Capital Or Operating Leases ? What Is The Difference To My Business ?

When business owners and financial managers enter into business equipment leases there needs to be an election, or ‘choice ‘ at the start of the transaction as to whether the company will reflect the lease on the company’s books as a capital lease , or an operating lease . What is the difference between these two leases, asks the business owner, as long as I have received equipment and financing approval ?

The answer is that the type of lease that the business has entered into has a direct impact on the company’s financial statements . Each lease has is own type of characteristics , and needs to be classified properly by your accountant .

Accounting standards have essentially established four criteria around how the business must treat the lease . Things are kept relatively simply, because in realty the tax department says that if your business equipment lease meets any one of the four criteria it is to be treated as an capital lease .
It goes without saying that lenders who specialize in operating leases make significant efforts to ensure their equipment leases do not pass any of the four criteria .

Lets looks at the 4 criteria . They are as follows :

3. LEASE TERM IS > or = 75% OF THE ASSETS ECONOMIC LIFE ( More about this one later!)

Title transfer is simply that, at the end of the lease the title of equipment, the ownership, reverts to the borrower , or lessee ,.
In he bargain purchase option scenario many leases are written so that at the end of the lease the customer has the right to purchase the asset for a specific amount. Many lessors simply use 1.00$ as the bargain purchase option amount, as they have essentially recovered all their capital and interest .

In category three if the lease term , or length of the lease, is equal to 75% of the life of the asset the transaction is viewed as a capital lease . This is certainly one of the grey areas of leasing, as we can all imagine as to who can really say what the useful economic life of any piece of machinery , etc, is? The whole point here is that if a lease has a short term then clearly it could be attacked as being a rental , with the owner having no intention to acquire the asset .
For our final category item, if the present value of the minimum lease payments is equal to or greater than 90% of the equipment value the government is essentially saying ? you own it ?! At this point the tax department is saying ? this is the same as if you were to buy the asset outright?.

In summary, if any of the four criteria are in place for any business equipment lease the lease is to be treated as a capital lease .

The accounting treatment is different for a capital lease, versus and operating lease , and that treatment will be explored outside of this article .

Accounting First Steps In Starting A Business- Helpful Hint About Accounting Software’s

I am sure your quest for accounting first steps in starting a business has come to an end as you read this article. Yes, gone are those days when we have to search endlessly for accounting first steps in starting a business information or other such information like accounting degrees, online accounting, cash flow statement or even wings accounting software. Even without articles such as this, with the Internet all you have to do is log on and use any of the search engines to find the accounting first steps in starting business information you need.

Comparison of the sales prices for Mug’s grass seed with what MAG had to pay for it showed a 20 percent decline in gross profit margin (sales – cost of goods sold = gross margin). The solution was to dock sales commissions for the amount under the company’s list price. Profits miraculously rebounded. Was the language the accounting system used to describe these two problems foreign? No. Was the solution a great mystery? Again, no. For TDO, the answer was simply to collect receivables faster. The accounting system identified the delinquent customers. For MAG, the answer was to raise prices. Once again, the accounting system showed which products and salespeople weren’t following company policy.

Having the same person draft the checks and reconcile the checking account is a good example of how not to assign accounting duties. We’ll talk extensively about internal control later. However, for now, small businesses often can’t afford the number of people needed for an adequate separation of duties. The internal control structure that we’ll install in your new accounting system helps mitigate that risk through mechanics and procedures rather than expensive people.

There may also be intangible assets owned by your company. Patents, the exclusive right to use a trademark, and goodwill from the acquisition of another company are such intangible assets. Their value can be somewhat hazy. Generally, the value of intangible assets is whatever both parties agree to when the assets are created. In the case of a patent, the value is often linked to its development costs. Goodwill is often the difference between the purchase price of a company and the value of the assets acquired (net of accumulated depreciation).

I know that as informative as this article is, it might not adequately cover your accounting first steps in starting a business quest. If this is so, don’t forget that the search engines like Dogpile Dot Com exist for looking up more information about accounting first steps in starting a business.

