Ten Best Practices for Accounts Payable

Healthy working capital flow is of paramount importance to all businesses. This is especially true for small to medium sized businesses. Accounts payable, when properly managed, can be an effective strategy to free up and protect working capital. Here are ten best practices for accounts payable management:

1. Develop a written accounts payable policy and procedures document. A written policy: (a) facilitates employee training, (b) helps to establish a consistent response to routine situations and, (c) may create a framework for appropriate delegation of responsibilities.

2. Identify incompatible duties and implement appropriate segregation of these duties. For example, employees who authorize invoices for payment should not have the ability to edit vendor master files, so too, employees who can edit vendor master files should not be allowed to process vendor invoices. Where possible appoint someone, not otherwise involved in the accounts payable process, to monitor changes to vendor master files.

3. Where possible make purchases from pre-approved vendors only. This could help negotiate more favorable terms.

4. When new vendors are added to the system, be sure to send a new vendor welcome letter. The letter should detail where invoices must be sent and any information necessary to process vendor invoices such as the completed w-9 forms, which are needed for the annual preparation of form 1099. There are hefty fines for non-compliance with 1099 reporting.

5. Have all vendor invoices sent to the accounts payable department, where they should be logged, before they are sent for approvals. This procedure reduces the incidence of lost and missing invoices.

6. Do not enter vendor invoices as a batch. Instead, enter each invoice separately as this facilitates the resolution of variances and provide a better audit trail.

7. Establish a specific procedures for processing vendor invoices, including the assignment of invoice numbers, (where vendor invoices are unnumbered or in the case of internal documents such as employee expense reimbursements) and entering invoice numbers.

8. The invoice amount should be entered as billed. Debit memos and adjustments should be posted as separate transactions as this facilitates account reconciliation and resolution of variances.

9. Define the default general distribution codes, where possible, as a part of new vendor set up procedures. Code all vendor invoices with applicable general ledger codes before posting. Both of these procedures reduce the possibility of errors.

10. Pay vendor invoices timely and take advantage of any discounts available. Discounts can add up to significant cash savings, and consistently paying invoices timely can help avoid the outlay of cash for late fees and interest and, set the basis for the negotiation of better vendor terms.

Debra ‘CAS’ Findlay, CPA CGMA the Principal of My CPAS Online. Ms. Findlay has been in the accounting profession for more than 25 years.
My CPAS Online provides services designed to allow small business owners to focus on the gorwth and operation of their businesses. Our services include, bookkeeping, bill payment and other business management services, payroll and payroll taxes, financial statements preparation and income tax preparation.
My CPAS Online serves numerous industries including food and beverage, not-for profits, retail and distribution, start-ups and professional services.

How Xero Accounting Software Could Benefit Your Business

Before we get into the many ways that Xero could benefit your business, you’ll need to consider where or not it is the right platform for you. There is a range of other options out there, and the right one will depend on a variety of factors. You don’t have to make this decision alone; your accountant can help you weigh up your options.

It’s best to discuss your requirements with your software provider before signing up to anything, but rest assured that this technology has proven compatible with a whole range of industries. It is also easy to use in collaboration with your existing accountant because it is a cloud-based programme, meaning it can be accessed in real time.

There are also various add-ons available including Payroll and Stock Control that can further help you manage your business. This means that the provider has allowed developers from other companies to integrate their products in with Xero. In Layman’s terms, this means that everything works in sync, saving you time and effort.

Once you have made the decision to bring Xero into your business, you will probably need help with the conversion process from your current accounting system. The provider should take care of this, but it’s best to make sure you won’t be left in the dark once you’ve made the buy, so be sure there is help on hand should you need it.

Once installed, the software can help your business in many ways. First off, it will automatically import all of your transactions from your bank account, credit card and PayPal into one place – negating the need for manual data entry. This will ultimately save your company vast amounts of time and money.

Xero will also enable you to send smart, simple invoices with ease. The layout of these invoices is entirely customisable, too, so you can easily join your company logo or design. Not only will it fire off invoices via e-mail but it will even tell you once they’ve been opened.

Not only will the programme save you time on your in voicing, it will also help you control all of your bills in one place. This allows you to see a clear picture of what you owe and when it’s due. This way, payments can be planned ahead of time to help you stay in control of your cash flow.

