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Accessible and sustainable systems are vital if you want your business to be systematic. As an investor, an accounting system is essential for business. A sound accounting system that keeps track of all the expenses is not as difficult to make as it seems.

Before you start building an accounting system, you need first to figure out how you would want to record and book profits and expenses. To keep up with them, you need to create a simple method to document invoices and receipts. The best way to record them is to use expense tracking applications and software programs. They allow more streamlined bookkeeping by letting you scan receipts, put in the amount, catalog, and store the information in the cloud. You can also use mileage apps to calculate travel expenses while performing job-related tasks. Accounting software like Quickbooks can also prove to be of immense help. Irrespective of the software you decide to use, the categories of your transactions should include:  

  1. Acquisition costs
  2. Rehabilitation costs
  3. Repair costs
  4. Holding costs
  5. Selling price
  6. Selling costs Check out America's Best Bookkeepers

Separating rehabilitation and repair costs may help you later on if you decide to rent the house instead of selling it.

Kinds of supporting documents you should keep

You are not required to keep any specific records according to the law, with the exception of a few cases. Keep any receipts related to the purchase and sale of the property and all related HUD-1 statements. Also, keep the tax assessment card of the property and, if applicable, the insurance and appraisal documents. You should also have supporting documents for expenses related to the rehab costs. They should state the total amount of payments made and that they were related to the business. These include:

  • Canceled checks
  • Cash register tapes
  • Account statements
  • Credit card sales slips
  • Invoices
  • Trivial cash slips for minor cash payments Check out America's Best Bookkeepers

Informational Returns

You may be required to inform the IRS about any payments related to your business on informational returns. The payments on the information returns will then be compared with the reported value on the individual’s revenues by the IRS to make sure the income they reported is correct.  You are required to fill out the Form 1099-MISC (Miscellaneous Income) to report selected payments. According to Publication 583, the payments include:

  • Payments of $600 or more for services performed for your business by people not treated as your employees, such as subcontractors, attorneys, accountants or directors
  • Rent payments of $600 or more, other than rents paid to real estate agents
  • Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows
  • Royalty payments of $10 or more
  • Payments to certain crew members by operators of fishing boats

Form W-2, Wage, and Tax Statement is supposed to be filed to report expenses related to your employees, such as wages, Medicare taxes, tips, compensation, social security, and withheld income. Using a software program that has a payroll system integrated can make your bookkeeping much easier if you have W-2 employees. Check out America's Best Bookkeepers

Accrual vs. Cash Method

You need to decide between the cash and accrual method of bookkeeping for your business.

The cash method is used when you acknowledge the income after the check is collected, and expenses are acknowledged after making the payment. Whereas the accrual method recognizes expenses and income after they are incurred or earned, not after the payment of the expenses and receiving the check.

If you are wondering how this applies to investors in a fix and flip business, here’s the answer:

When you plan to, or already flip numerous properties, you will most likely be classified as someone who deals, by the IRS. This means that the properties you own will be categorized as inventory, which will require you to utilize the accrual method of bookkeeping by the IRS. That is why it is recommended for investors to start with the accrual method of accounting from the beginning. This means you do not have to go through the hassle of transitioning your system to the accrual method at a later time.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

In the simplest terms, a Virtual Private Network helps build an encrypted and secure connection. Virtual Private Networks or VPNs permit users to securely enter a private network system and share data through public network systems. The same as a firewall shields the data on a computer, VPNs guards it online. Even though a VPN is theoretically a Wide Area Network (WAN), the front end maintains the same appearance, security, and functionality just as it would be on the private grid system.

For this purpose, VPNs are hugely common with businesses and companies as a means of safeguarding sensitive information when linked to remote data centers. Such networks have become more popular with “torrenters” and among individual users. The reason for this is that VPNs use a mixture of encryption protocols and dedicated connections to create virtual person-to-person networks. Check out America's Best Bookkeepers

Even if someone did manage to tap off some transmitted data, they would not be able to get their hands on the encryption account. VPNs permit the individuals to trick others regarding their physical location. This is because the VPN provider replaces that individual’s actual IP address. Thus letting them evade content filters.

You may never have heard of VPN services; you should be familiar with its importance in accounting and bookkeeping as a valuable tool. A VPN allows you to protect and secure accounting and bookkeeping transmitted data, web sessions, personal information, and financial transactions online, no matter where they are.

