Category: Accounting and Bookkeeping

Accounting Podcasts

Let’s face it: when we’re searching for something enjoyable to pass the time, we frequently turn to podcasts. However, because there are millions of possibilities to pick from, particularly in accounting, finding the ideal fit can be a lengthy endeavor. But not anymore!

We’ve compiled a selection of the best accounting podcasts, which cover a wide range of business topics and offer helpful advice that can be beneficial to even the most successful accountants in public accounting.

Don’t hesitate to listen to one or more of these episodes. It’s possible that you’ll find your new favorite playlist among these.

Green Apple Podcast

The Green Apple Podcast by John Garrett brings the bizarre and extraordinary to the surface by interviewing guests who try to be unique in order to stand out in their respective businesses.

With accounting professionals, lawyers, consultants, and other thought leaders on the podcast, you’ll enjoy learning more about their interests and how they incorporate them into their enterprises for more business enlightenment and independence.

Cloud Accounting Podcast

This podcast, hosted by Blake Oliver, CPA, and David Leary, is a cloud accounting podcast that focuses on how businesses may use current cloud accounting technologies to improve their operations in each weekly edition. They discuss many subjects, such as:

• Accounting and finance apps
• Accounting technology
• Cryptocurrency and emerging tech
• Cloud stories
• Remote work and cloud tools
• Online sales and marketing tips
• How to manage a modern practice

Accounting Influencers

Martin Bissett and Rob Brown host the Accounting Influencers podcast, which focuses on the following:

• accountancy and fintech news
• commentary around this news
• practical ‘what works’ tips and expert interviews

The podcast is CPE-accredited, promoted via social media, and commercially supported, with over 21,000 listeners in 150 countries, primarily in the United States and the United Kingdom.

Unison Globus Public Accountant

The Unison Globus Podcast features ongoing, in-depth talks on some of the hottest accounting trends with some of the industry’s most prominent business leaders and successful entrepreneurs.

Every episode will leave you with a minimum of one new tidbit of knowledge.

Future Firm

The finest aspect of Future Firm with Ryan Lazanis is that each episode is only a few minutes long. It is always packed with excellent, actionable advice.

This one is highly suggested because it won’t use much of your time but will prompt you to consider practical methods to improve your company.

Aly & Andrew’s All Aussie Accounting Adventures

If you’re interested in opening and operating your own accounting firm/small business, or if you want to learn more about this topic, Aly & Andrew’s All Aussie Accounting Adventures is the audio book for you.

Aly and Andrew give pearls of wisdom and sensible guidance based on their own personal experience with the process in each episode.

Accounting Best Practices with Steve Bragg

Accounting Best Practices with Steve Bragg, hosted by entrepreneur, author, and accounting expert Steve Bragg, will allow you to stay on top of all current challenges so that you miss nothing.

Each episode of this podcast is roughly 7-8 minutes long, making it ideal if you’re short on time and like processing information quickly.

Bean Ninjas

Bean Ninjas are unquestionably experts in providing world-class bookkeeping, accounting, virtual CFO, and tax services to 7- and 8-figure eCommerce firms seeking to scale.

This is evident in their monthly podcast episodes, which provide essential accounting and business advice for the professional development of anyone interested in the public accounting field.

Journal of Accountancy Podcast

Besides publishing The Journal of Accountancy decided to produce a related podcast.

The program frequently discusses significant accounting challenges and the most recent accounting news.

Taxgirl Podcast

The Taxgirl Podcast focuses on critical information on tax tips, money, cash flow, and making wise financial decisions. All themes are timely, educational, and easily understood. It allows you to remain knowledgeable about the most significant concerns in the world of taxes. New episodes are released regularly.

Scaling New Heights Podcast

Cutting-Edge Training for Small Business Advisors: The ‘Scaling New Heights’ podcast is created for accountants and other business advisors. It offers access to essential training from the annual Scaling New Heights conference throughout the year.

Each weekly broadcast features an interview with a prominent guest who is either a previous Scaling New Heights presenter or an upcoming conference presenter. It is approximately 30 minutes in length and is accessible on iTunes, Player FM, and Stitcher.

Grow My Accounting Practice

A show for accountants and bookkeepers seeking to expand their practices. We delve deeply into both the theoretical and actionable strategies you need to expand your practice as you’ve always envisioned.

You will learn about marketing, sales, hiring, management, pricing, and everything else required to expand a business. The only topic they do not discuss is accounting skills. They provide you with business skills. You already possess them.

Read also: Outsourcing from Marketing lens – Why India is the preferred choice of Outsourcing

Podcasts are becoming increasingly popular in the business world, as they integrate the strengths of radio, television, and the internet into one convenient medium.
Streaming podcasts on any device is hassle-free, as it doesn’t require any special software or hardware.

Compared to watching videos or reading articles, podcasts demand significantly less effort from the listener.

Gone are the days of carrying around physical newspapers like the Financial Times; now, you can access a wealth of information and stay up-to-date with the latest developments right at your fingertips.

So, listen to these 12 killer accounting podcasts on your daily commute, at work, or in your free time. Some are motivational, some are educational, and some are inspiring.

Want to outsource accounting or bookkeeping services? Click here.

Accrual to Cash Adjustment

A company’s finances can be handled using either the cash basis or the accrual basis of accounting. Income is calculated differently in the two approaches. The accrual method of accounting is the most common. However, many businesses employ the cash method instead.

It is crucial to grasp the fundamental distinction between the accrual and cash bases of accounting in order to comprehend the shift from one to the other. So, let’s clear your basics and understand the accrual to cash adjustments for your next finance handling.