The formula for calculating the amortization on an intangible asset is similar to the one used for calculating straight-line depreciation. You divide the initial cost of the intangible asset by the estimated useful life of the intangible asset. For example, if it costs $10,000 to acquire a patent, and it has an estimated useful life of ten years, the amortized amount per annum equals $1,000. The amount of amortization accumulated since the asset was acquired appears on the balance sheet as a deduction under the amortized asset.

Inventory accounting may sound like a huge undertaking but in reality, it is quite straightforward and easy to understand. You start with the inventory you have been on hand. No matter when you sell a product, the value of your inventory will remain constant based on accepted and rational methods of inventory accounting. Those methods include weighted average, first in/first out, and last in/first out.

Management accountants—also called cost, managerial, industrial, corporate, or private accountants—record and analyze the financial information of the companies for which they work. Among their other responsibilities are budgeting, performance evaluation, cost management, and asset management. Usually, management accountants are part of executive teams involved in strategic planning or the development of new products. They analyze and interpret the financial information that corporate executives need in order to make sound business decisions. They also prepare financial reports for other groups, including stockholders, creditors, regulatory agencies, and tax authorities. Within accounting departments, management accountants may work in various areas, including financial analysis, planning and budgeting, and cost accounting.

Many people that searched for accounting first steps in starting a business also searched online for accounting accounts, financial software, and even free accounting software non.

Earn Profits With Real Estate Accounting

If you are planning to make an entry in the industry of real estate, then the first thing to be emphasized is your accounting department. The entire business of real estate runs on the mechanism of transactions and calculations. Every task from lodging the data entries to the creating of tax return files is needed to be conducted with utmost attention and sincerity. Therefore, it is very important for any real estate company to be well equipped with the team of efficient and qualified accountants who have the capability of carrying out the entire procedure of accounting. All these issues finally make the requirement of a proficient and skilled real estate accounting team is inevitable.

Nowadays, almost all of the business organizations dealing in the task of real estate are seeking some or the other sort of real estate accounting plan so that a more meticulous approach can be followed. The most popular form of availing this assistance is the source of outsourcing. Many real estate firms are getting associated with numerous outsourcing firms which in turn are offering the services of real estate accounting. With the selection of this source, they not get the assurance of receiving efficient accounting management but can also save a lot on their time as well as money. These outsourcing firms are recruited with brilliant and well informed accountants who have all the knowledge about controlling the business of real estate. Moreover, they also make use of technical tools and smart softwares that increases the pace of the work.

Generally, these real estate accounting outsourcing vendors offer their services on the basis of contracts where the charges are quoted according to the task and the number of accountants employed for the same. On comparison, it has been proven that the total cost of taking accounting help from vendors is much lower than the expense a company makes by employing the in house accounting team. This is mainly because the organization gets the leniency of not paying various allowances such as medical, house and travel expenses. In addition to this, if a company has just started their business and cannot afford to make heavy payments then they can also opt for an individual accountant who is well qualified and has years of experience.

However this facility of intelligent account management can be enjoyed only if the owner makes an intelligent decision while selecting his or her preferred real estate accounting outsourcing firm. Therefore, it is advisable to conduct a decent research before finalizing your association with any service provider. First of all make a list of all the competent outsourcing companies and then make an attempt to inquire about their provisions, charges and most importantly their efficiency. You can retrieve this information through their previous clients and projects. In the business of real estate, owners often have to share the details of their company and other important facts about the transactions, which are mostly confidential and private. Therefore, it is very essential to be completely ensured about the reliability of the service provider. Always opt for the firm that is registered and certified.

Small Business Accounting: How to Choose an Accountant

A small business is an enterprise that is usually small in scale in terms of number of employees and/or sales revenues. A large majority of the businesses in the United State are small business. These businesses are usually registered as sole proprietor, meaning one individual owns it, or partnership, meaning 2 or more people owns the business.

One of the problems facing a small business is in terms of accounting. With the limitation in funds, some accounting is done by the business owner. The entrepreneur is tasked to run the business and at the same time handles the day-to-day accounting requirements of the company. Because of this, the company is often penalized by the government for late payment of taxes, late submission of tax documents and at times, non-submission of tax forms. Also, the business can also be penalized for erroneous computations of tax dues. The business owner has his/her hands full with running the business that handling the accounting requirements can be turned over to another person.