Plus, adding bills could not be simpler. You can even set up recurring bills and make multiple batch payments, meaning that once again there will be less to enter manually.
You will also be able to receive one-click financial reports displaying all of your real-time business data. These reports are interactive and will automatically calculate your return.

There are over 40 reports available, including profit and loss, balance sheets and many others to help you prepare your GST. This software takes all the hard work out of the process, making your data easy to access, whilst keeping it safe by implementing advanced security measures.

The main attraction of Xero is that is allows you to access your accounts from anywhere, at any time of day. All you will need to access all of your financial information is a computer, smartphone or tablet.

Another plus is that there is nothing to install or update, so you won’t need to spend time managing the software – it will simply manage everything for you. In addition, Xero automatically backs up and saves everything, so you’ll never need to worry about losing important data again.

Balanced Business Accounting is made up of a team of professional tax accountants based in Brisbane, Australia. The company offers innovative accounting solutions, as well as expert advice and assistance. Their unique, client-centred approach and years of both technical and commercial experience sets them apart from other leading accountancy firms in the area. Headed up by company president and registered chartered acco

Globalization in Accounting

Globalization plays a huge role in the world of accounting. It is a very significant topic because as globalization becomes more and more important, it changes which accounting principles one would use when certain situations arise. There are two sets of accounting principles: the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). The Generally Accepted Accounting Principles are mainly used within businesses in the United States, while the International Financial Reporting Standards are used in most international companies. The fact that there are two sets of standards or principles that can be used in the accounting world makes certain scenarios difficult. For example, when investors are choosing a company to invest in, they need to use their financial data to inform themselves and make specific decisions. However, this is sometimes made difficult because if one company uses IFRS and another uses GAAP, it’s challenging to form a proper comparison across the two principles. This is continuously becoming more and more of a relevant issue as companies continue to expand their markets globally. With no sight of a universal system being put into place soon, accountants are forced to expand their knowledge of both forms of accounting principles.

A few decades ago, there were very few international accounting courses offered at universities. Now, there are enough for it to be considered its own major. In today’s world, where all world economies directly affect each other, U.S. accountants must use international practices along with practices in the United States to properly conduct business. Take for example a situation placed in an article written by Paul E. Holt who is an accounting professor at Texas A&M. In Dr. Holt’s example, he states:

What if you buy something that requires payment in a foreign currency or sell something for which you will receive foreign currency? You are immediately challenged with a number of new problems that you don’t have to deal with in domestic accounting. For example, what if the exchange rate between the U.S. dollar and the foreign currency changes between the date you record an accounts payable and the date you actually make payment in foreign currency? There would be either a gain or loss from the exchange rate fluctuation. (Holt)

This is just an example of the many situations that could arise within the world of international accounting. There are many other instances in the areas of tax, as well as audit, which has drastic effect directly related to the financial status of a company. These new problems and situations are forcing accountants to increase their knowledge and form new understandings of international business. One positive outcome of this aspect is the fact that it also creates more jobs within the accounting field such as international accountants. The area of international accounting offers many opportunities for those who wish to expand their knowledge, skills and abilities to fit the world of international business. Though it may require the learning of new languages or constant travel, one can find endless opportunities in the accounting world for international accountants who are highly sought after.

Globalization has massive effects upon the accounting world. New and emerging technologies are making it easier for all businesses to expand internationally. As businesses are expanding internationally, accountants must prepare and adjust for international accounting. Without a universal accounting standard to follow, the world of accounting is drastically affected. Every single part of accounting is affected as businesses are moved internationally. On top of that, the knowledge that accountants are expected to have increases every single day due to the expansion of international business. Therefore, if globalization and businesses continue to expand, the world of accounting will continue to grow and evolve.

The Influence of Globalization on Tax Revenue

The Evolution of Business

Gone are the days when businesses were local, and they derived their material resources from relatively close locales, with the labor pool consisted of the nearby residents. Limited mass transportation and slower communication inhibited a fast-paced business environment in those days.

However, over the last century technology increased the pace of business to the point where today’s companies secure resources from halfway across the globe in a matter of days, and the once inaccessible human resource now performs duties virtually from the other side of the world. Out of this break-neck speed of business came the birth of globalized commerce, a phenomenon where more transactions occur on a larger, worldwide scale thanks to the help of technology and innovation connecting businesses all over the world.