Accrual Basis of Accounting – Overview

The accrual basis of accounting is a method of keeping financial records that mandates matching a period’s income and expenses. If you use this method of accounting, you’ll have to tally up your earnings and outgoings in the same accounting period. This holds true irrespective of the cyclical nature of financial flows.

Companies worldwide typically employ an Accrual Basis due to the matching notion. Accurately estimate the profitability over time by comparing the revenues and costs of a specific period.

What does accrued adjustment mean?

Journal entries made at the close of a reporting period to adjust the revenues or expenses shown on the income statement are accrual-type adjusting entries. Following is a breakdown of the four distinct categories of journal entries that you can use to correct for accruals.

Rise in costs due to incurred expenses for which an invoice from the relevant supplier is still pending.

A reduction in the total costs recognized that still needs to be spent.
Earned revenue growth represents money coming in from customers yet to invoice.

A reduction in revenues for revenues that have been recognized but have yet to be earned.

Cash Basis of Accounting – Overview

In contrast to the accrual basis of accounting, which records income and expenses in the period they are earned, the cash basis of accounting records them in the period in which cash is received.

The fundamental principle behind this method of reporting is to account for cash outflows and inflows. Countability is on the period they occur rather than the periods in which the related expenses and revenues are spent.

As the name implies, the cash basis of accounting does not keep any accounts receivable or payable, which is the fundamental distinction between the cash and accrual basis of accounting. On the other hand, the accrual method of accounting puts off the recognition of income and costs until after the fact.

Can you change from accrual to cash adjustment journal entry?

If this is your company’s first federal tax return, the IRS will likely let you choose the accounting system you like, but the agency mandates that you stick with the same technique in subsequent years to ensure consistency. In most cases, you will need to file IRS Form 3115 to get approval to switch from the accrual accounting technique to the cash basis accounting method.

Switch to cash basis accounting method – Eligibility

Most small businesses use a cash-basis accounting system, but the IRS may only allow you to move if your company is structured in a certain way. For instance, you cannot use the cash-basis accounting for the businesses that manufacture, purchase, or sell physical products. Corporations, partnerships, and QPCs are all eligible to employ cash-basis accounting with the IRS so long as they meet specific requirements.

Overview of How to Convert Accrual to Cash Adjustments

Consider the following procedures to make the switch from the accrual cash adjustment tax returns:

Adjusting for accrued expenses

Subtracting accrued expenses from the financial statements is necessary for switching from the accrual to cash adjustment journal entries. If a supplier invoice cannot verify an accumulated expense, reverse it in the financials. The accrued liabilities section of the balance sheet is where you may quickly find this data.

Adjusting for accounts receivables

Adjusting for accounts receivable is also crucial when switching from an accrual basis to a cash basis of accounting. If the money from sales comes in after the designated term ends, write off all accounts receivables.

Adjusting for accounts payable

Accounts payable require adjustment the same way as accounts receivable do in the financial statements. The financial statements should only reflect those transactions for which cash was paid as a settlement in the reporting period in question. Because of this, you can only add costs paid with cash during the reporting period in the financial statement.

Adjusting for prior period sales

Accumulate the sales at the end of the prior period under the accrual basis of accounting. If the cash from these transactions is received after the time they are made, they are shifted back to the period in which payment is due. Since cash payments are still unpaid, in addition to the current period sales, the need to make adjustments stems primarily from this necessity.

Customer prepayment adjustment

Under the accrual system, prepayments from clients would be counted as revenue if the order was completed. These sales must be accounted for in the period corresponding to the time in which the cash was received. This will help you record the orders on a cash basis.

Supplier prepayment adjustment

Prepaid expenses need to be revised in the same way that prepaid revenue (which was treated as a Current Liability under the Accrual Basis of Accounting) was modified. When using the Accrual method of accounting, any costs that the company has prepaid must be reclassified as outlays.

The modifications, as mentioned earlier, are essential for a seamless change from the accrual to the cash adjustment journal entry. These modifications entail switching to a payment schedule solely based on cash inflows and outflows.

Best Software and Services for Accrual Accounting

As your company grows in size and complexity, you should be prepared to switch to accrual-basis-friendly tools and resources. Intuit’s QuickBooks Online, for instance, provides the option to switch between cash and accrual accounting.

One can record Invoices, expenses, employee time, and more using this service, which is available monthly. Collaboration with an outsourcing accounting firm is made more accessible by the widespread use of spreadsheets, which can be quickly shared to reveal a clear picture of financial standing and tax liabilities.

Contact Us to Learn More About Our Financial Management Services.

Accrual to Cash Conversion Formula

To illustrate the change from an accrual to a cash basis adjustment, accountants employ specific formulas. The transition from accrual to cash accounting is simplified as a result.

The formula basically sorts accounts (and their corresponding amounts) into two groups: those that should be eliminated from the financial statements and those that should be reinstated. Here is a quick rundown of what happens throughout the transformation.

The following are the types of expenses that need to be subtracted from the balance sheets:

• Accrued (or outstanding) expenses
• Outstanding Income (income not yet settled for by debtors)
• Accounts Receivable
• Accounts Payable

The same logic applies to the following accounts that need to be re-established in the financials:

• Advanced Income
• Advance Expenses (Prepaid Expenses)

Also, the following formulas are used to convert some lines of the financial statements from the accrual to cash adjustment formula:

1. Cash Sales = Beginning Balance of Accounts Receivables + Sales Revenue – Ending Balance of Accounts Receivables.

2. Cash Payment for Expenses = Ending Balance for Prepaid Expenses + Expenses in the Income Statement + Beginning Balance for Accrued Expenses – Beginning Balance for Prepaid Expenses – Ending Balance for Accrued Expenses.