A business owner can hire an in-house accountant or he/she can outsource the small business accounting work to a CPA firm like Desert Rose Tax & Accounting. An outsourced accountant can sometimes be more beneficial than hiring an employee because it is less expensive to outsource than to hire. Also, the outsourced accountant doesn’t need a designated space while an in-house needs his/her own space in the office.

In choosing an accountant to handle small business accounting for the company, some tips can be useful. Before opening a business, the business owner must have a ready accountant. Since a CPA requires a license before he/she can practice the profession, one has to make sure that he/she has a license. The accountant must have experience in the kind of industry the business is in.

Also in a small business accounting setup, before hiring an outside CPA make sure that one knows how much the accountant charges. Fees charged by CPA firms can vary widely. It is good practice to compare the accountant fees with industry standards. The accountant must be able to fill the needs of the company. Before hiring an accountant, one has to interview at least 3 or more prospective accountants so one can compare which among the three will best serve the company’s purpose.

In handling the accounting needs of the company, the business owner must ask the prospective accountant about other possible services he/she can offer to the company like sales tax and payroll tax reporting services. Some Certified Public Accountants offer business advice to help the enterprise grow.

Also, the accountant best fitted to handle the small business accounting is the CPA whose accounting firm is also small. Accountants who own small firms understand how small businesses are run. They also have the time and resources to share with the business owner. It’s one thing to have a fancy degree in business and another to have practical experience running a small business. In the event that the business owner sells the business, the accountant must be good enough to discuss with the owner how to go about with the sale so that tax liabilities are minimized.

Prior to signing up an accountant for the small business accounting, the business owner must ask the accountant for client references so that the owner can investigate. One must also make sure that the accountant establishes a business relationship with the owner, meaning the accountant has time to visit the company every now and then rather than just seeing him/her only when it’s tax filing season.

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Easy Tips and Tricks to Get Small Business Accounting Right

Making mistakes in your accounting can have serious implications for any business, such as significant fines for suspected tax evasion. For a large corporation, this can damage both the finances and the reputation of the company. For a small business however, it can have a huge impact and possibly even cause the company to go under, if there is not enough money to pay the fines.

Good accounting is therefore essential right from the very start. Many small business owners believe that they do not need to do any kind of accounting, or do only basic bookkeeping, but this is wrong. It is critical for every business, no matter its size, to start accounting from the moment it starts trading. Simply keeping hold of customer receipts and invoices is not enough, the business must set up a simple but thorough system to record all transactions made and to produce reports as and when needed. Getting off to a good start with accounting will set your business up for long-term success.

When you launch your small business, open a separate bank account for it. It is not uncommon for sole traders for example to simply use their personal checking account for their business but this then makes it impossible, or at least extremely difficult and time-consuming, to carry out a reconciliation, which is a check to ensure that the figure your bookkeeping tells you should be in the account is indeed the amount in the account.

Reconciling your books and accounts regularly, such as weekly or monthly, is a great way to avoid accounting errors. This way if the figures do not add up you will have more chance of being able to correct the mistake. Imagine trying to find a small receipt from ten months ago, for example. That is the kind of problem that can occur and be impossible to correct if you only check your books against your bank right before you have to submit your annual tax return.

Good bookkeeping and accounting such as producing monthly cash flow statements not only benefits you when it comes to submitting your tax return, which is much easier when you have all of the necessary figures and documentation already in place, but it also benefits you because you can see if you are overspending on particular items or services, and predict whether you will make a profit or loss. You can also start to see trends, such as seasonal increases and decreases in profit, which may otherwise have gone unnoticed.

Another great tip is to find out if you are entitled to any tax credits as a small business owner. Too many small companies do not realise that they may be able to claim certain expenses such as travel, home office costs and even childcare as untaxed. Be sure to do your research to make sure you are not overpaying.

For small businesses who want to keep their accounts in good order but who perhaps do not have the expertise needed to do their own accounting, there are a couple of options to choose from. It is possible to buy accounting software online that will produce reports for you. These are relatively cheap and easy to use, however the reports are only as good as the figures you enter into them so if you make an error, it is likely to go unnoticed.

Hiring a small business accountant, however, ensures that your accounts will be prepared by a knowledgeable and experienced person who pays meticulous attention to detail. You can opt for a local accountant or, to keep costs down, you can find an accountant online who generally charge lower fees.