Security experts recommend individuals not to use open Wi-Fi hot spots in public and shared locations. This is due to the risk factor of their connection being hacked. Internet service providers might seize and take over your privacy by retailing the data of your online behaviors to the advertisers. Having a VPN technology will eliminate these vulnerabilities to security.

A VPN will also help you to defend and guard against any such identity theft. A VPN will make it tougher for third parties to follow you, conceals your IP address, bypasses firewalls, and allowing the right of entry to all content without any restrictions.

Security protocols are being created as VPNs. Every one of them is providing different levels of features and security to protect your accounting data. The common ones are: Check out America's Best Bookkeepers

 

  1. IP security (IPSec):

IPSec is mostly used to protect Internet communications so that it can function in two modes. The first mode is called Transport mode, which only encodes the data packet message by itself. The second mode is called Tunneling mode. Tunneling mode encodes the whole data packet. This procedure is also used in tandem along with other practices to escalate their mutual level of security.

  1. Layer 2 Tunneling Protocol (L2TP)/IPsec:

The IPsec and L2TP protocols pool together their greatest individual characteristics to produce an extremely secure VPN user. Because L2TP is not able to encrypt, instead, it creates a tunnel. The IPSec protocol is in charge of the data integrity checks, channel security, and encryption to ensure that all the packets have reached, as well as ensuring that the channels have not been compromised.

 

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

Accounting for the non-accountant is often the mainstream issue for small business owners, especially the ones who are more into creativity. Crunching the numbers can appear to be an arduous task. However, keeping track of your cash flows and other important financial details can prove to be the difference between a successful business and one who may close its doors. More than half of the new businesses today close down after its first operational year, and an astounding 90% of them close down after the 5th year.

These statistics are the reason you should take accounting seriously starting day one. For someone like you who is not familiar with bookkeeping, this accounting for the non-accountant guide will help you to develop the right mindset for this job.

Building the right mindset

Having the right approach to whatever you do combine with the right tools is key to getting started. Before you even start the business, you must prepare yourself for handling the accounting tasks of the company. If you can’t afford to hire an accountant, you may seriously consider taking an accounting course and get yourself acquainted with it. Here is a checklist of things you must do at the start.

Know your business category

Tracking income tax expenses and sales comes later while accounting for the non-accountant, and before everything else, you should know the type of your registered company. Either its sole proprietorship, LLC, or a corporation and type will influence your taxes, pay structures, and methods of acquiring funds. Research before registering the business as it will have severe implications later on. Check out America's Best Bookkeepers


Separate your bank accounts

Regardless of how small your business may be, you need a separate bank account for it to run the transactions through. Many sole proprietorship businesses may prefer to use a personal checking account for business purposes. However, that is not recommended and is likely going to complicate the bookkeeping process. The basic lesson in accounting for the non-accountant puts a great emphasis on getting a separate business account.

Record all your income and expenses

Recording your every business expense and income may appear to be a difficult task. However, it is a must-do. Either you hire someone to do this or take it upon yourself, this job must be completed according to rules mentioned for recording income and expenses. Maintain a ledger of debit/credit entries, which indicates even the smallest of transactions.

Tracking and collecting payments

A business will always have a sales team at its disposal. However, every business does not invest in the recollection process. The basic rule of accounting for the non-accountant requires you to get accustomed to the market norms as soon as you can. Most of your dealings will be based on credit, which means there has to be a collection system in place for receiving and managing these payments.

In time invoicing and incorporating late fees can make the recollection process more efficient. Always ensure that all the parties sign the agreement in advance to a deal. You may have to rely on trust for specific clients, but you cannot trust everyone. The state may govern some of the laws for payments. Therefore, you must ensure to adhere to them at all times.

Managing the cash – accounting for non-accountant

Cash is the king, and every business needs plenty of it to keep operating and be profitable at the same time. However, managing the cash might not be as simple as it appears. You will have money flowing in, out, sideways, and places you never imagined. Keeping track of all your finances requires you to maintain a full-time accounting system. There are many different accounting software options available these days, which are quite useful in recording all your cash proceedings accurately.

A good rule of thumb is to keep 50% of all the earned cash to yourself, save 30% for taxes and other fees, and the remaining 20% for all your expenses. You may even have to cut the percentage from 50 even further if your business is a startup because it usually struggles to maintain stable cash flows.

