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No matter how good or bad the situation in the economy is, many companies simply can’t stay in business and they are forced to either permanently dissolve their operations or reorganize into another entity. Without proper tax planning, both dissolution … Continue reading
Businesses effectively divide the money they manage into two major categories—cost and revenue. Companies can increase net income by either increasing the revenue they take in or by decreasing the money they spend out. In down economies where revenue increases … Continue reading
In today’s economy, it is becoming increasingly important to look good socially to your customers. Many consumers are willing to pay more for a product that they feel comes from a socially responsible company. You prove yourself to be more social responsible than your competitors through cost-benefit analysis results, which you then carefully market to potential customers. Turning complex cost-benefit analysis results into concise and marketable information is costly but well worth the expense. Continue reading
The primary purpose of a budget is to manage expenses so that a business can meet its targeted profit goals. In other words, budgets are supposed to ensure efficiency. The traditional line-item budget is an excellent tool for analyzing every use of company funds, so it would seem to be a great tool for encouraging efficiency. However, line item budgets tend to encourage employees to spend everything they are budgeted due to the “use it or lose it” principle. In recent decades, alternate budget types have been tried. Each has strengths and weaknesses that must be taken into account when using them. Accounting firms are familiar with each of these budget types, and they will help you decide which one fits your needs best. Continue reading
Gross profit is defined as the difference between a business’s total sales revenue and its total direct cost. This number is an important metric in determining the overall health of a company. Gross profit is affected by a number of … Continue reading
It’s Valentine’s Day, and thoughts of love and relationships are in the air. Just as couples date to strengthen their personal relationships, your business must ‘date’ your investors to keep their support. Once a year by law, you are required to send them a long and lengthy ‘valentine’—a set of financial statements telling them of the return you made on their investment. Besides keeping the books and filing taxes, a certified public accountant can also help you prepare financial reports that will tell your investors you love them. Continue reading
Many small businesses try to do their own accounting almost completely through software. While software like Quickbooks can certainly produce the numbers for financial statements, it cannot tell a story about those numbers. One of the best small business financial services available is financial statement preparation. When a small business outsources their accounting, they can get affordable reports that tell a meaningful story about the data. Continue reading
A financial services firm can provide smaller businesses with lower accounting costs than they would experience in-house. This is because of “economy of scale,” which means that the cost-per-service goes down as more services are offered. An accounting firm already owns powerful accounting tools, so it costs them less to provide complex accounting services. To be specific, it may cost your pawn shop a dollar per item to do all the proper accounting while a financial service firm may charge only 60 cents per item. This can enable a small business to compete with larger businesses on cost. Continue reading
Managing a successful small business in this difficult economy is no small accomplishment, but the good news is that even now there are a lot of companies that are poised to take things to the next step and expand their … Continue reading
Can a loss be good? Can a profit be bad? Context is very important in accounting. Certainly, an overall loss is never a good thing, but occasional losses are unavoidable and certain losses can actually be valuable. We call these “acceptable” losses. There are also ways to profit that risk hampering future growth. We will call these “risky” profits. Continue reading
