Most people are involved in some sort of bookkeeping, whether for their personal use or for their organization, yet there are many misunderstandings about what bookkeeping actually is.
Many San Diego accountants believe that their clients should be educated on bookkeeping in general, so that they can have better understanding of why they do things and what the finances of their own business need to do.
Bookkeeping is the recording of all financial transactions undertaken by an individual or organization. The organization may be a business, a charitable organization or even a local sports club. A financial transaction is any event that involves the exchange of money.
In short, bookkeeping is “keeping records of what is bought, sold, owed, and owned; what money comes in, what goes out, and what is left.”
The name comes from the fact that financial information used to be recorded using pen and ink in paper books – hence “bookkeeping.” However, these days it is more commonly recorded in a computer system.
Individual and family bookkeeping involves keeping track of income and expenses in a cash account record, bank account statements, credit card statements, or savings account passbook. Individuals who borrow or lend out money also track how much they owe or are owed from others.
Two most common bookkeeping methods used are the single-entry bookkeeping system and the double-entry bookkeeping system:
- Single-entry bookkeeping uses only income and expense accounts. Its is a simple method of bookkeeping relying on a one sided accounting entry to maintain financial information.
- Double-entry bookkeeping requires recording each transaction twice, as debits and credits. It is a set of rules for recording financial information in a financial accounting system in which every transaction or event changes at least two different nominal ledger accounts.
While many companies outsource their bookkeeping to accountants, bookkeeping San Diego specialists agree that any individual or organization involved in bookkeeping should be aware of the process and what goes into it. A more informed client can assure that his or her accounting services are the most appropriate for their needs.
When choosing strategic business partners one must consider how they will choose the right people, create an appropriate structure, define expected measures of success and identify potential threats or failures. Most importantly, one must not overlook legal and accounting in Encinitas issues that may arise during the partnership. Below are some key points the Financial Post recommends when starting a successful, trouble-free business relationship between two entities.
Protect intellectual property: It is important that any business agreement safeguards the intellectual property of each participant. Doing so helps to reduce the risk of unnecessarily exposing what makes your company special. This alone can have considerable implications on the ownership of licenses and future royalties.
Protect confidential information: To protect confidential information, you can limit its access to those who require it to carry out the obligations defined in the alliance agreement. Another safeguard is to agree upon and monitor specific standards for sharing, managing and guarding confidential information.
Define sharing agreements: Alliances are built on the premise of sharing resources such as data, intellectual property, competitive intelligence, and access to employees and customers. Sharing such resources creates a unique set of legal and business requirements that need to be included in an alliance agreement. Begin by taking an inventory of the resources that you plan to share so that they may be included.
Partner with competitors. Defining the rules around sharing in an alliance agreement is particularly important when forming an alliance with a competitor. For example, competitive partners in the airline industry establish rules around sharing routes, and competitive partners in the auto manufacturing industry develop detailed rules about sharing vehicle components. In fact, hyper-competitive partners often develop a “co-opetition” framework that recognizes two partners may effectively leverage an alliance for some product offerings or targeting some market segments while remaining fierce competitors in others.
Protect expertise and client information: Resources commonly shared during an alliance include human resources and customer data. As a result, there can be concerns that employees may work for the current or former alliance partner. To safeguard against this risk, include in an alliance agreement an employee non-solicitation clause where partners agree not to offer employment to the other partner’s employees during the term of the agreement or for a defined period after the conclusion of the alliance. A similar non-solicitation clause can be added so that partners cannot solicit each other’s clients.
Protect confidential information: To protect confidential information, you can limit its access to those who require it to carry out the obligations defined in the alliance agreement. Another safeguard is to agree upon and monitor specific standards for sharing, managing and guarding confidential information, especially during tax preparation in Encinitas.