The Tax Effect

Because certain locations allow for lower costs of doing business, corporations realize more net revenue, which should translate into increased taxable income. However, increased revenue does not necessarily translate into taxable revenue if the organization is maximizing profit by reducing net income tax expense by conducting business where the tax rate is the lowest. When this happens an economic phenomenon called “race to the bottom” occurs (Dreher). Governments reduce tax rates to encourage corporations to locate to their country to do business, thus increasing their economy.

Tax loopholes contribute to a decrease in corporate income tax revenue (McIntyre). Theoretically, these companies should be taxed in both their base country and the target country, which is called double taxation (Lentz). However, double taxation agreements limit double taxation by providing an arrangement where countries do not subject foreign income to double taxation in more than one national taxing jurisdiction. Global taxing agencies enact these agreements to entice companies to do business within their borders to increase their local economy and boost their markets.

There are also other ways to get around taxation. Often a country will enact tax holidays (Lentz) as an incentive for companies to do business within their borders. Tax holidays allow respites from paying taxes during certain times of the year. A “tax haven” (Lentz) is another simpler method of tax manipulation allowing companies to house their revenue in locations where taxes are extremely low and sometimes even non-existent. “It is estimated that the top 500 U.S. companies would owe an estimated $620 billion in U.S. taxes were it not for the more than $2.1 trillion in offshore cash that most of the firms hold in foreign tax havens” (McIntyre).

Countries are businesses as much as the corporations that operate within them. Globalization provides companies the mobility to transact business to different geographic areas with ease. Therefore, countries compete for and attract foreign business by making it cost-effective for corporations to transact business in their country through decreased taxation. When taxable organizations transact their business in locations other than their homeland, they are redirecting tax money that, under non-globalized operations, would be infused directly into the base country’s economy. A result of this redirection is that the homeland creates revenues for its government by replacing the burden of lost tax-generated funding on the individual citizens.

Globalization affects individual taxpayers by providing a means for other countries to seduce tax-paying corporations to conduct business with them by reducing their tax expense. Citizens are burdened by increased income taxation to make up the difference of lost corporate tax revenue needed to maintain the well-being of the economy.

Concerns

As a college student who is getting ready to enter the workforce, having additional individual tax burdens worries me. At a time when our national economy is hurting, many companies are skirting their own nation’s tax needs to pay less tax in another country, yet they still generate profits each year. Many individuals argue that a portion of these profits should be going directly into the base nation’s economy rather than more tax advantaged countries. Globalization allows the redirection of revenue and therefore redirects the burden of tax revenue on the homeland’s citizens, even though they may not be a part of the problem.

How to Determine the Best Accounting Software for Your Business

Cloud accounting is a revolutionary way to efficiently manage your business, and even personal, financial transactions. It is a great tool to keep your books accurate and up to date. But how do you choose the best software for your business? With the many products out there, it can be challenging to decide which is the best tool to assist your business financial management.

So whether you are a small or medium enterprise, or a big business, or a professional, here are some questions that you need to consider when finding the best software for you.

1. What are your accounting needs?

Analyse your business and figure out what you need. If you are a small enterprise, chances are, you’ll only need simple accounting processes and services. On the other hand, if you are a big business, you will have more complex business processes that need comprehensive accounting assistance. Knowing your business needs will help you match to the most appropriate cloud accounting tool in the market.

2. What do you know about accounting processes?

Know your skills and capabilities. If you plan to be hands-on with your business accounting tasks, you need to have a wide understanding of finance and accounting processes. Knowing your ability and capacity will help you find the tool that you will be most comfortable to use for your business.

On the other hand, if you think you don’t have enough skills, you can always talk to an expert like a chartered accountant and ask them for advice and recommendations.

3. What is your budget?

Cloud accounting software is not free. It is very cost-efficient however considering the benefits that it can give to your business. So it is important to allot enough budget for it. Cloud accounting tools on the market vary in price. The more generic ones are available at a lower rate while the more specialised tools are more expensive.