3. Cash Payments for Purchases (Merchandise Inventory) = Ending Balance of Merchandise Inventory + Cost of Goods Sold + Beginning Balance of Accounts Payable – Beginning Balance of Merchandise Inventory – Ending Balance of Accounts Payable.

The primary goal of the accrual to cash adjustment formulas

As mentioned earlier, the primary goal of the accrual to cash adjustment formulas is to remove the effects of transactions that have been recorded but not yet settled in cash from the financial accounts. As a result, all of the previously recorded income and expenditures must be updated to reflect those already settled in cash.

Reviewing one’s bank records and comparing one’s cash inflows and outflows is also a quick and easy way to make the transition from an accrual to a cash adjustment journal entry. The remaining sum represents the profit made during the specified time frame. Businesses that want to better understand their profitability in cash on hand often switch from an accrual to a cash basis.

In addition, unlike the cash basis of accounting, the accrual basis of accounting considers several different accounts.

Case in point: Money owed and expenses that have already been incurred. It is common practice for businesses to transition to a cash basis to have a clearer picture of how their operations truly perform in terms of cash flow.

Accrual Accounting and Cash Basis Accounting Example

So, you run a company that offers machine sales.

In the books, cash sales are not recorded until the receipt of cash or a check, meaning that if $5,000 worth of equipment is sold, the transaction remains unrecorded until payment is received.

Under the accrual approach, income of $5,000 is recognized on the day of the sale. Even if you don’t get the money for a few days, weeks, or months.

This also holds true for financial outlays. For example, if a corporation uses the cash method to keep track of its finances, any bills over $1,700 one would record, once one makes the payment. On the other hand, if the corporation uses the accrual technique, the $1,700 will be deducted from its cash on the day it pays the payment.

A best-of-both-worlds option

Businesses can benefit from combining cash and accrual accounting methods. Hybrid accounting is the term for this type of approach.

By combining traditional and contemporary accounting techniques, businesses better monitor their cash flow and assess their sustainability over time. For the IRS’s approval of the hybrid approach, however, you must adhere to specific guidelines.

• A company must utilize the accrual method of bookkeeping for purchases and sales when keeping track of inventories is essential to reporting revenue.
• If a company reports its earnings using the cash method, it must likewise disclose its expenditures similarly.
• If you record your expenses using the accrual technique, you must also use it to calculate your income.
• One can assume a Cash Basis use along with any other reporting technique.

FAQs

Is it better to file taxes on an accrual or cash basis?

Keeping a sufficient cash reserve for tax payments is a major benefit of cash-basis accounting, which is why many businesses choose it. The accrual approach may be preferable to have the most reliable data possible for yearly income projections.

Is cash accounting in accordance with GAAP?

According to GAAP, the cash-basis method of accounting is unacceptable. Companies that adhere to GAAP guidelines should use the accrual-basis accounting approach.

Payroll is affected differently by cash and accrual accounting; is that so?

Payroll is a necessary component of any organization, big or small, that employs people. A company’s Accumulated Payroll account is an example of an accrued expense from processing payroll.

That account is a liability on the balance sheet and contains all employee earnings. Payroll is a good example of an account that lends itself well to accrual accounting, as it has both an accruing and a cost component.

Which types of financial reports are most sensitive to changes in accounting practices?

Your accounting technique will influence the statement of cash flows since you calculate the net income differently.

You record Expenses and earnings in the income statement as soon as you receive or make them.

However, the balance sheet includes accounts like accumulated liabilities and accrued payroll that are likewise affected by the selected accounting system.

Introduction

Understanding the distinct roles of accountants and bookkeepers is crucial for effective financial management. While both are essential, their functions differ significantly. This blog will explain why separating these roles can benefit your business.

Understanding the Roles: 

What Does a Bookkeeper Do?

• Record and categorize daily payments and expenses
• Send customer invoices and record payments received
• Conduct monthly bank reconciliations
• Generate monthly financial statements
• Provide year-end financials and tax documents to the accountant

Bookkeeping primarily involves recording and categorizing daily financial transactions. This includes tasks such as recording payments and expenses, sending invoices, conducting bank reconciliations, and generating monthly financial statements. Bookkeepers ensure that all financial data is accurately recorded and organized, providing a clear picture of the company’s day-to-day financial activities.

However, bookkeeping can face common problems such as errors in data entry, time-consuming manual processes, and limited financial insights. To address these issues, businesses can implement automated accounting software, provide regular training for accuracy, and consider outsourcing to expert bookkeepers. These solutions help streamline bookkeeping processes and improve overall efficiency.

What Does an Accountant Do?

• Prepare adjusting entries
• Analyze the cost of operations
• Advise business owners during financial decision-making
• Review and analyze financial statements
• File tax returns, conduct tax planning, and provide tax advisory

On the other hand, accounting focuses on analyzing, interpreting, and summarizing financial data. Accountants prepare adjusting entries, analyze operational costs, advise business owners during financial decision-making, review financial statements, and handle tax planning and filing. Their role is crucial for understanding the overall financial health and strategy of the business.

Accounting also comes with its own set of challenges, including complex financial regulations, strategic decision-making difficulties, and high workloads during tax season. Solutions to these problems include utilizing advanced financial analysis tools, continuous professional development, and hiring additional staff during peak periods. These measures help accountants manage their workload and provide accurate, strategic financial advice.

Here’s the differences between accounting and bookkeeping, highlighting both the problems and solutions associated with each role:

The Risks of Combining Roles

Overburdening Your Accountants

• Combining roles can lead to inefficiency and errors.
• Accountants may experience burnout due to the additional workload.

Lack of Specialization

• Specialization in each role ensures better financial management.
• Expert accountants and bookkeepers bring unique skills to the table.

Benefits of Keeping Roles Separate

Enhanced Accuracy and Efficiency

• Dedicated bookkeepers ensure precise record-keeping.
• Accountants can focus on strategic financial planning.

