Need an Efficiency Boost or Waste Reduced? Cash Accounting Can Help.

Need an Efficiency Boost or Waste Reduced? Cash Accounting Can Help.

Let’s say you just created a brand new, brilliant idea/product for your business to sell.

Congratulations! And as you proudly look at this new shiny product that you’re sure is going to fly off the shelf into consumer hands—a thought crosses your mind.

“How much should I charge for this thing?”

Sure, you could look at what other Jacksonville or St. Augustine-based business charge for a similar product and charge the same. But, does this comparison pricing method capture the full picture?

Does the price include your manufacturing, staffing, or other overhead costs?

Will you, over time, lose money at this price?

That’s where cost accounting can come to your rescue.

What is Cost Accounting?

Cost accounting is literally the accounting of all costs incurred in carrying out your business activities.

By examining the cost structure of your activities, this management accounting process can help you gain an understanding your business’ relationship with money. How you earn it. How you lose it.

Quite simply, this accounting process collects, measures, analyzes, interprets and reports on the real cost of product manufacturing or providing a service.

Valuable Benefits of Cost Accounting

Defining Costs of Business: Cash accounting looks at the business costs, including direct materials, direct labor, overhead, etc. Using this information, a standard costing system can be implemented in your business. This allows the business Owner or Manager to determine price on products and services plus knowledgeably adjust pricing when necessary.

Reduce Expenses: Business Owners and Managers can use information gathered through cost accounting to review the operation of their business. Gaining an understanding of how much money it costs to run their business, Owners can make adjustments to materials and resources to reduce costs.

Improved Cash Flow: Owners and Managers will be able to thoroughly comb through their finances—analyzing necessary and unnecessary cash expenditures.

Knowledgeable Business Decisions: Data from cash accounting allows Owners and Managers to make quantitative business decisions & very helpful when a new business opportunities appear. Owners and Managers can make a decision to pursue the opportunity based on the informed impact it would have on their business.

What Types of Businesses Would Benefit from Cash Accounting?

Cash accounting would benefit most businesses that directly assign costs to items or activities.

Manufacturing: Businesses that produce consumer products require accurate production costs: direct materials, direct labor and overhead. Cash accounting allows manufacturing businesses to plan cost allocation to ensure their expenditures can be recouped by sales of their products.

Retail: Cost accounting allows retail store Owners and Managers to forecast inventory needs, review profit margins and make business decisions based on analyzed financial data.

Service (Transportation, Professional, Restaurant, Maintenance, etc.): Cost accounting helps service-based businesses determine business function costs. This provides Owners and Managers data on how much labor is used and amount of materials used to perform their service. This information can be invaluable to maximize your profit for each customer interaction.

Overall, most businesses could benefit from some level of cash accounting. If you need guidance on cash accounting or any other accounting needs, give us a call: (904) 429-4588.

It Pays to Shop Around for Business Services

It Pays to Shop Around for Business Services

It Could Pay to Shop Around for Business Services

Complacency could be robbing you of profits.

When it comes to purchasing business services like insurance, IT or pest control, most business owners are like most consumers—creatures of habit.

Once an owner finds a company to service their needs they generally stay with them, year after year. That’s understandable. After all, it takes time to research services and you’ve got a business to run.

However, shopping for services once a year or every two years could bring a financial reward for your business as in better rates.

But it’s not always about better rates. Shopping around could bring improved services that align with your current business needs.

Those benefits are not just attained by switching service companies. By educating yourself on available rates and services, you might be able to negotiate a better deal with your current provider.

Who knows, they might have been complacent with your account as well.

Below are some business services that shopping around and making comparisons could prove beneficial to your business.

Insurance Companies

As a business, you need insurance. Of course, type of insurance needed for your business varies for general liability, health and worker’s compensation.

Since insurance rates and coverage are based on many factors, it’s important to make sure an insurance company understands your business industry and current needs.

Companies offering industry-specialized protection might offer better rates and coverage for your specific needs plus more apt to stay current on your industry’s trends and requirements.

For example, a florist with a single employee is not going to have the same needs as a general contractor with a dozen. Or, if your business heavily relies on computers, cyber insurance coverage could be beneficial if your systems come under a cyberattack.

When shopping for insurance coverage enlisting the services of an independent insurance broker could be beneficial. They could help you:

  • Assess your risks
  • Determine if you’re currently over or under insured
  • Make sure your insurance company coverage can expand as you grow your business

When selecting an insurance broker, it’s important they understand the type of business you operate and the risks associated with your industry.