4. What add ons would you like to include?

All accounting software comes with different add ons that could further maximise your use of the tool. So once you figure out what kind of accounting tool you want for your business, be mindful of the add ons that you may need. Add ons are not free. Make sure to pick the right ones for your business and allot appropriate budget for it.

These are just some of the questions that you need to ask yourself before deciding what cloud accounting software to use. But if you can’t answer these questions, or are lost on which to software to choose, you should talk to an expert like your chartered accountant for recommendations.

Our team has knowledge and experience using different cloud accounting products. You can talk to us about the right software to use for your business and assist you to set it up properly.Just request for an online appointment for assistance or call our cloud accounting experts today on (09) 576 4166!

Paul Martin Chartered Accountant is a modern, proactive Auckland firm located at Botany Town Centre, East Auckland. Utilising the cloud and other technologies we provide accounting, tax and business strategy and advisory services to individuals and businesses across New Zealand and internationally.

Five Reasons Why Businesses Should Hire Accountants

For many small-business owners, taxes are a point of stress. Changing guidelines and regulations can make the process of filing a difficult process for small-business owners, but hiring an experienced team of accountants can take the worry and stress out of tax season. Here are a few signs it’s time to hire an accountant.

The Business Is Growing

All owners strive to have a growing business, but this can spell confusion come tax time. As revenue increases, tax liability increases. However, the number of deductions the business may qualify for can increase as well. An experienced team of accountants can help determine which deductions will benefit the business and make recommendations for future deductions based on the projected growth of the company.

Managers Are Too Busy for Bookkeeping

The path towards proper tax preparation depends upon accurate bookkeeping. If the enterprise is too busy or growing rapidly, an accountant can help with bookkeeping. The right firm will be able to keep track of the books so the managers and owners can devote their time to growing their client base. The more time they can spend on operations and management, the better the company can function.

Profits Aren’t Increasing Along with Revenue

An increase in revenue does not automatically mean an increase in profits. Accountants do more than handle tax preparation-they examine overhead costs and look for areas of improvement. If they see a particular expense that can be eliminated or reduced, they’ll advise the company.

Demanding Investors

Investors place their money in a company if they believe it will be successful, but their support is often contingent on a degree of involvement. Many investors expect the owner to provide them with professionally prepared financial statements. These statements should give the investors an idea of the company’s performance, the way their contributions have impacted the business and if they can expect any returns on their investment. Unless the owner or management team is familiar with preparing these statements, the process can take a while.

The Government Requests an Audit

Audits strike fear in the hearts of many taxpayers, and when individuals are unprepared for them, it can seem like the most daunting part of being a business owner. A team of financial professionals who are familiar with the audit process can help companies navigate the process, reducing the stress associated with government audits. Best of all, they understand the tax code and will work to make sure the audit is done correctly.

When companies are starting out, they may struggle to keep up with the financial expectations required by the government. For financial professionals, the goal is to help the business be as successful as possible by reducing the strain and stress associated with bookkeeping, taxes and financial records. Owners should be able to focus on running and growing their client base, not on keeping track of expenses and overhead costs. A dedicated team of financial professionals will help operations of any size continue to grow and thrive.

Making Sense of What an Accounting Firm Does

No one dreams of opening a restaurant or shop so that they can spend hours staring at accounts payable and receivable columns. Many entrepreneurs and small business owners can benefit from having an extra hand balancing the books, but they may be unsure about outsourcing to an accounting firm. Experts recommend hiring a professional accountant once a business has around 25-30 employees or revenue above $1 million, but many organizations can benefit from bookkeeping help much sooner than that. Understanding some of the other services a firm provides can make the decision easier.

1. Budgeting

Setting and sticking to a budget is a challenge for any team, so having an outside look at the income and outflow of cash can be extremely helpful. An accounting firm can offer advice on when companies should hire new employees, what percentage of the budget should be allocated toward improvement or expansion, and how much money will be needed to maintain normal operations.

2. Taxes

Monthly and quarterly taxes can be complicated. From withholding federal and state taxes for employees and preparing an end-of-the-year tax return to facilitating an audit, this is sure to be one of the most useful services offered by a firm. Also, the accountant may also help set up tax software systems as well as auditing software. By automating these processes, the need for a full-time bookkeeper is eliminated making the cost of consulting with a firm less expensive than keeping an employee on staff.