Improved Financial Insights

• Accurate bookkeeping provides better data for accountants to analyze.
• This leads to more informed decision-making.

Cost-Effectiveness

• Efficient use of resources by outsourcing for accountants.
• Potential cost savings from hiring specialized bookkeepers.

How to Implement This Separation

Assessing Your Current Setup

• Evaluate your current financial management structure.
• Identify areas for improvement.

Hiring or Outsourcing Bookkeeping Services

• Consider outsourcing to specialized firms.
• Hire bookkeepers from India for high-quality services at competitive rates.

Integrating Bookkeeping and Accounting Functions

• Establish clear communication channels between bookkeepers and accountants.
• Use tools and software to facilitate collaboration.

Conclusion

Separating bookkeeping and accounting roles can significantly enhance your business’s financial management. By partnering with expert accountants and bookkeepers from Unison Globus, you can ensure accuracy, efficiency, and strategic growth.

Call to Action

Ready to optimize your financial management? Partner with Unison Globus for expert bookkeeping and accounting services. Contact us today to learn how we can help streamline your processes and support your business growth.

Bookkeeping for Amazon Sellers

Bookkeeping for Amazon sellers is the process of recording and storing the day-to-day financial transactions of a merchant. The terms “sales,” “purchases,” “shipping charges,” “debt payments,” and “advertising spend” are all examples of everyday financial transactions. In the next section, we will discuss why maintaining accurate books is crucial to a firm’s operation.

Why Are Accounting and Bookkeeping So Important?

There are several reasons why bookkeeping is vital for businesses that sell on Amazon. Still, we’ll begin with one of the most important ones: Keeping track of the financial operations enables you to evaluate how well the company is doing over time.

Do you know, for instance, how much money the company has gained from a profit? What really matters is how much money it made, not how much revenue it brought in through sales.

Remember that profit refers to the remaining money after subtracting all other expenses. When you maintain the books in order, determining the profits becomes simple. If you don’t know how much (if any!) profit the company is earning, it will be impossible to evaluate the company’s health and long-term viability if you don’t have this data.

What Are the Most Important Advantages of Selling on Amazon?

Keeping accurate books and records offers several significant advantages that most Amazon sellers are entirely unaware of.

To begin, if you ever decide to apply for a loan for the company, the creditor will require you to give them various financial details. If the books are correct and up to date, this won’t be difficult to accomplish at all. It won’t matter if you haven’t been keeping track of this information or if the records are inaccurate.

Two, if the client ever decides to sell the company, the purchaser will want to look over the financial records. Again, if you properly maintain the books, this will not pose a problem for you. However, if you do not, it will become a nightmare.

Services of an Amazon Accountant – What’s the Need?

The accessibility of these benefits requires significant effort, although each of these advantages sounds fantastic. Accounting is challenging for any type of company and should only be handled by trained specialists knowledgeable in the field.

Far too many business owners and Amazon sellers try to get by with cloud-based accounting software or services and do their best to keep things organized, but they fail miserably more often than they succeed. This typically leads to errors in accounting as well as incomplete records.

Taking a do-it-yourself strategy will force you to scramble whenever you need anything to generate new papers and locate the ones you already have. Because of this, dealing with accounting becomes even more of a chore, generating great anxiety during tax season.

You cannot accomplish something of this nature on your own at this point in time. You can either attempt to handle your own bookkeeping by pulling reports from your Amazon Seller Central account or search for the most effective accounting software available.

However, if you are serious about keeping your business above board, maximizing your deductions come tax season and, tracking sales tax, maintaining an accurate understanding of your financial health with the proper accounting system. Impressing potential buyers or lenders, you should trust a certified public accountant (CPA) or an agency with experience in the field.

First things first, let’s go through how to get off to a good start.

To embark on Amazon’s financial management software and the company registration process, it is essential to prioritize setting up correctly from the outset, as recommended by our specialists and vendors. What exactly does this entail?

It signifies two different things:

Registering your business

Many Amazon businesses have humble beginnings as hobbies but have grown into lucrative enterprises.

Because of this, it can be tempting to put off registering a company and paying taxes in the beginning stages of business operations. However, this is not the most effective strategy moving forward.

If something goes wrong with your business, registering it can shield you from specific responsibilities and allow you to keep your business revenue distinct from your personal income. As the company owner, you are responsible for meeting all your financial and legal obligations.

It is in your best interest to register your company regardless of whether or not you believe it is prepared for the change.

A valuable piece of advice is to search for the most recent information continually. Do not let unexpected obligations catch you off guard, especially when it comes to the sales tax that applies to online shopping. Having an eCommerce accountant to help you out is beneficial, even if it’s just at the beginning of your business venture and not for the long haul.

Taking your Amazon accounting to the cloud

Although spreadsheets and paper-based systems are cost-free and simple methods to get started, they only prove helpful for managing relatively limited volumes of data. And even with that, it’s a time-consuming process that’s rife with opportunities for error.

If you are serious about Amazon selling, ensuring that your systems are robust enough to handle larger transaction volumes without problems is essential. If you are serious about Amazon selling, it is essential to ensure that your systems can handle larger transaction volumes.

When you follow proper accounting procedures, closing the books takes no additional time, and it ensures the production of highly accurate information.

Previously, companies had to run digital accounting systems on servers and PCs, requiring frequent backups and software updates. However, nowadays, most accounting systems are hosted remotely in the cloud.

Because of this, there is no need to create multiple accounts, update software, or even download software in the first place. You can access your books from any location in the world when you use cloud accounting services, and you can securely transmit information when required.