Therefore, accounting for non-accountant is not something that cannot be done. With little planning and effort, you can overcome most of the bookkeeping challenges faced by your small business.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

Regardless of types, sizes, location, and industry, accounting fraud is a problem faced by companies all across the globe. A report published by the Association of Certified Fraud Examiners (ACFE) in 2014 revealed that, on average, a typical organization losses a significant 8% of its annual revenues and profits to accounting fraud. It includes unauthorized use of financial data, coupled with the smart usage of financial information to steal money from the company. However, detecting and preventing an accounting fraud requires you to take preventive measures before it kicks your business out of the competitive race. No one desires to face significant financial losses and stuck in severe liabilities due to employee fraud or theft.

When things get off the trail, you need to detect accounting fraud and come up with preventive measures to create a favorable ground yet again your business. Probably a path to glory! However, the biggest hurdle on your way to glory is your entrusted partner, possibly an accountant who knows the art of stealing from you due to the level of trust, h/she may have developed and established upon you. According to a study, the people whom we trust the most will more likely commit a crime or fraud or steal from us once they the opportunity. Check out America's Best Bookkeepers

Why Don’t Small Businesses Report Accounting Fraud?

Small business owners indeed feel reluctant to report cases of internal fraud. Most of them forgive the perpetrators on some social or moral grounds as the fraudster could be someone from your social circle or family. However, there is another reason why small business owners don’t report accounting fraud or theft; they don’t want to involve the police in resolving the matter. What they most commonly do is that they just fire the fraudster, and that’s it. Getting involved with the police means they would have to file a formal complaint against the stealing employee and pursue the case in the court that may cause them a great deal of stress and concern.

Common Types of Internal or Accounting Fraud

Corruption

It is one of the most common types of internal fraud that happens when employees use their influence or authority in business to violate their duties to bring about monetary gains to go in their favor or benefitting them with something useful. The examples of corruption include extortion, illegal gratitude, bribery, conflict of interest.

Billings Schemes or Asset Misappropriation

More than half of internal or accounting fraud cases result due to asset misappropriation or billing schemes. This typically involves fabricated invoicing either by using the name of a legitimate vendor or opening a fictitious company that has no physical existence. So, fraudsters enter made-up bills into the business books and treat them as normal entries for giving it a professional appeal. This way, it gets hard to identify and differentiate between a legit entry and a made-up one.

Non-Cash Theft

It is also one of the most common types of internal or accounting fraud, where inventory or other tangible assets are stolen from the company for personal use or to sell it to the outside party for profits. The Inventory or non-cash items that are taken from the company are either not recorded in the business books or written off as fictitious sales with no useful clues.

Other common internal or accounting fraud include payroll fraud, cash-on-hand manipulation, financial statement fraud, skimming, cash larceny, and cash-register theft, and more.

Tips on Prevention Accounting Fraud

First Thing First—Have an Anti-Theft Policy–Make sure you have an excellent anti-theft policy in place. If not then, you must immediately draft a new anti-theft code and include in your company’s manual for preventing future revenue losses.

Know Your Books— Most accounting fraud happens when you don’t monitor and review your books regularly. So, you need to make sure that you can read your business books well.

Conduct Regular Internal Audits—Make sure you know your accounting system and know how to operate bookkeeping or accounting software. If you lack awareness about operating your accounting software, then you can hire a professional accountant or auditor to do periodic reviews on your behalf and identify possible accounting fraud.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

Inventory can be the object of outsourcing. Third-party specialized companies have their technology and methodology for inventorying, specialized expensive software and equipment, as well as the professionally trained staff of specialists whose wages are lower than those of warehouse and office staff often involved in inventory.

Inventory is organized based on the written order of the head of the organization. For its conduct, a commission of at least three people is created. The commission may include specialists of the necessary profile representatives of the internal control of the enterprise. The inventory commission has to perform the following duties.

  • For the timeliness and observance of the order of inventory per the request of the head of the enterprise.
  • For completeness and accuracy of entering the inventory data on the actual balances of inventory items.
  • For the correctness of the instructions in the descriptions of the distinguishing features of commodity-material values ​​(type, grade, brand, size, article, etc.)
  • For the correctness and timeliness of registration of inventory results.

 

Purpose of inventory

Main aims of inventory involve:

  • Determination of the actual number of material and production resources used in the production process;

 

  • Comparison of actual data on the availability of property in kind with data from analytical and synthetic accounting (identification of surpluses and shortages);

 

  • Verification of the completeness and correctness of accounting for the assessment of property and liabilities. Including the possibility of valuing commodity and material resources, taking into account their market value and actual physical condition. It is said to be the primary purpose of the inventory.