Define post-alliance obligations: Whether an alliance is established for a specific, one- time event or it is intended to span several years, participants need to identify the conditions that would cause the partnership to end — either on friendly terms or not (e.g. because of non-performance). The more involved the alliance, the more important it is to consider post-alliance obligations to minimize any potential business disruption or damage to complex relationships (with customers, suppliers, manufacturers and/or distributors).
Warren Buffett is considered one of the richest men in the world and the most successful investor of the 20th century. As a primary shareholder, chairmen and CEO of Berkshire Hathaway he has conducted very intelligent business and investment tactics that others want to learn from and copy.
There are several well-known Buffett strategies that will help any investor, businessmen, or regular tax payer looking to invest or when meeting with our tax experts like tax preparation Encinitas accountants.
A major investment strategy that Warren Buffett utilizes is a modification of the value investing approach that his mentor Benjamin Graham once used. Before buying a business, Warren looks to see if the business has earnings with an upward trend with consistent margins, the debt-to-equity ratio was low and if it was high he made sure that the company could repay their debt.
He also ensures that the return on equity (ROE) is consistent and more than 12%, the company retains earnings for growth, the company has a low maintenance cost of operations, they reinvest earnings in good business opportunities, and the company is able to adjust prices for inflation. Buffett does not hurry to invest in businesses. He will wait for market corrections or downturns to buy successful businesses at reasonable prices. Buffett is known for creating the term “economic moat” which means that he prefers to attain companies that have more competitive advantages over other businesses. As a result of these investment strategies, Buffett has become a very wealthy and successful man who has earned billions of dollars.
To learn more about smart business planning and accounting visit this bookkeeping Encinitas website.
If you need to complete you taxes, there is still time, and depending on your personal situation there may be free tax filing assistance available to you.
While accounting Encinitas professionals advice clients to plan ahead in order to ensure the highest rebate possible, at this stage, there is still time to take advantage of certain services available.
This year the deadline to file your taxes has been extended to April 17th, due to the fact that the traditional filing deadlines, April 15th is a Sunday and Monday April 16th is a holiday in Washington.
In fact, According to an article published today in the Your Money Section of the New York Times, the Internal Revenue Service’s Free File program offers software that enable taxpayers to electronically file their taxes free of costs. In order to quality of the free file software assistance program, you must have earned no more than $57,000. According to the I.R.S. must files earn below that amount.
If you have earned more than $57,000 in 2011 you do not qualify for the free filing online software, but you can however, use electronic tax filing forms. Experts, such as financial planning Vista CA, are always available to assist you in filing your taxes to ensure an accurate and convenient filing and that you can maximize your deductions.
Not everyone’s costs are sufficient to itemize their deductions, but your costs may still be significant enough that you could benefit from a different way of handling them. Bunching your deductions helps you get the most from your almost-deductible expenses and help you collect more.
How Do Itemized Deductions Work?
An itemized deduction is an expense that taxpayers can report on their tax preparation Encinitas forms to reduce the amount of money that they owe to the federal government (or increase the amount of the refund they are entitled to). The IRS maintains a list of items eligible for itemized deduction. Taxpayers simply subtract this amount from their adjusted gross income (AGI) to find their taxable income.
Many deductions are only allowed if they reach a minimum amount related to your AGI. Bunching your deductions offers a way around this limit.
Bunching Your Deductions
Bunching your deductions simply means fitting as many deductible expenses into one tax year as possible. Bunchers will need to keep track of their expenses throughout the year, and if they are falling short of a deduction by the end of the year they can prepay certain services or take care of medical expenses before the year is over.
For example, if your AGI is $50,000 then your medical expenses must total $3,750 before you can list it as a deduction. If your medical expenses fall a thousand dollars or so short, bunching may not be an option – but if you’re only a few hundred dollars short, you could consider paying for certain medical needs in advance. For example, you could purchase a year’s supply of contact lenses in advance or give the whole family flu shots to bring your expenses up.
For more San Diego tax preparation tips, visit DePauw Johnson online.