3. Advice

The advice offered by an accounting firm is especially useful for newer business owners who have never had to manage large-scale financial operations. An accountant can be a valuable resource for advice on financial strategies, how to maximize tax breaks, investment of business resources, and risk management. Accountants can also provide insight into the depreciation of equipment and other assets, which is important in a final valuation.

4. Regulations

While a tech-savvy entrepreneur might know every programming code under the sun, he or she may have absolutely no knowledge of the tax code or other business regulations. Having an accountant available can help ensure that the business operates legally and does not incur any fines. If any of these regulations change, the business will be notified and advised on how to incorporate necessary adjustments.

5. Forensic Accounting

If a business owner suspects that one of his or her employees has been committing fraud, an accounting firm can investigate to see if there is a paper trail. This is called forensic accounting. In addition to the benefit found in having experts examine the books, this also helps to avoid any appearance of bias or impropriety.

No matter how large or small, every company can benefit from the knowledge, advice, and services offered by an accounting firm. To establish a customized service plan, a company’s owners or general management should set up a consultatio

5 Tips To Help You Start Your Own Accounting System Setup

As a business owner, one of duties you have is making sure that the day-to-day operation of your business is in the hands of the most capable individuals that you can have around you. Whether it is waste disposal, technology, or the company’s accounting system setup, the right people makes for a smoothly run business.

The tricky aspect of running a business in this fashion is that sometimes the overall size of the company may mean that you, as business owner, represent nearly the entirety of these departments, with few being as important as your accounting system. After all, a company that cannot regulate its finances is in quite the predicament. You may mean well, but you may lack the right background, training, and tools to make sure things are done right.

To this end, setting up your own accounting system doesn’t have to complicated. You just need to make it a priority in your overall business plan. Consider the following tips:

1. Keep It Simple – Early on, you just need a simple way of keeping track of your company’s expenses. As time goes on and your need increases, you still have access to low-cost systems that are user-friendly & allow companies to maintain a lot of control on the accounting front. Either way, though it can’t be stressed enough how important having an accounting system in place is, don’t overwhelm yourself this early in the process.

2. Business and Personal Expenses Should be Separated – If you’re an entrepreneur who is just starting his/her own business, this would seem like Business Practices 101, but many business owners still blur the very fine line of what money goes where only because as your business gets off the ground, you are funding your business with your own money.

3. Keep Track of What You Buy – As you begin to establish your company’s accounting system, you will be responsible for maintaining a paper-trail for your expenses. Some companies are able to maintain very accurate records with physical receipts while others have found success with virtual storage.

4. Set-up Payroll – This may vary based on whether your business actually has employees from the start. After all, if you’re starting a business, you may be the only employee for a bit. Either way, as your needs change, a payroll provider will be key to ensure everyone is paid correctly and that any additional issues such as payroll taxes are addressed.

5. Hire Professional Help – This point cannot be stressed enough. Part of the reason we indicated that simplicity was key for first-time business owners when it came to keeping track of finances is because we are indirectly acknowledging that they don’t have experience in the field of accounting. There is no shame in asking for help, and reaching out to a local, trustworthy financial firm or CPA office may be the best investment in your business you can make.

An accounting system setup for your business is essential to its financial health and longevity. Whether you decide to run things yourself in a simple & straightforward manner or welcome professional help in lieu of your inexperience, you are laying down the groundwork for responsible business practices.

Improve Productivity & Optimize Your Business Processes With Cloud Hosted QuickBooks

Evolution in cloud technology and the offsite services leads to a high scale robust service management in accounting as well as QuickBooks hosting. If you want to optimize your business and your daily workflow, then you have to find the right QuickBooks hosting provider that can do wonders for your business productivity.

The act of switching your QuickBooks application and your company data from your location to the dedicated network hubs makes sense. The burden of managing your hardware, network, the proper database work as well as management of backup will be immediately lifted from your workforce.

However, that is not the extent in which the right QuickBooks cloud hosting plan can help your corporation to grow and save your money.

Here are the few ways in which choosing a proper QuickBooks hosting plan can improve your productivity and optimize your business for amazing growth.

Security – Your data is completely safe from any authorized access. Hosting service provider’s hardware and security measures are built to protect your financial data.