Inventory procedure

The inventory procedure consists of several stages.

The first stage is preparatory. It includes the following activities:

  • preparation of an order to conduct an inventory;
  • formation of an inventory commission;
  • Determination of the timing and types of inventory property;
  • Receipt of receipts from financially responsible persons, etc.

 

The second stage is weighing, measuring, counting, identifying, and verifying the actual availability of property and liabilities, as well as drawing up inventory inventories. The third stage is the comparison of the data of inventories with accounting data: discrepancies are detected, identification lists are drawn up, and the causes of differences are determined. In addition to this, the process of bookkeeping can also be used in this process.

The final stage is the registration of inventory results. At this stage, the accounting data are brought into line with the results of the inventory, the persons guilty of false accounting of property are brought to administrative responsibility.

Scheduled Technical Inventory

The scheduled technical inventory process is the most commonly used. This process of inventory is carried out regularly with an interval of not less than five years after the previous inventory (primary or planned). The procedure includes the study of capital construction objects, identification of changes in their technical condition, and documentation of all received information following the provisions of the current legislation of the government.

 

Unscheduled Technical Inventory

The process should be carried out with actual changes in the parameters of capital construction objects. Also, we are talking about both the technical and qualitative aspects of their condition. Most often, this type of inventory is carried out with re-planning and other changes in the characteristics of objects. The same applies to situations in which real estate is subject to exchange or sale. The procedure and timing of the inventory, including cases in which this procedure must be carried out, are determined by the company independently. Also, the company itself determines the list of objects subject to such verification. At the same time, there are several cases when the inventory is mandatory.

  • When transferring the company’s property for rent, sale, redemption;
  • A change of financially responsible persons;
  • When revealing facts of damage or theft of property;
  • In the event of emergencies that could affect the state of the company’s assets;
  • When the firm is liquidated or reorganized;
  • In other cases provided by law.

From the above items, it was evident that the inventory, as an element of the method of accounting, in the situations described is mandatory not only under the law but also in terms of pure logic. After all, without conducting an audit of assets and liabilities in all the cases listed, it would be difficult to talk about the correctness of their reflection in the organization’s account in the future.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file, critical financial documents and back office tools in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooks™️ ProAdvisor’s providing bookkeeping, record storage, performance reporting and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay services. With flat rate service plans, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Accounting operations cover the financial aspects of running a successful business. Up to date, accounting information is the key to plan, control, and direct operations in a business. Accounting statements must be updated routinely and timely. Operational accounting is the study of day to day activities of a company and its impact on the finances of the company/business. Bookkeeping for day to day activities is recorded and interpreted for further decision making. Big business-oriented companies hire experts in operational accounting who keep a check of daily/routine activities of the company and how that impacts the financial statements of a company. The operational accountant studies the impact of activities on balance sheets and finds difficult areas and inefficiencies.

Operational accounting works on three aspects that plan the activities in a company/business, directing activities of employees, and controlling the activities in a company. These three aspects are collectively called “accounting operations.”

Activity planning in a company is done by comparing previous old trends in the company and their effects on financial statements and balance sheets. A complete analysis is required for planning activities in a company. If a previous activity influenced a balance sheet positively and posed no risk in a further period, such an event can be scheduled for the future too. Income and expenditures are analyzed by using historical records and impacts on the financial status of a company in the long run. A complete analysis requires dividing the report in steps and among departments, or it can be started as a new project in the company. The records of the company foresee future performance, and this is made by planning such activities.

Employees are observed through accounting operations in a business and how they help in reaching the financial goals of the company. Managers use data from the operational accountant to allocate resources where needed. Transfers are made and directed using accounting operations and meeting with an operational accountant. Employee hiring, initiating purchase orders for raw materials, production, and sales are directed through accounting operations.

All the above activities in a business are reviewed and analyzed. Activities are compared with the original plans to achieve fixed goals/targets. Accountants prepare reports that give an accurate picture of impacts on financial statements. Budget, expenses, increased customers and income are some of the indicators that are used in analyzing activities. This step is collectively called ‘controlling activities.’ If a business shows a considerable difference in a negative manner, then costs are controlled and reduced. In-time decisions and correct interpretation of accounting information is key to successful business operation.

