Merchant Accounts For Small Businesses – A Chart of Accounts (CoA) is a list of accounts used by a business or organization that can define each class of items for which cash or cash equivalents are spent or received. A CoA is used to organize all transactions and separate expenses, income, assets and liabilities so that the company can clearly understand the financial health of the company. A well-designed CoA can improve a company’s ability to compare, understand and focus on key business areas.
We often see small business owners make the mistake of creating a new account for every item they enter. This practice creates unnecessary loopholes (for example, accounts that are used for one month and then continue to show as 0.00) and makes it difficult to obtain key information needed to achieve business goals.
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For example, imagine that a company has created an expense account for a loan payment when that payment is actually in a liability account. It would be a costly mistake to record the payment as a business expense instead of reducing the amount owed.
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Whether we’re doing a Quickbooks review or setting up our accounting services for a client, CoA is one of the first issues we address so we can be sure our clients have a reliable and organized digital “file” system that works. their financial well-being. Here are some tips for creating a solid CoA and a basic template to get you up and running!
Both. Many companies use a systematic numbering system to assign a number to each account in the chart of accounts. These are often called account numbers or general ledger (GL) codes.
Tip: When adding invoices, be sure to distribute the revised list to each employee who uses the list to record transactions in the accounting system. Employees who are not directly involved in accounting will need a copy of the chart of accounts if they code invoices or other transactions and specify which accounts those transactions should be posted to.
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Generally, most GL accounts will have a main account (or group account) as well as sub-accounts where all sub-account balances are added to the main account.
For example, a main account would be named “Cash and Cash Equivalents” with the following sub-accounts: main checking account, savings bank account, payroll bank account, etc. With this design, the sub-account will always have a total balance. All bank account amounts will be aggregated to show the total amount of cash available to the business at any given time
Tip: If you’re setting up your chart of accounts manually, be sure to leave spaces between accounts so you can add new accounts. For example, number the cash checking account as 1000 and the accounts receivable account as 1100. This also gives you plenty of room to add other accounts to keep track of your cash.
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What does the chart of accounts look like? Download the Excel spreadsheet below and use it as a template for your chart of accounts:
Tip: Not all small businesses have the same chart of accounts. The accounts you include in your chart of accounts depend on your type of business. For example, if you have a service business, you won’t have an inventory account. If you have a business that sells products, you will need an inventory account.
Need help? Contact us today and we can help you review or set up a billing plan!
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The Coronavirus Relief, Assistance, and Economic Security (CARES) Act, H.R. 748 was passed by the Senate late Wednesday, 2020. March 26 This $2 trillion economic aid package aims to boost the economy that is suffering from the effects of COVID. 19 Pandemic. The 880-page bill contains numerous provisions related to small businesses and individual taxpayers. These key measures are summarized below.
The draft law has yet to be passed by the House and signed by the President, so it may be subject to additional changes.
Ky Nguyen, owner of the city’s popular dining spot SA PA Vietnamese Kitchen, has advice for other aspiring food entrepreneurs: Make sure you have a strong team behind you. After starting the business in 2012, he outsourced the accounting part of the plan. His hands will be very full with the growing business, including a food truck, brick and mortar locations, and catering services.
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One of Tristan CPA’s first assignments was to help SA PA reorganize the categories they used for their financial statements, including their income statements. This helped Ky get the most accurate and up-to-date information to make important business decisions. He said: “It’s good to talk about all the financial information with someone else. And Tristan is great because he gets the business.”
Running a restaurant is a tough business and the profit margins are often very thin. With a strong staff and consistent and reliable accounting at Tristan CPA, Ky says he is proud to see SA PA turn a profit that supports his employees and business growth. She enjoys seeing happy customers eating her carefully crafted egg rolls, banh mi, pho and savory bowls because she has a “good guy” presence that allows her to focus on the food and the customers.
Reliable and accurate accounting is key to the success of any business, but many business owners struggle to decide whether to hire an in-house accountant or an outsourced accountant. Being able to clearly understand the pros and cons of each will help you decide which investment is best for your growing business. Below are three common situations that business owners face when managing their accounting.
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Do not forget that there is no unequivocal answer as to whether accounting should be done externally. Therefore, we strongly recommend that you carefully weigh your options and consult with a specialist regarding your specific situation.
An accountant can provide more access and day-to-day control, but these small benefits can quickly be outweighed by the cost and flexibility of the situation. A full-time accountant requires the same competitive salary, recruiting costs, office space, equipment, supplies, software licenses and benefits as other employees. Also, your accountant will be expensive, will be limited to your business, so they will be less likely to encounter various issues, and their ability to adjust production volumes based on demand may be more limited than that of an outsourced accountant.
Scenario II: You or an employee do or plan to do your own accounting using shared software.
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As a business owner, you may think you know your business best and can rely on software to take care of your accounting needs. This certainly seems like the fastest and most cost-effective way to get started, but the increased risk of costly mistakes may not be worth it. Having an employee become the “bookkeeper” of a growing business is also dangerous for a number of reasons, the most dangerous of which is that the employee will lack the accounting knowledge to properly advise a growing or struggling business. Professional accountants can provide an unparalleled level of advice because they see a lot more into your business than you think.
Advances in technology and the cloud have made outsourced accounting a scalable, affordable option for many small and large businesses. An outsourcing company can provide “real-time” access to what you own, eliminating costly errors and reducing the burden of manual reporting on internal staff.
Each accounting firm has different rates, pricing policies, and customer experiences, so do your research carefully and speak to the firms directly. Do your accountants treat you like just another paycheck, or do they feel like a team that truly cares about the success of your business? Here’s a quick checklist of questions to ask:
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These are some of the things we offer at Tristan CPA. To learn more about how you can save money and still receive high-quality accounting services, contact us or start using our Quickbooks review service today!
Signing up is easy. We firmly believe that with stress-free bookkeeping, you’ll never want to go back. When running a small business, you’re likely to be faced with day-to-day administrative tasks such as bookkeeping.
Even if you decide to hire an accountant or freelance accountant in the near future, it is good to know at least the basics of accounting. This will help you track and manage your business more efficiently
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This guide covers everything you need to know about accounting for your small business:
Small business accounting involves keeping track of all the money flowing into and out of your business accounts, summarizing that data into financial statements that can then be analyzed and used to improve the business.
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