owns and operates Lanzaro CPA, LLC, a boutique tax strategy, accounting and IRS debt resolution firm with offices in Shelton, CT. He can be reached by phone at 203-922-1742 or via email at Ted@lanzarocpa.com. You can visit his website at www.lanzarocpa.com.

Large corporations outsource their accounting for a very good reason – to prevent mistakes. Yes, the services of outsourcing companies can be a bit costly but the value you get is worth every penny that you pay. Just to give you an idea of what you get out of the deal, here are some of the advantages that you get by opting to outsource small business accounting matters:

Economical: While outsourcing outside personnel for your accounting needs can mean additional expenses for the company, services are guaranteed of accuracy and expertise. This means that you won’t be running into problems in the future due to misrepresentation or any other accounting related problems. Not only that, business accounting firms will also be able to provide you with tips and advice that will further enhance the company’s financial management.

Efficient: By outsourcing your accounting, you will be able to concentrate more on the other facets of your business without having to worry about your accounting. All that’s required of you is to transfer all the necessary financial information so the professional can take care of your project. Regardless of whether it’s tax season or not, you will be rest assured that everything will get done in time and without any mistakes.

Expertise: Small business companies want to get the best out of everything that they pay for. Getting your accounting services outsourced can be a very wise move as they will be able to provide you with additional services that will allow you to pay the smallest amount of tax possible and also deduct expenses correctly. By outsourcing, you will be assured that your financial statements will be handled by some of the most capable experts.

These of course, are just some of the advantages that one can have when opting to outsource their small business accounting needs. But before you go into searching for the nearest accounting firm, there are several things that you need to remember first in order to get the best and most capable accountants for your needs.

Try asking for referrals from other businesses or your local Chamber of Commerce chapter, they will surely be able to provide you with the services that you require. Also, it would be a good idea to interview some CPA’s first before making any final decisions. Grabbing the first one that you come across can be risky, so do take time to seek other options.

And on a final note, it would also be advisable to seek for credentials first before getting any work started. This will further assure that your finances are in good hands. Small business accounting can be difficult and problematic. Getting assistance is not only rational, it is necessary, especially if you want to avoid running into trouble.

It is important to maximize your time when running a small business, and so one should look into using an outside accounting firm to keep your small business accounting in order. Huang and Kan LLP is such a firm.

The bookkeeper can remotely work at the documents that are entrusted to him and make it easier for updates. Whoever uses this kind of technology would have to include:

- mobile employees sending and scanning their bills and receipts while they are on the road in order to be reimbursed even more quickly.

- organization that have several offices that can focus on centralizing on their accounting department and have the particular data to be sent on an online location.

Bookkeeping might not be the cream of the crop when it comes to making money but it should be included on your priorities. It may not be on top of the list but the life of your business greatly depends on the amount of diligence you would invest on this area.

Regardless of the size of the business that you have, it has to have the capacity to keep a record of detailed financial activities that were made over the past couple of months in order to comply with the laws of your country’s tax.

Diligent and accurate bookkeeping is essential even if you only have a small business. It doesn’t only improve a person’s ability to make decisions operationally but also establishes compliance with several IRS regulations and bank rules regarding lending.

If you are already overwhelmed with how mountains of receipts are sprung on your desk and you just can’t seem to figure out what to do or how to organize every piece of receipt, online bookkeeping can sort everything out for you. What are the different advantages of online bookkeeping for your business?

1. It is an electronic system that is easy to use and allows faster tracking of expenses and income for any online business.

2. Stop worrying about mortgages because enough cash will flow even if it’s due for tomorrow.

3. Keeping it on track with sales and not be left out on the system.

4. Stop being confused on how to reconcile every bank statements, credit card statements, shopping and pay pal receipts.

5. You can have a clearer picture of every financial circulation going into the business without the fear of any risk for collapse.

If you are an online entrepreneur and there are a lot of things going into your mind, make bookkeeping one of them. Even if you don’t know how, there are a lot of online bookkeeping companies who are willing to do the grueling work for you. But if you wanted to do it for yourself, there are tons of schools offering courses regarding bookkeeping online. There are also experienced bookkeepers who are willing to share some tips on how to DYI.

Online bookkeeping for you business has its many benefits. With it, you don’t have to feel stressed out or even overwhelmed anymore. It is sure to reduce your level of stress out of minimizing the risk of numerous mistakes and lastly it will lower the taxes that are owed.

Willie Greg is an expert in Internet marketing. He writes articles about internet business and other related topics.
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