A helpful hint is that there are solutions available for accounting software that can start small and grow with you. This means that your initial investment does not need to be prohibitively expensive. When it comes to your Amazon accounting needs, you should investigate what QuickBooks, Xero, and Sage have to offer.

Getting organized: Amazon business planning

An Amazon business strategy will benefit you in many ways, including your accounting, which is only one of those methods.

A business plan serves as a sounding board throughout your company journey, can be modified over time, and provides a solid starting point for assessing progress.

In summary, a business plan assists in developing strategies and organizing for the present and future of your company.

Attention to detail and organisation is crucial when it comes to your Amazon documentation. A useful tip is to outline the specific elements of your Amazon accounting in the financial section of your business plan. This helps you anticipate the information Amazon will provide and allows you to identify any gaps that need to be filled in.

Regular checks to avoid mistakes

You must always keep your personal visibility and comprehension of your financials, even if you are using an optimized accounting stack, which is something we will discuss in the following section.

So let’s make a night of it, shall we? And make it a consistent practice, not just once a month.

Checking in once a day or a week doesn’t have to take more than ten to twenty minutes time, but it’ll help you keep track of the performance of your business. You’ll become more aware of any problems more quickly, and have a better sense of any patterns.

The world of online retail is frenetic and cutthroat, prone to rapid change, and demanding one’s full attention. You can save time and improve your familiarity with your company if you manage your accounts in chunks consistently.

Important advice: Don’t include the cost of your merchandise in your expenses! This is a mistake that frequently occurs in Amazon’s accounting. If you get everything set up correctly from the beginning and check in on it frequently, you should be able to solve problems like this one before they become more serious.

Optimizing your Amazon accounting automation: Getting to the next level

Integrating your accounting software with Amazon’s Seller Central is a great way to instantly transfer data. However, making effective use of that data often demands substantial human effort, calculations, and accounting expertise, which many online retailers lack.

As a seller on Amazon, keeping the books sometimes becomes an increasingly difficult task as it requires a significant amount of time and is rife with inaccuracies:

Getting help: Free Amazon seller accounting resources

Utilize the variety of helpful information that is available online to give yourself the greatest possible opportunity of succeeding with your Amazon FBA accounting.

What Characteristics of Amazon’s Bookkeeping Set It Apart From the Majority of Other Businesses?

The accounting for Amazon is most effectively handled using an accrual system, in contrast to the majority of other small firms, which operate using a cash basis:

The Challenges of Cash Basis Accounting

The issue with accounting on a cash basis is that it’s possible to buy inventory weeks or months before you sell it. Then you don’t get paid for it until at least two weeks after it’s been sold and sent. This can be a significant delay. When using the cash basis of accounting, it is possible to have months that appear to be very profitable or very unprofitable.

Benefits of Accrual Basis Accounting

Accounting based on accruals brings this into balance by synchronizing the timing of sales with when products are dispatched. This means that we record the entire amount you sold in a month, even if you haven’t yet received payment, and we match it with the cost of the things you sold, although you may have purchased them a long time ago. In this method, you can determine, for each product you sell, whether or not you are generating a profit!

Real-World Impact: A Comparison

To illustrate the real-world impact, here’s a side-by-side comparison of the earnings of the same company over two months, viewed from an accrual basis versus a cash basis:

In the first month of the contract, the company invests significantly in inventory, resulting in a negative cash flow for the entire period. When assessing the cash side of the business in the second month, the firm does not acquire any inventory, creating an illusion of immense profitability.

However, neither month accurately reflects the true situation at hand.

Managing COGS and Landed Costs

On the accrual side, including total sales before Amazon fees, showing the fees separately, and directly tying the cost of goods sold (COGS) to the products shipped in a given month, rather than what was purchased, presents higher sales.

Minimizing Costs and Achieving Alignment

This approach creates the appearance of elevated sales and results in a month appearing profitable. In the subsequent month, a typical variation includes a slight increase in Amazon fees and COGS. Without accrual accounting, understanding the true state of the firm and making accurate month-to-month performance comparisons becomes challenging.

For operating an Amazon-based firm, precise management of COGS and leveraging landed costs is crucial. COGS often represents one of the most significant expenses for Amazon sellers.

To determine the actual cost of selling merchandise, consider the selling price and include expenses like shipping, duties, fees, and more for transporting items to the Amazon fulfilment centre.

The primary objective is to minimize unit costs and align them with the comprehensive “all-in” total cost of selling the product. While spreadsheets can track costs for a few items, as your product range expands, inventory management software becomes essential for accurate tracking and staying on track.

Channel-Specific Tracking

If you have multiple sales channels, it’s crucial to track income and expenses separately for each channel (e.g., Amazon US, Amazon UK, Shopify, Wal-Mart, eBay). Even if you sell the same products in different markets, it’s essential to determine which channel provides the highest return on your time investment.

To make meaningful comparisons, monitor sales, cost of goods sold, fees, and other channel-specific charges. This analysis can help you identify lucrative expansion opportunities and areas where efforts may not yield worthwhile results. Combining everything into one overall result can obscure the fact that one channel might be disproportionately supporting others or even masking losses.

Preparing for Selling the Business

When preparing to sell your business, categorize operating expenses separately from overhead expenses. This distinction is important as the worth of your company relies on Seller’s Discretionary Earnings (SDE), which include profits and non-essential expenditures. By informing us in advance, we can divide these expense categories in your chart of accounts. Monitoring SDE over a year forms the basis for determining your company’s worth. Separating expenses in advance saves time and provides a month-by-month snapshot of potential sale value.

How to Keep the Books for Your Online Store If You Sell on Amazon

Try Amazon bookkeeping and accounting in two ways:

• The business owner can handle the accounting themselves.
• The business owner can engage a professional to conduct the accounting.