It would be highly recommended to any small business to hire a small business accountant as a consultant right from the start of the process, which gives them time to familiarise themselves with your business before the busy period at the end of the tax year. However, you want to ensure that you are working with an accountant who understands your position and can advise on how best to handle your finances, so wherever possible opt for someone who specialises in small business accounting and, preferably, who has already worked with small businesses that are in the same industry as you are. If you live in a large city, accountants tend to be readily available with the necessary background, but if none of your local accountants can offer what you need, then it would be best to find one online, rather than opt for someone who only knows how large corporations work.

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IAFEI: Nominations open for Top African CFO of the Year 2017 award

The economy, BRICS, cyber security, tax and financial management will all come under the spotlight at the 46th World CFO Congress to be convened in Cape Town from 9-11 November 2016.
“To further invest in the financial professionals of Africa, we are privileged to announce that the International Association of Financial Executives Institutes (IAFEI) is making an investment of R500,000 towards Africa’s next top 100 CFOs, by giving the best 100 nominated African finance professionals the opportunity to attend the 46th World CFO Congress as guests of IAFEI,” says IAFEI chairman, Fausto Cosi.

Nicolaas van Wyk
Nicolaas van Wyk

“Africa, as an emerging market, is developing significantly on so many fronts, and the role of the financial professional is vital in guiding growth and development in the right direction. It is important for us to not only focus on existing CFOs, but to expose and mentor upcoming finance professionals in Africa as best as possible. By learning from the experienced leaders in the industry, these younger CFOs will have a more successful career in financial management.”

Mentorship programme

From the 100 next top CFOs nominated by a fellow CFO or finance professional, the best candidate will be awarded the Next Top African CFO of the Year 2017 Award at the gala dinner, taking place on 9 November 2016. The person awarded this prestigious title will receive the opportunity of a lifetime to travel to Paris, France from 5 to 9 December 2016 for a mentorship programme, learning from some of Europe’s top CFOs, followed by media exposure and opportunities to engage with local stakeholders back in South Africa for the following 12 months.

“Gaining international exposure is extremely valuable in our industry, and this investment made by IAFEI indicates the importance of developing up and coming CFOs. The person awarded this prize will be able to interact with experts such as Jean-Luc Michel (CAO, Nissan Europe), Armand Angeli (VP, Lumiu Ltd), Frederic Doche (CEO, Decision Performance Conseil), Dominique Chesneau (Managing Partner, Tresoriskconseil) and Jerome Bogaert (Founder, Harmony). This is an opportunity of a lifetime,” says Nicolaas van Wyk, SA Institute for Business Accountants’ (SAIBA) CEO and IAFEI board member.

Candidates that may be nominated must work within the finance department and be earmarked for success, showing promise as an achiever and have an outstanding work ethic. They must be a member of a professional body and have the relevant degree and experience indicative of an outstanding career. He or she must be a worthy ambassador for both SAIBA and IAFEI.

To submit a nomination, a finance professional must identify someone he/she thinks meet the above criteria and would benefit from attending the congress. Nominations can be submitted on the website before or on 25 October 2016. The best 100 candidates will be notified by 30 October 2016.

Properly trained financial managers are key to municipal stability

With the current focus on local government and municipalities, the CFO community both locally and abroad is seeking the immediate implementation of the recommendations by the auditor-general to improve public sector and municipal financial management.
Properly trained financial managers are key to municipal stability
© Andriy Popov
Municipalities in financial trouble

According to the Auditor-General SA (AGSA) report released on 1 June 2016, irregular expenditure has more than doubled since 2010-11 to R14,75 bn. Fruitless and wasteful expenditure in 2014-15 was more than R1bn higher than in 2010-11 at R1,34bn. Unauthorised expenditure also increased threefold from 2010-11 to R15,32bn. In 2014-15, the AGSA rated the financial health of 92% of the municipalities as either concerning or requiring intervention.

Appropriately qualified and protected public sector CFOs and financial managers and officers are a key ingredient in turning the fortunes of South African municipalities around.

“With 60% of the country’s key municipalities in financial trouble and South Africa’s credit rating being reviewed, the CFO community believes that an increased focus on financial sustainability within municipalities is a critical priority for all stakeholders,” says Nicolaas van Wyk, SA Institute for Business Accountants (SAIBA) CEO.