IT Companies

As a business grows, so does the technology used to support it. While many small businesses or home-based business might rely on the tech support of friends, eventually a pros touch might be what your business needs.

A general rule of thumb is if you’re a small business with a minimum of five computers, an on-call IT specialist could help prevent computer problems that could take your company down for an unprofitable day—or longer.

When shopping for services of a professional IT service, here are some guidelines:

They Understand Your Operation and Business Computer Needs

Make sure they understand your operation and business computer goals – not just the technology you’re using. That includes:

  • How you use your email service
  • Your data security and backup needs
  • Industry regulations regarding technology and privacy
  • Tablet and smart phone usage
  • Not just your immediate needs, but three and five year business plans

They Provide Choices

Look for a professional who offers a range of services and pricing levels. These individuals probably have done their research and understand that one price does not fit all needs.

They’re Credentialed

Most IT professionals will display their credentials proudly. Look for Microsoft Certifications and Apple Certifications based on the computers you use.

Pest Control

It’s easy to deal with the occasional cockroach in DIY Fashion (anyone got a shoe?).

However, an insect infestation could be a major business interruption. It could also impact your valuable reputation—especially important for say the restaurant business.

And that could be where hiring a pest control professional comes in handy.

When shopping for a pest control professional look at the following:

  • Longevity and experience
  • References (especially those from your industry)
  • Ongoing training of field personnel
  • Use of chemicals applicable to your industry
  • Licensing and liability insurance
  • Prevention and cleanup procedures

Get a Few Estimates

Regardless of services, always make an effort to get a few estimates. That way you can compare services offered and prices before making a decision.

If you need any guidance on selecting a service based on your budget and needs, give us a call, 904-429-4588, today and we’ll be happy to help.

6 Common Accounting Mistakes Businesses Make and How to Prevent them

6 Common Accounting Mistakes Businesses Make and How to Prevent them

 

 

 

 

 

 

 

 

 

 

 

 

 

Stacks of financial documents sitting on your desk can be an intimidating sight.
Of course it’s intimidating. Not only is it a time-consuming task to sift through the income, expenses and taxes, but a mistake could be costly.
As a small business, diligent accounting is a necessary activity that keeps you and your business rolling along with the clearest picture of your success…or areas that need to be tightened up.
As important as accounting is to a business, you’d be amazed at the common mistakes businesses make in their finances.

1. Not Seeking Professional Help
You’re an expert in your business and you probably are the go-to professional providing a valuable service to your clients.
The same could be said about a professional Accountant. They can leverage their education and expertise to your financials.
• Make sure you don’t miss filing deadlines
• Find areas that are costing you money in the short and long term
• Make sure your business is set up properly
• Keep you organized, ensuring that your finances are accounted for all year long

2. Not Using the Right Accounting Software
There are a wide range of accounting software choices out there, and they all sound impressive.
Some are inexpensive. Some are very expensive. However, when assessing which software is right for you, prices shouldn’t be the deciding factor.
Other considerations: Do you have retail inventory costs? Medical insurance billing? Staff size (and projected growth)?
The wrong choice could force you to a costly and time-consuming accounting software upgrade in a year or two as your needs change due to growth or other business issues.
That’s why you should first conduct an accounting needs analysis before making a software choice.
That’s where a professional can help. They can analyze your managerial, financial and future needs. Good planning in the beginning can make a world of difference in cost, time and frustration.

3. Lack of Accounting Knowledge
Accounting software is only as good as the data you feed it and understanding the reports it generates.
Understanding the basic principles of accounting will help you set up a proper workflow for your finances.
Again, a professional can step in, give you the basic training you need to manage your accounting software and be there when you run into more complicated financial issues.

4. Mixing Business and Personal Finances
Mixing these two can be a huge issue in managing your cash flow and profits. Not to mention tax time.
Comingling funds (especially if you’re a corporation) can raise flags, opening you up to an audit that looks at both your personal and business finances and cost you even more money.
The simplest thing to do is set up a business bank account.
Then run all of your business income and expenses through that account. That way, you’ll have a clearer picture of your actual business finances and a more likely pain-free tax season.

5. Not Keeping Your Records
Speaking of audits, how long should you keep your financial documents and receipts—just in case?
Well, the answer can vary depending on business type, income sources, etc. However, a good rule of thumb is to store your records for seven years.