Accounting operations have different techniques for analyzing activities and the interpretation of data. The manufacturing industry is concerned with production capacity, market availability of its products, and increasing customers. For this, two separate departments will work under the manufacturing industry to make a financial impact; manufacturing unit and business sales unit. These two units will be analyzed according to the tasks or goals achieved. The manufacturing group will be examined through accounting operations by the manufacturing performance, employees working hours, production rate, etc. The business sales unit will deal with the accounting operations related to net sales, activities done, and building more customers. The marketing department can conduct surveys regarding customer’s satisfaction with their products and customer satisfaction.

Accounting operations ensure that business activities are in line with the goals of the business. Without the accounting department and setting up accounting operations, a company cannot run successfully and smoothly. The income and expense statements, cash flow and balance sheets, and bookkeeping are made through accounting information. On the other hand, the planning, directing, and controlling activities in the business are done through accounting operations. Successful accounting operations make inventory management, managing resources, increasing performance, cost-cutting, or growing decisions.

Conclusion:

No accounting operations means there is no successfully running business. Accounting operations ensure the success and growth of a business.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file, critical financial documents and back office tools in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooks™️ ProAdvisor’s providing bookkeeping, record storage, performance reporting and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay services. With flat rate service plans, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

No matter how much trust your employees may have developed while working with you, the fact is that trusted employees steal more from organizations. According to a study, businesses lose about 9% of their annual revenue to employee theft or fraud. Of these, 85% are trusted employees. Furthermore, severe fraud cases led to 33% of organizations around the globe to file for bankruptcy. These whopping figures reveal that employee theft and fraud are costly to businesses, which may trigger lawsuits and legal proceedings against the employees for the breach of agreement and trust.

A Trusted and Reliable Bookkeeper Is the Need of the Business

People who play with numbers have the technical knowledge, skills, and ability to manipulate financial records and business books with ease. Employee theft detection is quite an intimidating task, especially when your bookkeeper or accountant is the main culprit. As a bookkeeper or an accountant knows the actual financial status of the company, the business can always be at risk of losing sensitive financial data that can lead to a complete disaster. Bookkeeping records, maintained by trusted bookkeepers, can help you with better financial decision-making. Therefore, to prevent fraud of any scale, you must always stay alert and vigilant to warning signs of changing employee behavior.

Change in Employee Habits and Behavior

Employees are the real asset to any company. They can change the entire fate of a business. By remaining honest with their jobs and the company, evolving employee attitude and behavior and the desire to have more salaries and bonuses—if denied, lead to serious crimes. However, it doesn’t mean every employee would be involved in malicious, unlawful, and unethical activities. Only a tiny percentage of employees do such corrupt things.

You need to create a mechanism by which you could know who is stealing from the firm and how to prevent fraud. A sudden change in habits tells almost everything about an employee, like working late hours, coming to the office on weekends, and anything other than average. Hence, professionally, these things must be taken care of by establishing and developing close ties with your employees, especially your bookkeeper. You must keep a regular check on your financial books to have more control over your company.

Other Warning Signs 

Sudden or Unexpected Debts

Personal financial equation plays a pivotal role in defining the moral of an accountant. Unexpected debts can arise at any moment, perhaps due to divorce, gambling, or drinking, which may be the reason for their deceitful behavior. Bookkeeper or an accountant’s financial strains and anxieties may be a potential risk to your business.

Spending More Than Earning

If your accountant is spending more than he’s earning from you, that could be a warning for your organization. It is perhaps one of the most common ways to know and investigate your accountant’s fraudulent behavior. Excessive spending on cars, homes, shopping, and vacation tours by your accountant can raise red flags. Therefore, you must keep a closer watch on your business books and employees to prevent fraud and theft.

What to do to prevent these Fraudulent Activities?

As your business continues to grow, the chances of fraud increases. There is a high possibility that your accountant may try to steal from you and take advantage of the situation. It doesn’t matter whether your business is of small-scale or large—maintaining in-house or back-office control is fundamentally important for businesses. Employee fraud and theft affect not only the finances and image of the company but also the morale. Therefore, if an organization wants to know whether its bookkeeper is stealing, and hopes to prevent fraud, then it

  • Must create a mechanism to maintain internal control within the organization for fraud prevention. All business transactions must be accurately documented for future references to prevent fraud and theft.
  • Should not rely on one single accountant to manage all the financial affairs of the business.
  • Should also integrate some accounting system to process essential procedures of accounting and preventing frauds.
  • May also outsource their financial operations to third-party service providers to prevent fraud.
Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file, critical financial documents and back office tools in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooks™️ ProAdvisor’s providing bookkeeping, record storage, performance reporting and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay services. With flat rate service plans, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

For many entrepreneurs, their own accounting is not one of the most popular tasks. But if you follow certain rules, everything is very simple. Most important is a complete and orderly filing.