Recommendations need to be fast tracked

The auditor-general, Kimi Makwetu has noted the encouraging improvement in the audit results of municipalities as a result of political, municipal and provincial leadership delivering on commitments to fill key positions with competent people, stabilising the administration and adopting minimum competency requirements.

The public sector and municipal finance leaders need to fast track the recommendations made by the AGSA and provide additional independence and protection for public sector CFOs and municipal finance managers. The only way to ensure the financial sustainability of municipalities and achieve greater governance and efficiency, is to strengthen the role of the public sector CFO and municipal finance officers.

“Public sector CFOs and municipal finance managers are subjected to diverse demands from political party leaders, traditional leaders and the electorate. Their role needs to be strengthened through legislation to protect them from unwarranted influence and to allow them freedom of access and movement to make independent decisions,” comments Van Wyk.

Public sector leaders need to:

Respond urgently to the AGSA’s consistent messages about addressing risks and improving internal controls.

Fill vacancies and address instability in the key positions of municipal managers and chief financial officers as this affects the financial and performance management of municipalities and can have a direct effect on audit outcomes.

Take appropriate action against any person responsible for the high levels of unauthorised, irregular as well as fruitless and wasteful expenditure.

QuickBooks celebrates Mompreneurs

QuickBooks is looking to recognise and celebrate South Africa’s Mompreneurs with the QuickBooks/Entrepreneur magazine and Saturday Star Mompreneur Competition
Being the number one choice of financial software for small to medium business worldwide, EasyBiz QuickBooks recognises the challenges that these growing businesses face in today’s challenging business landscape. Within the South African context, QuickBooks has also identified that a lot of these growing entrepreneurial concerns have been started by ‘Mompreneurs’ – talented and skilled women that have families and other responsibilities and have opted out of the corporate world in order to seek out that elusive state of ‘life balance’ by starting their own businesses in order to be more in control of their own destinies.

This year EasyBiz QuickBooks and Entrepreneur, in recognition of this growing powerhouse of working Moms, has decided to launch the QuickBooks Mompreneur Competition in association with Entrepreneur magazine and the Saturday Star, to celebrate and pay tribute to these incredible women who have taken the brave step of leaving the corporate world to start their own business.

How does it work?

In year one, there will be no restrictions on entry in terms of size of business or turn-over. The rules are simple, you must have started your own business and you must be a Mom. In years to come, categories will be added to the competition, but for this year all businesses will be judged on their own merit in terms of the idea, the execution and its relative success.

For the inaugural Mompreneur Competition in 2016, entries will be driven through online and social media platforms – predominantly through the QuickBooks and Entrepreneur websites and via the Saturday Star. Here, Moms can either enter themselves, or be entered via a nomination. The entry form is simple, and needs to be accompanied by a photograph of the entrant and a short video explaining how and why they started their own business and what that business is. The campaign will run from May to July with the winner being judged by a panel of successful entrepreneurs and business journalists, being announced in August – Women’s Month.

Over and above the accolade of receiving the title of Mompreneur of the Year, the winner will receive the following prize:

QuickBooks Accountant valued at R7,000
eZ Bank Download software
One laptop computer valued at R10,000
A full-page feature in Entrepreneur magazine on the winner and the runner-up (Valued at R49,300)
An UBUNTU Strategic Analysis of their business as well as a Business Builder Programme with 12 Modules to implement changes – R50,000
UBUNTU two-hour consultation on how to grow their business – valued at R15,000
Southern African Institute of Business Accountants – SAIBA – A week’s training in set-up management and bookkeeping
One-year subscription to The Star/Saturday Star
Coverage in the Saturday Star for their business
Full membership at the National Small Business Chamber (NSBC) for one year, sponsored by QuickBooks

Started Your Business, Now Hire Business Accountants To Make It Work

Once you will open a business firm then the first task will be to plan the financial aspect of your business because without proper financial management, a business will cripple down. Moreover, when you will run the firm, then you will have to indulge yourself in various core activities, like managing the customer interaction, idea implementation, product development, marketing etc. Hence, it will become nearly impossible for you to give attention to these issues while also managing the financial side of the business. Therefore, hiring a business accountant will not only ensure a long-term success for your business, but it will also reduce the amount of responsibilities on your head.