6. Making Financial Decisions without the Right Data
Buying that new equipment or hiring a staff member might be exciting, but what impact will it have on your business? Is it a sound decision?
After using your accounting software properly, seeking the guidance of a professional Accountant and gaining a full understanding of your finances, you’ll have the data needed to make the right decisions for your business.

What’s great is, you’ll make financial decisions with confidence and sidestep the second guessing that can keep you awake at night.
Yes, accounting is essential to your business. Consider it an investment to your success. If you have any questions, give us a call, 904-429-4588. We’ll help point you in the right direction.

Cash vs. Accrual Accounting

Cash vs. Accrual Accounting

Accounting is a vital part to any business, no matter how big or small it is. When deciding what type of accounting to use, you must see what works best for you and your company. Accrual base accounting and cash base accounting are two very different types of accounting, both work but you just have to decide which is better for your company.

Accrual base accounting is when revenues are reported when they are earned, which tends to occur before the cash or payment is received from the customer. The same goes for expenses, they are reported in the period for which they occurred which can be a different time than when the actual payment is made.

Cash based accounting is when revenues are reported in the period in which the cash is received from customers. Again, the same goes for expense, they are reported when the cash is paid instead of the time the expense occurred.

Both accrual and cash based accounting has its benefits and its drawbacks. Cash based accounting is great for many small businesses because it’s an easy type of accounting and does a good job of tracking cash flow. However, as businesses grow many tend to switch to accrual accounting in order to better track revenues and expenses. Accrual based accounting is far better at tracking revenues and expenses but does a poor job of tracking cash flow.

Accrual vs. cash

Accounting is important and just because you start with one type of accounting does not mean you have to stick with it. You have to find what works best for your company, do you have a stronger need to track cash flow or track revenue and expenses?

Still not sure which is right for your business, have this discussion with your CPA. We are here to help guide you all year long not just during tax season.

Accounting for Sustainability

Accounting for Sustainability

Malcolm X once said “The future belongs to those who prepare for it today.” We must plan and prepare for the future that we want, not only for ourselves but for future generations that will follow in our footsteps.

Businesses are a major part of what makes our great nation thrive. To run those businesses one must have money to open and maintain the business. Without money there is no business and without businesses our great nation faces a potential downward spiral. Therefore to help ensure the success and the continued productivity within a business is an accounting department. Through accounting we are able to help ensure that businesses are here for the long haul. No one understood this more than HRH The Prince of Wales, who created a project titled Accounting for Sustainability. Through this project they aim to demonstrate and encourage change that results in sustainable business practices, develop practical tools to assist this change, and facilitate the environment to help further the change toward sustainable business practices. The mission statement for this project is “To catalyse action by the finance, accounting and investor community to support a fundamental shift towards resilient business models and a sustainable economy.”

Too often do we think of the short-term gains and losses of one’s business, instead of thinking of the future of the business and how it might affect our nation’s economic success. Through this project there are many opportunities that will help a company follow the path to ensuring their company’s a sustainable one. The Accounting for Sustainability offers a A4S CFO Leadership Network to ignite the change within the CFO and business community and the A4S Accounting Bodies Network which provides over two million accountants to help incorporate sustainability into accounting qualifications, standards and approaches.

The person who builds a strong foundation for their company shall maintain that sustainability that all business owners hope for.

To learn more about The Prince’s Accounting for Sustainability click here.

QuickBooks Pro-Advisor

QuickBooks Pro-Advisor

We were happy to announce a couple weeks back that we are certified in QuickBooks Online. Once Certified by QuickBooks they call us Pro-Advisors. QuickBooks is the leading accounting software and as Accountants & CPAs we are working in QuickBooks constantly. So, we know the software & have the accounting knowledge to use this tool for your best benefit. Now as official Pro-Advisors we can better serve you by:

  1. Being trained by QuickBooks to better answer questions & help resolve issues.
  2. Having support help from QuickBooks.
  3. Offering discounts on QuickBooks online products.
  4. Offer QuickBooks classes so you too can have a better understanding of QuickBooksQB Pro

 

We can now be found on QuickBooks “Find-a-ProAdvisor” website, http://proadvisor.intuit.com/quickbooks-pro/bridget-van-landingham. If you are looking for someone to help you with your QuickBooks, from taking it over fully for you to training you to do what you need to do, please contact us or another Pro-Advisor. We are here to help you keep an eye on the fiscal health of your business.