Speed – By being able to access your files through the service provider’s high-speed network and cloud computing platform, you can eliminate the wasteful traffic that tends to slow down your performance.

Redundancy – The automated backup systems manage your data and provide scheduled copies that provide you the redundancy that you need in your finances.

Helps in eliminating the wasteful and outdated storage systems that create a headache when it comes to disposing of critical or secure documents.

Convenience – You can access your QuickBooks from anywhere, anytime, and instantly get plugged into the real time finances of your company. Whether you are telecommuting or just walking on the road, this flexibility makes it convenient for you to get your job done.

Updates – You will never fall behind regarding your updates and software patches. Everyone of them can fix or address the security issues and problems that may arise. Proper maintenance plays a vital role in any QuickBooks hosting plan to ensure maximum performance and security.

IT Staff – QuickBooks hosting service can lower your overhead and minimize your requirements of a dedicated IT staff to manage your network. It also allows an organization to redirect their information technology cost into a fixed monthly fees.

Support Desk – Round the clock service from proficient technicians who are certified and trained to handle your any type of QuickBooks issues or connectivity problems.

Their service desk is the bedrock of their service and properly maintain your hosted services and ensure a proper application integration.

This helps you to free yourself as well as your time for other important tasks of your business. And, also expand your reach and your brand into new markets.

By their virtual server environment, you can access your QuickBooks in a totally safe and secure environment, that is geared and maintained just for your business.

Why Would Businesses Prefer GST Over Other Tax Structures?

The GST reform has been successfully passed in both the houses of Parliament and the Government is ready to roll out the new tax structure in coming months, i.e. from 01 July 2017, to be precise. So what is GST? GST stands for Goods & Service Tax which will simplify the tax structure in India. This tax system will be beneficial for both businesses as well as individuals. As far as businesses are concerned, GST will be quite beneficial as it will lessen the burden of several return filings and will also eliminate the geographical barriers for trading companies. GST’s integration with Tally ERP 9 will be a great value addition for businesses looking to automate their return filings as compared to manual.

Organizations would prefer GST over current tax regime

Being a dual concept tax system, it’s vital to comprehend GST’s essentials. This system lets both the State as well as Centre governments to manage, collect as well as share the tax based on how the transaction is done. Undoubtedly, its way different from the current tax regime and once into implementation will make the life of people and small and medium sized businesses easy. Now, let’s see what GST brings in new as compared with the current tax regime.

  • The current tax regime in India includes different laws for different taxes, whereas in GST there will be only one law as this tax structure will incorporate different taxes
  • Current tax regime has different rates whereas this system would include a single CGST rate and a constant rate of SGST across all states
  • The credit of CST and the fact that many taxes aren’t allowed in the current tax system will lead into a spilling effect. GST won’t give a rise to this situation as the concept of CST will be completely removed after IGST gets introduced.
  • The current tax regime levies heavy taxes on the tax payer thus putting a lot of tax burden on him/her. When GST gets introduced, the tax burden is likely to be lessened as all the taxes will be integrated which will further divide the tax burden.
  • Some taxes get included in the cost due to the presence of cascading effect. However, in GST the burden of the cost is reduced as the effect is eliminated by the mechanism by providing credit.
  • The current scenario doesn’t empower both the State and Centre on similar subject matter in the current tax system. However, in GST both the authorities will be commended with the power to make law on GST as the constitution will allow it to do so.
  • In the current scenario, the tax structure is quite complex as there are several laws to be followed along with their necessities. In GST, the tax structure is extremely simplified as it would be governed by only a single law.

Many believe that GST is the best thing to happen to Indian tax system. Further, its integration with Tally ERP will make it reach millions of people. Also, the implementation of GST will further lead to more productivity and efficiency in delivering time based solutions.

Riyaz Tamboli is a Director at Antraweb Technologies Pvt. Ltd, a leading provider of Tally ERP 9 Software and support. Antraweb is a Master Tally Solutions’ partner with over 20 years of experience in providing Tally services including integration, customization, providing mobile apps, add-ons and more. His knowledge and experience has been instrumental in developing customized solutions for various businesses. Organizations can benefit from implementing Tally ERP 9 for their business and can download it from website.