Let’s talk about the second choice first because it’s the simpler one (and often cheaper, but more on that in a minute).

When you hire a professional bookkeeper, all the pressure and tension you have been carrying is lifted off your shoulders. You won’t have to worry about it being done, done on schedule, or done right. We will take care of all of those things for you. In addition, outsourcing this duty enables you to focus on other parts of your business, such as product development and marketing, which are likely to provide you with higher satisfaction.

Security breaches can cause disruption, but when it comes to financial data, the repercussions are dire for both the client and the financial services provider. There are chances of massive sums of money being lost, sensitive account information being compromised, and both the company’s employees and customers are likely to suffer.

As the systems and processes that allow our banks and financial institutions to operate become more digitized, the possibility of fraud and infiltration becomes an even greater concern.

Accounting Backup of Data is Required for Various Reasons, Regardless of Industry

Data backup is intertwined with sustainability and business continuity. The company’s accounting data must have a recent backup to ensure business continuity. Assume the company stores all data on a single device and does not create backups. In that case, it risks losing that data, which could disrupt business and negatively impact operations.

Assume a company does its accounting and bookkeeping by hand. Only a few people have access to financial data, and these individuals may leave the company in search of better opportunities. In that case, the company risks losing accounting data due to technical failures and the destruction of paper records.

Data backup is beneficial in terms of preserving financial well-being. An unanticipated disaster that affects data records can jeopardize an organization’s financial standing.

Auditable Data

Audit findings frequently point to the need to streamline accounting and bookkeeping processes. It is critical to keep track of every transaction, perform timely reconciliations, and keep an archive of data for easy access.

For a variety of reasons, invoices and receipts may go missing. Audit delays and disappointments may result from insufficient backup. Although many businesses securely save all data, including paper receipts, data may be difficult to access when needed.

Small and medium-sized businesses, particularly those experiencing rapid growth, may struggle to keep order in their physical data storage facilities.

Companies may record transactions on small pieces of paper, which are easily misplaced or destroyed. In this case, a timely backup could save the day.

Negative financial outlook

Accounting data loss could be detrimental to the company. A lack of data backup may throw accounts receivable and cash flow off track, resulting in incorrect payments and income calculations.

As a result, perceptions of poor financial health and inefficiency may arise. Accounting data backups are essential for making informed decisions during data loss. Accounting data provides company stakeholders with instant access to key performance indicators (KPIs) and critical insights for management decisions.

What Could Happen if you don’t have Accounting Backup?

Have you ever thought about what might occur if accounting data is lost?

Numerous factors can cause data loss. Here are a few illustrations:

Data Loss

Other similar catastrophes, such as server failures, hard drive failures, natural disasters, and even man-made catastrophes, can also happen in addition to accidentally wiping your data.

Legal Obligations

You must keep records for a set amount of time in many countries. You should maintain backups to adhere to regulations and guarantee that you can consistently produce data from a particular period.

Another justification for backing up your data is auditors. The ability to quickly and easily access account information can help you avoid time-consuming and embarrassing situations if your company is going under any audit.

Client & Vendor Details

You benefit in several ways from maintaining accurate customer and vendor information in your financial database. You can always find their information when you need to get in touch with them. It demonstrates that you are a trustworthy and effective company because you know where to send invoices, payments, and other documents.

You could face many problems if you lose this information, so ensuring it’s well-backed up will spare you any future hassles.

Time Wasting

If you hire someone to keep your books, you have already paid them for the time it takes to enter all of your financial records.
If the worst were to happen and everything had to be entered again, you would pay them twice for the same work.

Because they aren’t dealing with your current finances, your bookkeeper’s time is wasted. This may result in delays in maintaining daily accounts, invoicing, and paying bills or wages. The repercussions could even cause cash flow issues.

Investors and Planning

To determine how well a company is doing, it is frequently necessary to examine financial records for various times of the year or to compare them to previous years. Without this type of information, directors and investors cannot make decisions.

Regular accounting backups ensure that it is available for presentation when needed. This adds the benefit of making your company appear more organized and professional.

Peace of Mind

With cybercrime on the rise and the ever-present possibility of system crashes or other forms of disaster, knowing that all of your critical financial data is adequately backed up provides peace of mind.

The results are the same regardless of the cause. Data loss affects everyone, causing ripple effects throughout the organization, lowering morale, and harming your reputation. You may lose clients or jeopardize your business continuity.

You may face fines or legal consequences if Personally Identifiable Information (PII) is exposed. It will, at the very least, force you to work much harder to get things back on track. Some businesses may not survive, depending on the extent of the damage.

Here are some of the items at stake:

• Transactions
• Bank account information
• Payroll data
• Sales data
• Reports, and pay stubs
• Vendor account activity
• Aged payables
• Invoices
• Budgets
• Expenses

If this data is lost, you and your team will face numerous difficulties. Trying to re-enter all that data from hard copies or other sources will require significant time, effort, and resources.

Fortunately, Unison Globus comes in handy here as it offers a solution that can help you avoid all of this. Our experts back up all your essential files are continuously by so that you can restore anything from specific items to attachments, expenses, reports, and more.

Have Accounting Backup data and protect the business

The stability and health of the company are directly protected. Local incremental backups are fine for less valuable data, but the most sensitive files, like financial information, client information, and so on, should have a cloud backup.

Accounting backup of data is essential for any company. They are your plan B in case things go wrong. Data backups will save you money, time, and effort. It gives you an edge over your competitors and makes sure your business keeps running. Having backups of your financial data will also ensure that people are doing daily reconciliation the same way every day.

Find out how Unison Globus QuickBooks Advanced can help you automate this process and access your financial data from anywhere, at any time.

AP AR Processes

Get AP AR processes in order and maximize your cashflow. Checkout below infographic to know more.