Our experience has shown that this can make a tax audit a lot better and the examiner has fewer or even no complaints.

If you have a tax accountant, an orderly bookkeeping will also be very important. You can save money by sorting and handing over the accounting records to the accountant. 
However, if he first has to sort the documents received and request further documents, this can be a lot more expensive.

We have listed some tips for you on how to save money and look forward to the tax audit without any concerns.

Create a folder with six tabs.

If you are filing the documents digitally in programs such as “Tax Office Online or Dropbox “, you should also create six folders.

The tabs/subdivisions/folders are labeled with the terms:

  • Cash register 
  • Bank 
  • Credit card statements 
  • Outgoing invoices 
  • Incoming invoices • Accounting evaluations / sales tax advance filing

For

  • Contracts and important documents

You should set up another separate folder when you use the output bin/digital bin.

It is also important that you pass on a copy of the contract to your accountant immediately after concluding a contract, that he has the required information and that this does not lead to any queries and additional expenses.

There are various things to note about the individual folders. There is a proven approach; we will give you the instructions.

  • Cash register
    In this folder / under this tab you can deposit all invoices and receipts of the cash receipts and cash expenses. 
    The sorting takes place after the document date. 
    The cash register should never fall into the minus; otherwise, your cash register is not properly led. 
    Because if there is no money, nothing can be bought or spent.
  • Bank
    In this folder / under this tab; you can arrange the account statements. 
    The sorting takes place by date ascending or descending. 
    Please note: there should be no extracts.
  • Credit Card billing
    In this folder / under this tab you deposit the credit card statements and the corresponding documents.
    Outgoing invoices in this folder / under this tab, you insert all the invoices that you have submitted to your customers. 
    Please note: Again, sorting should be done by date. 
    Important: The invoice number may only be issued once and must be continuous.
    Incoming Invoices In this folder / under this tab, you will deposit all invoices that you receive from your suppliers or service providers. 
    If you have not received an invoice from a supplier / service provider, please ask for it. 
    You should not forget about online bills and invoices paid by PayPal, as well as bills that you should have paid with your debit card. 
    Our experience has shown that such bills are often overlooked. 
    Also, note the sorting by date.

If you have not received an invoice from a supplier / service provider, please ask for it. 
Important: The amount paid cannot be charged as an operating expense without an invoice.

  • Accounting
    evaluations / sales tax advance filing in this folder / under this tab you insert the business evaluations, totals and balance sheets and the sales tax filing declarations (evaluations by the tax consultant). 
    On the evaluations, you can see if you have made a profit or a loss, and how much revenue and expenses have been. 
    The advance VAT return shows how much money you have to pay monthly / quarterly to the tax office.
  • Contracts and important documents
    In this folder / under this register you create contracts (e.g. loan or lease agreement) or other important documents that are important for the bookkeeping, the annual financial statements and the tax return. 
    Keeping things organized will save you a lot of search. 
    Often you need such documents at short notice.

Further possibility
If you have a bookkeeper with a smaller scope and determine the profit with the income surplus bill, there is also another way to arrange the filing of the documents.

The folders/registers outgoing invoices, incoming invoices, bank and credit card billing are stored together.

The outgoing and incoming invoices should be added to the corresponding account statements. When paying by credit card, proceed accordingly with the supporting documents.

For smaller companies that want to do their own bookkeeping, the bookkeeping software is recommended.

Special feature: The input tax for incoming invoices is always deductible in the month in which the invoice was issued (invoice date).

Example: You have received an invoice for 30.03.2018. The bill was paid but only on 06.04.2018. You can therefore claim the input tax in June or in the first quarter of 2018. 
It is best to deposit these documents together with a note in a separate register or directly after the bank statements.

Conclusion
If you follow these instructions and always make sure that the documents are complete and no bills are missing, you save yourself unnecessary time and trouble. You will notice on the accountant’s accounts that your proper bookkeeping has paid off. Examinations by the tax office can also be much smoother and more relaxed.

In principle, this approach will have a positive effect on the financial situation of your company.


Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file, critical financial documents and back office tools in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooks™️ ProAdvisor’s providing bookkeeping, record storage, performance reporting and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay services. With flat rate service plans, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.
Internal Revenue Service sign with a traffic signal in the foreground indicating a red light.

What is an accounting scam?

An accounting scam is a scam made by someone who pretends to be an “accounting expert” by taking advantage of the lack of knowledge of the taxpayer. In this way he manages to make collections and generate amounts that are not really what he should be paying. Likewise, omissions or tax failures can also be incurred and this could be very harmful for any of us.

 

How to avoid it?

The advice given below will help you avoid being a victim of this situation and will give you the peace of mind that your accounting is done correctly.

 

  1. Search for a trusted person

Each company has different requirements and when it comes to hiring an accountant, he must give you the confidence of knowing that he will handle all your numbers correctly. Ask concise questions and ask for references that can attest to your good work. If you have an SME, look for an independent accountant through your acquaintances or relatives, and also ask for references when interviewing. Remember to make a contract with this person where both agree what their responsibilities will be and where everything related to their employment relationship is established.

 

  1. Save your acknowledgements

There are many accountants who do not deliver the acknowledgments to their customers and protect them for them to keep a better control of their accounting, do not allow it. Ask your accountant to give you the acknowledgment of receipt of your statements and if you need it, take a photocopy for your records. Thanks to the digitalization of the SAT files, it is now possible to make online inquiries about your tax situation, if you have any doubts, enter this link   to verify the statements that have been made. Compare the SAT data with the information provided by your accountant and make sure everything corresponds correctly.

 

  1. Never deliver your FAITHFUL

Your Advanced Electronic Signature (FAITHFUL) is just that, your signature. Many accountants ask their clients for their FAITHFUL so that they can carry out various procedures on their behalf, but in doing so the taxpayers are exposed to the misuse of it. For this reason, we recommend not giving your FAITH to anyone and when necessary its use you meet with your accountant to perform the necessary procedures.

 

  1. Safeguard your electronic invoices issued and received

By law the SAT asks taxpayers to keep their invoices issued and received for a minimum of 5 years. During this time, it is YOUR responsibility to take care of this, since if you depend on your accountant to do so, you could risk mistakes or fraud.

 

  1. Pay attention to the messages you receive from the IRS

The IRS periodically informs you about your tax situation through your email, and also notifies you when a statement has been made or the lack thereof. This is a very good way to monitor the activity of your accountant and to check the amounts and procedures that are performed. You can forward these emails to your accountant if required, but always remember to check them carefully to avoid any problems.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file, critical financial documents and back office tools in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooks™️ ProAdvisor’s providing bookkeeping, record storage, performance reporting and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay services. With flat rate service plans, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

One of the biggest challenges today is to reduce the environmental impact of companies and consumers. It is believed that by 2025, air pollution could be to blame for more than 6 million premature deaths a year. If the pace of manufacturing and current consumption continues, we could be putting future generations at risk.

As entrepreneurs, we have a responsibility to reduce our environmental impact and create sustainable business practices. Below you will find three industries that could reduce environmental pollution significantly.

 

FOOD

According to the United Nations, approximately 1.3 billion tons of food annually are wasted. Sustainable solutions that reduce the intermediaries between producer and consumer have had a lot of boom in recent years. Companies have focused on better predicting demand so that there is no more than what consumers require.

 

CLOTHING

Before being donated to charity, most consumer clothing usually ends up in garbage dumps. Companies contribute to this by encouraging consumers in these unsustainable practices. In many cases , more than what is consumed is produced, so new clothes end up in the garbage. Instead of manufacturing new clothes, companies should look for recycling and re-circulation options for products that are in good condition.

 

TECHNOLOGY

Our desire to obtain faster, smarter and more capable devices could be considered as productive from an ecological visa point. We look for speeds close to that of light in connectivity, phones are increasingly larger and other devices make our lives easier while we use up non-renewable resources.

Sadly, only 25% of the total technological products that are produced are recycled, so that new startups could start by looking for recycling and reuse options, as well as materials created from sustainable resources.

The more entrepreneurs take responsibility for caring for the environment by giving consumers more choices about what they buy, future generations will have more opportunity to enjoy a healthier world.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file, critical financial documents and back office tools in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooks™️ ProAdvisor’s providing bookkeeping, record storage, performance reporting and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay services. With flat rate service plans, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.