These accountants will take care of your company’s audits, cash flows and various other financial services. Besides, if your business will not keep an accounting record and do not manage those records efficiently then it will face disastrous circumstances.

Today every business firm knows the true importance of managing their accounts and taking care of the financial side of any business. They have started hiring the business accountants, because it is a way they can ensure a long-term success for their business.

Once you will hire the accountants you will be able relive yourself from the added responsibility of managing the accounts, managing the updating of the financial records and the bookkeeping tasks. These business accountants will give you the best of the services based on your accounting, bookkeeping and other needs, they will make sure to provide the solution to the every finance related issue that you company might face. This will make sure that you can put all your concentration and energy in the basic parts of a business like client interaction, idea implementation, product development etc. Therefore, you can keep working on growing your business in various ways while they will handle the finances in the background, thus making sure your business works efficiently.

One more reason why you should hire these accountants is that they are full of practical knowledge and they have all the necessary skills to ensure that you can reduce the operating cost of your business. You can outsource you financial needs to an accounting firm, instead of hiring a team of professionals to take care of your business’ finances. This will ensure that you will not have to spend a lot of money in hiring various people and you will end up saving costs in salaries, employee benefits, insurances etc. Therefore, by getting these accountants, you will eventually end up saving the money.

Your overall business success will depend on these accountants, as their services ensure your business develops in an all-round way. They will not only provide you with the best of the solutions but will also give you the best of the financial management services. These accountants come with high qualifications and are dedicated in what they are doing. This ensures them to provide you with the most accurate reports and up-to-date financial records. These records will be error-free and readily available.

These are just some of the benefits you will get by hiring business accountants. Therefore, provide your business with their services, because that will turn out to be the best decision you will ever take.

Benefits Of Business Accounting

Who is Nathan Morris?

Nathan Morris is a senior tax agent and advisor who founded the firm Morris Accounting in East Brisbane. He has over 15 years experience in the accounting field. He helps clients with business management, sales and acquisition as well. He aids the property, building and construction industry. Nathan Morris covers small to medium enterprises, including professionals, manufacturing, wholesale, and retail, hospitality and primary production.

Nathan Morris advises clients with tax minimization strategies and business expansion planning for small, medium and large industries. Some of his specialized skills are in asset protection, business appraisal and evaluation, structural business for startup business ventures, estate planning, finance planning, business planning, cash flow projections, etc.

Significance of a Business Accountant

Every business owner wants to minimize tax legally as well as maximize the revenue as well. The business accountant Brisbane will assist you in structuring a budget that will help you to keep track of your progress. He will help you to establish a business plan that will monitor your cash flow so that you know exactly how your funds are utilized.

The business accountant Brisbane will also have a tax plan in place before the current financial year ends which aids you in minimizing your tax liability as well. The business accountant is either a member of the Institute of Chartered Accountants of Australia or other organizations. He follows a certain set of rules and regulations like the �Generally Accepted Accounting Principles.� In order to find a business accountant Brisbane, you can search in various accounting firms who employ business accountants.

A firm such as KPMG will serve you well in terms of tax, audit, and advisory services. Business accountants offer a full range of financial services along with preparing tax returns as well. Preparing balance sheets is a very complicated skill which can help you to avoid costly mistakes.

Account Services for Small Businesses

Accountants also perform bookkeeping services as well. Managing the day-to-day transactions allows you to keep track of the money coming in and out of the business. There are different methods of bookkeeping which your accountant can advise you on. Tax regulations keep changing all the time as each budget brings up a new round of updates.

Accountants are up-to-date with these changes and they will advise you to effectively manage your business also. Submission of annual returns is legally necessary and you might have to face a fine if you are late in submitting them. The accountant can help you to get money in the shortest time without raising any audit flags. Monthly bank statements will help you when you submit your tax return and helps you to check your monthly expenses as well.

It also helps you to note whether you are gaining profits or losses. You can also look for trends such as seasonal increases and decreases in profit, which otherwise would have been unnoticed. Accounting services for small business act as the backbone of the small enterprise. Without proper maintenance of accounts, you will hardly have an idea whether you are making a profit or a loss.