Account Payable

1. Manage payments and balances

2. Straight-Through Processing of Invoices

3. Taking Advantage of Every Early Payment Discount Automatically

4. Cut Processing Fees and Costs

5. Time Payments To Your Advantage

6. Evaluate And Serve Suppliers More Effectively

7. Use Commercial Credit Cards Easily

8. Always Have Emergency Reserves

Account Receivable

1. Evaluate Credit Terms

2. Create and Follow Credit Policies Strictly

3. Swiftly Handle Clients Who Frequently Pay Late

4. Monitor Accounts Receivable

5. Time Payments To Your Advantage

6. Automate Accounts Receivable

7. Be precise with follow-up reminders

8. Forecast Recurring Revenue

Checkout this guide on AP AR processes from Zoho to know more in detail.

Several unknown circumstances hinder the firm’s capacity to maintain its finances. This suggests that improving cash flow management necessitates the assistance of a professional and the implementation of new technology. An account receivable and payable process hence can improve your cash flow maximization.

Get in touch with Unison Globus.

How to start a Virtual Bookkeeping Business in 2023?

Starting a virtual bookkeeping business in 2023 can be an exciting and rewarding venture. As businesses increasingly turn to remote solutions, the demand for virtual bookkeeping services continues to grow.

If you have a passion for numbers, organisational skills, and the desire to work independently, starting a virtual bookkeeping business can offer you the flexibility and potential for success in the digital age.

Step 1 – Define Your Purpose

Why are you starting a virtual bookkeeping business?

This “why” is your bookkeeping business’s purpose, and it’s important that you, your team, and your clients understand it.

Step 2 – Define Your Target Market

After establishing your firm’s purpose, you’ll need to define your ideal client early in your first year.

When starting an accounting business, consider creating a client persona.

• Which industries?
• What’s their problem?
• Who works there?
• Revenues?
• Who knows?
• They like what?

By defining your target market, you can focus your marketing efforts, as we’ll see.

Step 3 – Create a Long-Term Target

Prioritizing decisions, projects, and initiatives when starting a firm is impossible without a clear vision.

Long-term goals:

• Date yourself. 5-10-20 years, etc. You and your firm choose a date.
• Consider your bookkeeping or accounting firm’s goals by that date. It should be measurable and ambitious.
• Maybe it’s reaching $5,00,000 in sales or 1,000 small businesses.

Write yours in your strategic plan.

Step 4 – Create a 1 Year Plan

Once you have a long-term goal for your business, you can create a 1-year plan.

• Date your 1-year business plan.
• Project future business revenues.
• Project future profit margins (backed with a forecast).
• Create 3-7 measurable, attainable goals by that date.
  These are immediate goals to ensure your business is on track to hit its 1-year plan, aligning with its 10-year goal.

Example:

• Employ an assistant
• 30-50 clients
• Website launch

Step 5 – Establish Your 90-Day Rocks

Let’s divide your 1-year plan into 90-day rocks:

• Pick a future date, likely the end of your next quarter.
• Look at the 3-7 goals in your 1-year plan and chunk them into 3-7 specific, measurable, attainable priorities for the next 90 days.
• Complete your simplified strategic plan by listing your rocks.

Embark on the journey of launching your very own Virtual Bookkeeping Business today! Dive into our comprehensive guide and take the first steps towards building a successful venture in the digital realm. Contact us to kickstart your entrepreneurial dreams

A company that hires or contracts with a client’s (typically temporary) staff is an umbrella company. The recent implementation of IR35 and off-payroll working laws in the United Kingdom has made umbrella companies an increasingly viable compliance solution.

Umbrella companies (called ‘umbrella agencies’ and ‘umbrella organizations’) are comparable to but separate from PEOs. Whether their concentration is domestic or international, umbrella companies are more prevalent in the United Kingdom and Europe, while PEO services are more prevalent in the United States and Asia.

Why Use an Umbrella Company?

Independent contractors may use an umbrella firm for numerous reasons. Starting as a contractor is easier than forming an LLC, which might be confusing.

If you want to contract for a short time, an umbrella company is easier than forming a limited company and dissolving it afterward.

IR35 contract – In that instance, you may prefer to work through an umbrella company because it will reduce the limited company tax benefits and administrative load. Your end client or recruitment agency may only work with you through an umbrella firm due to IR35.

The law applies even if you employ British workers in the United States. The off-payroll working regulations apply to any UK resident contractor who trades via a UK-based limited company, regardless of where they operate.

Therefore, IR35 regulations will apply if a contractor works for you in the United States, which has a “Reciprocal Agreement” (RA) with the United Kingdom addressing tax and social security.

You only pay the umbrella firm’s margin during the weeks you are employed.

When you are unemployed, you are not required to pay. Using a limited liability corporation would require you to pay your accountant regardless, but at a lower rate.

How Does an Umbrella Company Work?

Umbrella companies are third parties paying independent contractors for services to an agency or customer. An umbrella will invoice the client or agency for the amount and pay the contractor after deducting taxes and National Insurance.

The typical procedure for joining an umbrella company is as follows:

1. Even if your agency recommended a particular umbrella company, you should thoroughly investigate its suitability before signing a contract.

2. Contact via the official website.

3. Sign a contract with the umbrella company

4. Next, they will sign a contract with your recruitment firm.

5. Perform your duties and submit your hours for approval to the client before submitting them to the umbrella firm for processing.

6. The umbrella firm will pay you after billing the agency or customer with all applicable deductions and expense allowances.

7. After the tax year, you will obtain a P60 or P11D and will be able to reclaim any remaining expenses.

Key Benefits of Umbrella Organization Arrangements

An umbrella company acts as a liaison between the client, the recruitment agency, the worker, and itself.

