Big-Picture Accounting for Your Small Business in Midtown Manhattan
Small business accounting is the process of tracking, noting, and analyzing your financial transactions. The goal is to determine how profitable your business is and look for ways to improve your standing. At Adam Baruch, CPA, we provide sound monitoring of your small business' accounting, so you know exactly how much money flows out of and into your company's accounts. Our Midtown Manhattan CPAs can carefully evaluate this through business sales, purchases, payments, liabilities, and other transactions.
With decades of experience assisting small businesses of different industries, we can provide bookkeeping, prepare your financial reports, and handle tax returns. We evaluate your financial health so that we can assist you with your long-term plans. Contact our Midtown Manhattan CPA firm to schedule your consultation today!
Why You Should Choose a CPA to Handle Your Small Business Accounting
In addition to their accounting skills, the experience of CPAs provides several benefits. Certified public accountants have a deeper understanding of tax regulations and codes. They're required to pass the CPA exam, a demanding process that tests their expertise in various finance and tax-related fields. After getting licensed, they keep in compliance with strict educational requirements to maintain their professional status. This advanced knowledge makes them an ideal expert to help you with your financial needs and tax problems.
A CPA can act as your representative during an IRS audit. You don't have to hire separate firms for accounting, financial analysis, and tax audit representation. One CPA is qualified to perform all these tasks.
Understanding the Small Business Accounting Process
A good accounting process involves careful organization and record-keeping. As a busy business owner, chances are you won't have the time to perform these detailed steps yourself. At Adam Baruch, CPA, our experienced CPA can oversee all of this and more for you. A sound business accounting process involves:
Separating Accounts - Your reports need to reflect that you're a separate entity from your business. We can help you do this by working with you to set up distinct business checking and savings accounts. This not only helps you better manage your finances; it also makes it easier to file returns during tax season.
Keeping Meticulous Records - Greater financial success depends on organized and accurate tracking of and recording transactions. For successful accounting, we'll ask you to provide us with supplier invoices, sales orders, timecards, bank statements, and credit card receipts. These documents help to keep track of deductible expenses, file tax returns, and assess your business's overall performance.
Choosing an Accounting Method - The two primary accounting methods for recording transactions are accrual and cash basis. The accrual method requires making two entries for each transaction. This is also known as the double-entry system. It records income and expenses immediately when they're incurred, as opposed to cash exchange. Our CPAs can help you determine which method best suits your business.
Recording Transactions to a Trial Balance - If you choose a double-entry system, you need to make consecutive journal entries. These entries must include the amounts credited and debited, entry dates, and a description of the transactions. After balancing these entries, we post them to a general ledger where the balance can be determined.
Generating Financial Statements - After preparing the balance, we can now create financial statements that are relevant to your business. These include cash flow statements, balance sheets, and income statements.
Reconciling and Closing Your Books - This is the final step of the accounting process. It involves closing expense and income accounts to record a new period's transactions. Closing entries is useful in resetting temporary account balances to zero and introducing a new accounting cycle.
What is Bookkeeping?
Bookkeeping is the regular recording of all financial transactions involving your business. It typically consists of entering cash, banking, sales, and spending details in a general ledger. It is an essential process that helps lay down the foundation for your company's financial success. At Adam Baruch, CPA, our bookkeeping experts work closely with you to ensure you understand your company's fiscal health and how to use this information to your advantage.
Bookkeeping & Accounting: Understanding the Difference
While these two terms are often similar, they don't necessarily refer to the same functions. Bookkeeping involves daily tasks such as posting to a general ledger and generating invoices. Accounting is the process of analyzing this information to develop insights into your business's financial standing. At Adam Baruch, CPA, we offer bookkeeping both as a standalone service and paired with accounting, so your business has access to exactly the services it needs.
Outsourced Bookkeeping for Strategic Tax Planning
By taking advantage of deductions and tax credits you qualify for, you can invest more profits into your business. Accurate bookkeeping is one of the most important aspects of tax planning. As a business owner, you're expected to pay taxes on income, sales, excise, and self-employment. Your net profit determines how much income tax you pay, which is a direct result of accurate bookkeeping.
Small businesses also make estimated federal tax payments throughout the year. Balancing your books makes it easier to estimate your taxes and better avoid an IRS audit.
How We Use Bookkeeping to Help You Save
For your business expenses to be tax-deductible, they must be ordinary and necessary. Ordinary means the cost is useful in your line of work. Our savvy CPA can help you determine the type of expenses that qualify for significant tax deductions.
Two essential documents for solid tax planning are profit and loss statements and the balance sheets. We recommend keeping all records that support these entries in your general ledger, and we can see that you do in an organized manner. This is important because the IRS could ask you to provide evidence of the figures posted in your tax returns.
Our professionals at Adam Baruch, CPA do more than record transactions and preparing financial reports. We also provide tax planning services, audit support, and preparation of reviewed or audited financial statements.
The 6 Aspects of Successful Bookkeeping
The following bookkeeping basics will prepare your business for financial stability:
1. Hire an Expert
Bookkeeping often proves to be too tedious for a busy business owner. It makes more sense to hire a team of experienced professionals to help with these complicated financial matters. Outsourcing allows you to focus solely on running your company. In addition to balanced books, you can also receive expert advice on different fields, such as tax compliance and financial planning.
2. Setting Up Your Business Accounts
Once you know which accounts are relevant to your business, the next step is to set them up. In the past, you could create these accounts in a general ledger, but with modern technology, you can create soft copies. You can use spreadsheets, desktop accounting software such as QuickBooks, and cloud-based software to make general ledgers.
Accounting software is convenient, and with our CPA's help, it can also help you save time and greatly reduce errors when filing. An ideal solution is to hire a qualified CPA to create and manage your financial documents.
3. Choosing a Bookkeeping Method
Depending on the size of your business, you can choose between single-entry and double-entry bookkeeping. For smaller ventures, single-entry can work well. It involves making one entry in the relevant account's column for each transaction.
Many small business owners prefer the double-entry system. You make an entry in one account, followed by a similar one in another account related to that transaction. Although double-entry is more complicated, it's often more accurate.
4. Keeping Accurate Records
For your accounts to balance, every credit and debit entry must be entered correctly. When you close your books at the end of a financial calendar, the totals in both columns need to match. After entering the details for each account, you have an adjusted trial balance.
These adjusted balances should conform to this basic accounting equation: Assets = Liabilities + Equity. If the two sides of this equation don't match, it means you have errors in your accounts. Once you solve the mistakes, you can close the books.
5. Preparing Your Financial Documents
Balance sheets give a summary of your equity, assets, and liabilities. In an accurate balance sheet, your business's assets are equal to the combined value of investment and liabilities. Profit and loss statements give a breakdown of costs, expenses, and revenues. Cash flow statements resemble profit and loss statements, except they only record cash items. We help you generate these reports to show you how your business is spending and earning money.
6. Creating a Bookkeeping Schedule
You might be too busy to record every financial transaction as it happens. At Adam Baruch, CPA, we do this for you. We help you get into the habit of updating your accounts and making it more bearable.
We also help you close your books regularly. This should be performed at least every quarter if you can't manage a monthly schedule. Our team ensures your financial records are kept in a secure place where you can easily retrieve them.
Savvy Accounting for Your Small Business
At Adam Baruch, CPA, we always strive to uphold the highest accounting standards. Our services are available to small businesses of all sizes. Our team is also well-versed with the accounting needs of diverse industries. If you want to open a business in the US from an overseas country, we can help you get started!
Our CPAs use their tax and accounting expertise to guide you through the entire process. Contact our Midtown Manhattan firm today for more information.