FAQs


Frequently Asked Questions

How much do I need to know about accounting and bookkeeping?

Since numbers constitute the language of business, the more you know about this language, the better you will understand your business and the better will be your decisions. As a minimum, you should understand your bookkeeping system. This means you should understand how your money is spent and how much money you have coming in. You should also be able to read and understand the two basic summary financial statements: balance sheet and income statement. A CPA can be of invaluable service to assisting your understanding of these financial statements.

Why are financial projections necessary?

Financial projections are estimates of future business activities. By estimating the future, you have a target to shoot at. You have a frame of reference, even if the projection is not highly accurate. The chief value of financial projections for a business owner is not so much the attempt to predict the future with accuracy, as it is a plan to set a target or goal to work toward. The projections provide you a framework to compare actual performance from which you can adjust tactics to maximize success. Seasoned professionals, like CPAs, have the experience to provide guidance in both the setup and monitoring against these projections.

What financial statements will I need?

You should prepare and understand two basic financial statements:
1. The balance sheet, which is a record of assets, liabilities and capital; and
2. The income (profit and loss) statement, a summary of your earnings and expenses over a given period of time.

What is a balance sheet?

Often referred to as the basic business financial statement, the balance sheet shows three things about a business: assets, liabilities, and owner’s equity. Assets are things that are owned by the business. Liabilities are things that are owed to others. Owner’s equity is the difference between assets and liabilities.

What is an income statement?

An income statement (often called profit and loss statement or P&L) is the scorecard for business. It shows the revenue, expenses and profit or loss. It shows these things for some period of time, usually a month or a year. An income statement is usually titled “Income Statement for X Business for the period January 1 to December 31.”

What is a cash flow statement?

Cash is the lifeblood of a business. The cash flow statement shows the sources and uses of cash. This tool can help plan how to best maximize cash flow.

What is equity?

Equity has two different, but related meanings. On the one hand it is the term applied to the money the owner puts into the business – money that is not borrowed or is borrowed from relatives without any requirement to pay it back. Equity also means the same as “net worth,” which is the difference between the assets and liabilities of a business. It is the portion of the assets that the owner would get after all the liabilities were paid. Equity is one of two sources of capital for a business. The other is debt. Equity comes from the owner and debt comes from others, usually banks or other financing agencies.

What is capital?

To operate any type of business activity, you need things. These things are different from business to business, but usually include equipment, tools, office equipment, vehicles, computers, etc. These assets are purchased with cash. Cash is usually referred to as capital, whether generated from operations, lending or from owners’ contributions.

Is it better to lease or buy the store/plant and equipment?

This is a good question and needs to be considered carefully. Leasing does not tie up your cash; a disadvantage is that the item then has no resale or salvage value since you do not own it. Additionally the lease typically includes interest that the lessor is including in the overall payment. Careful weighing of alternatives and a cost analysis will help you make the best decision.

Should I hire a C.P.A.?

You can get accounting advice from different sources. A Certified Public Accountant is probably the most competent to give you advice on a wide variety of business topics. Others, such as public accountants, bookkeepers, and specialists who focus on small business record keeping, can also be useful. CPAs may have a higher rate, but may still offer the best value because of their breadth of knowledge and their ability to assist you with all aspects of your business finance, accounting and tax issues.

Why Bookkeepers And Accountants Use Double Entry Bookkeeping.

Double entry bookkeeping is the technique employed to accurately record financial transactions stretching back hundreds of years. Double entry bookkeeping means every financial transaction has an equal offsetting component which is checked using a trial balance prior to producing a profit and loss account and balance sheet.

Why Use A Tax Consultant?

Tax can be a tricky and confusing subject – are you paying too much? Too little? Are you on the right tax code? These are the very reasons why so many companies hire tax consultants.


Additional Interesting Subjects

Basic Bookkeeping For Small Business Can Save Money.

Every business is required to keep a set of financial records to enable those accounts to be submitted and the tax payable calculated. Bookkeeping is the most basic level of support in keeping company financial records.  This can be maintained by an individual with a lower level of accounting knowledge and experience.  It is highly recommended that more experienced sources, such as a CPA, be consulted regularly to ensure that the records provide the proper information.  Accurate records can save the business through better understanding of operating results and from penalties and interest from improperly filed regulatory filings.

Deciding Between Bookkeeping Software And Bookkeeping Services.

All small businesses have to choose between keeping manual records of financial transactions and the benefits, advantages and disadvantages of utilizing bookkeeping software and or employing bookkeeping services for this purpose. The correct choice will vary from business to business.

Bookkeeping help makes your bookkeeping convenient.

A business whether it’s big or small needs to pay extra attention on its financial matters. Bookkeeping manages all your financial and accounting activities. Making your bookkeeping hassle free provides invaluable information for managing your business and is less costly in the long run helping you avoid costly errors.

Decide your success with Bookkeeping outsourcing.

Bookkeeping outsourcing is often the best way to maintain store and update financial records and documents. This is a proven advantage for businesses at the time of filing tax and undergoing an audit. Timely bookkeeping outsourcing makes data readily available and helps businesses in making key decision for growth and success.

Accounting Outsourcing takes you a step ahead.

Accounting outsourcing helps a firm get a hold on their expenses and helps them to earn profit.

Get smarter with the help of web based accounting.

Web based accounting is a boon for people who have hectic schedules to look into their accounting books and it also helps them in saving time along with money.

Double your profits via outsourced accounting.

Outsourced accounting has become quite a revolution in the market today, for its exceptional experience and expertise.

Enhance profitability of your business with accounting outsourcing.

Accounting outsourcing is the finest way to reduce the burden and enhance the profitability of your business.

Manage a flawless accounting system with accounting outsourcing.

Accounting outsourcing can definitely help a business in raising its success graph and in making its financial data flawless.

Bookkeeping help is the profit-center of your company.

If you think that bookkeeping staff of your company is not handling the task proficiently and the chances of error are high then you should consider outsourced bookkeeping assistance.

Take your business places with accounting outsourcing in US.

Accounting outsourcing in US makes quite a sense to various companies as they get detailed accountancy records and moreover earn great profits. Hence it is short cut for getting success in their business.
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