Utilizing an umbrella company has many potential advantages for businesses that are expanding overseas, including:

Compliance

Engaging an umbrella company guarantees that your overseas operations are legally compliant, which reduces the likelihood that you will have to pay back taxes, mandatory contributions, and penalties.

For instance, they assure full compliance with termination and redundancy rules and all applicable deductions.

Potential tax benefits for workers

In other instances, the umbrella company employs a limited company owned and run by the individual worker rather than employing the individual worker directly.

While this arrangement is not risk-free, it may permit the deductibility of additional expenses and a potential reduction in taxable income.

Note that the legality of other umbrella agreements varies from country to country, and you should seek expert counsel before entering into a specific arrangement.

Umbrella Company – Advantages

Both companies and workers benefit from umbrella companies.

Benefits for companies

A business that hires workers through an umbrella company also gets some benefits.

Some organizations may prefer to collaborate with employees of umbrella companies as opposed to engaging independent contractors or direct employees since this structure can benefit them:

Promote global employment:

If a company wishes to hire in another country, it may deal with an umbrella company there. The umbrella company can find legal contractors abroad via a transitory setup.

This is advantageous if you wish to hire someone for a project or consulting but not permanently. You can hire contractors directly in these scenarios.

Avoid worker misclassification:

Countries have laws that distinguish between contractor-client and employee-employer relationships. You could be penalized or sued if you hire a contractor, but the government determines they should be an employee instead.

Employers must now ensure that contractors aren’t misclassified under IR35. When you hire through an umbrella company, you don’t have to worry about misclassifying them.

Benefits for workers

Being an employee of an umbrella company has some advantages over being a contractor who works independently.

The main reasons why workers choose this option are:

Ease on taxes:

You only pay the margin to the umbrella company during the weeks you work. If you are not working, you have no financial obligations.

When working through a limited company, on the other hand, you will be required to pay your accountant no matter what, but they may charge you a lower cost.

Provide benefits:

Workers could get benefits they wouldn’t get as contractors if they worked for an umbrella company. In some countries, benefits packages may include pension plans and health insurance.

Umbrella Company – Disadvantages

There are also some considerable downsides to working with an umbrella company that both companies and workers should consider before making a deal.

Disadvantages for companies

Employing independent contractors under an umbrella company rather than directly as employees has significant drawbacks. In this regard, the following are some downsides of the umbrella company model:

Incompatible with conventional job arrangements:

You shouldn’t use an umbrella company if you want to hire exceptional employees permanently. Independent contractors can sign a contract for a specific duration but aren’t compelled to remain forever.

This personnel can choose how they do their work because they are not conventional employees.

Often connected to staffing firms:

Working with an umbrella company typically involves working with a staffing firm. This means you will engage with a recruitment agency to provide you with personnel and use an umbrella company to pay them.

This structure can feel cumbersome compared to recruiting staff directly and restricts your ability to select employees. If you desire greater control over your recruitment, you should avoid umbrella businesses.

Limited to HR basic functions:

Remember that umbrella companies offer restricted services if you plan to hire globally. They can pay employees, keep records, and give legal benefits. They are not, however, a resource for worldwide expansion, as you would find with an Employer of Record.

Disadvantages for workers

Workers must consider various risks before employing an umbrella company, freelancing, or becoming a client’s employee. Among the disadvantages of dealing with umbrella companies are the following:

Temporary work:

Working for an umbrella company may benefit employees over being independent. Only contract work is allowed. Even if the umbrella company hires people, they work temporarily for several clients.

If this sort of employment is less desired than long-term employment with a single organization, the person should seek a more traditional job.

Offers fewer tax benefits:

As employees, workers cannot deduct as many expenses as self-employed individuals under this paradigm. If they are accustomed to deducting work-related expenses, they may lose this flexibility upon becoming employees.

Some umbrella companies say they can assist workers in maximizing their take-home income through “tax-efficient” tactics, yet they may be engaging in tax avoidance. Employees may owe overdue taxes, interest, and other penalties.

FAQs

Q1. How do I select an umbrella company?

There are several important elements to consider while selecting an umbrella company.
These consist of:

• Fees
• Quality of service
• Speed
• Industry reputation
• Testimonials
• Compliance and qualifications

Q2. What is the fee to join an umbrella company?

Typically, there is no price associated with joining an umbrella business.

Find an umbrella company that conforms with HMRC and charges no joining cost.

Q3. What expenditures can I deduct as an independent contractor?

In general, only reimbursable expenditures are paid to umbrella employees; these are reimbursed on top of their weekly or monthly income upon submission of the appropriate documents and permission by the client firm.

This drastically restricts the expenses to claim, although it is crucial to note that if you have purchased something strictly for work-related purposes, such as a uniform or tools, you can still claim tax relief at the end of the fiscal year.

Q4. Exist unusual situations in which umbrella employees may claim tax deductions for expenses?

Again, contractors are now subject to the same standards as permanent workers. Therefore the same restrictions apply. It is doubtful that a permanent employer would cover meals or daily commutes.

Still, they may cover travel costs for mobile workers or one-time excursions to other places for business purposes.

Nevertheless, your recruitment agency, not your umbrella agency, must process all expenses in compliance with the revised standards.

Learn more about an umbrella agency or international PEO

Contact Unison Globus if you want more information about umbrella companies or other cost-effective methods for achieving global expansion. We concentrate on offering worldwide business solutions to organizations that lack current legal entities or require additional office support.

Our global business services enable foreign companies to cut administrative costs, streamline and consolidate payments, and delegate compliance and regulatory problems to local businesses with existing contacts with government agencies.

Contact us to learn more about how we can assist your company’s expansion into numerous attractive locales.