Business Accounting

Accounting System Design and Installation

Every business, no matter how large or small, needs a solid accounting system. Your business’s accounting system should include, at the least:

  • Regular income statements (also known as profit and loss statements or P & L): Monthly or quarterly income statements allow you to evaluate how well your business is performing.
  • Regular reconciliation of your business bank accounts: Keeping your accounts up-to-date will detect any lost deposits or payments, detect embezzlement by employees, identify unjustified charges by your bank, and manage your cash flow.
  • Ongoing maintenance of your business’s general ledger: Your books should reflect all transactions and payments to or from your business. If your books are not current, you won’t be able to identify any potential discrepancies such as a double billing or missed payments.

Our experienced accountants can do all of this and more to make sure your business is on track.

Strategic Planning

When you are running a business, it is important to understand what your objectives are so that you can make sure you are operating the company in the most efficient way to reach your objectives while staying true to your business and personal philosophy.  A strategic plan is necessary to identify how to allocate business resources and take advantage of opportunities in your business’s target market.

Our licensed CPA’s can develop a strategic plan to:

  • Identify your target market and target customer
  • Evaluate your competition and develop marketing strategy and budget
  • Develop plans for your staffing
  • Create and implement management policies, procedures, and strategy
  • Develop a financial plan based on projected operating costs, revenue, and profits

If you are about to start a new business, expand your current business, or attempt to revitalize a struggling business, consult one of our certified public accounts about developing a strategic plan to help you realize your business goals.

Oversight and Review of Client Financial Statements

Financial statements are akin to the results of your annual physical exam. These statements are a detailed picture of your business’s financial health. Financial statements can help business owners make important decisions about the company’s operations. They can help prospective investors determine whether to invest in the business. Financial statements can also help banks and other lenders decide whether to extend credit to the business.

There are four basic types of financial statements that our accountants can assist you with:

  • Balance Sheet: Also known as the Statement of Financial Position. This statement is a snapshot of a business’s assets, liabilities, and equity. Assets are what the business owns and can include cash, equipment, inventory, real property, accounts receivable and more. Liabilities are what the business owes and can include loans, outstanding payments to vendors, accounts payable, wages due employees, etc. Equity is generally defined as the difference between the assets and liabilities and therefore can be either positive or negative.The balance sheet, or statement of financial position, is part of an annual report but should be kept current throughout the year. Oversight by qualified CPA’s goes a long way to keeping your business’s balance sheet in good order.
  • Income Statement: Also known as the Profit and Loss Statement (or P & L). The income statement is designed to show a company’s net profit or net loss over a specific time frame, usually per month, per quarter, or per year. It is a major component of a company’s annual report. The income statement is particularly useful in conducting management review.This statement reflects two key metrics: income and expenses. Net profit (or net loss) is calculated by subtracting expenses from income. Income equals revenue, usually from sales. Expenses include cost of goods sold, employee salaries and wages, administrative costs, rental fees, income taxes, etc.Remember that a publicly-held company must show basic and diluted earnings-per-share on its profit and loss statement.
  • Cash Flow Statement: The cash flow statement shows the movement of cash and changes in bank balances over a given period of time. This type of statement generally tracks cash flow from operating activities, financing activities, and investing activities.
  • Statement of Changes in Equity: Also called the Statement of Retained Earnings. This statement shows changes in the company’s equity from net profit or net loss, dividend payments, any surplus or loss from revaluation of equipment or property. A company’s equity could also be affected by an accounting error from a prior year. This would need to be reflected in the statement of changes in equity. If you suspect an accounting error from a prior year, particularly if your business was not employing a licensed CPA, you should retain a CPA to diagnose the error and help you understand the impact on your business.

Consultation Regarding Buying or Selling a Business

Whether you are buying your first business or your tenth business, whether you are merging with a competing business or acquiring another small business to expand your current scope of operations, you want to make sure the transaction and transition is as smooth as possible. Here are just a few of the ways that an experienced accountant can help you with the process of buying an existing business:

  • Valuation of the Business to be Purchased: The biggest factor in determining whether to acquire a business is often the purchase price. But the seller’s suggested price may be based on arbitrary or faulty calculations, such as a multiple of gross sales. This may not give you an accurate picture of what type of return you will realize from the purchase. An experienced CPA will know of many different approaches to valuing the business to give you an informed perspective and negotiating power.
  • Reviewing Financial Statements: Financial statements will give the clearest picture of a business’s economic vitality. It is imperative to have a CPA review the financial statements of a business you are considering buying. Furthermore, if the business prepared its own financial statements without the benefit of an accountant, you should have an accountant perform an audit before committing to the purchase.
  • Reviewing Tax Returns: In addition to financial statements, a business’s tax returns for the past three-to-five years can give a good idea of that business’s profitability. And, the tax returns will warn you if the business owes back taxes to the IRS.

Just as with buying a business, selling your business to a third party requires careful planning. Here are a few services we can provide to aid you in the sale of your company:

  • Valuation of the Business: Sale price is obviously important to the seller, just as it is to the buyer. As the seller, you will want to get as much value out of the business as possible. You know that your business’s value is not solely comprised of tangible assets and liabilities. Goodwill and business reputation are valuable, too. A certified public accountant with expertise in business valuation can use various methods, including asset-based valuation, income-based valuation, and market-based valuation, to support a sale price at the fair market value of your business.
  • Preparing Financial Statements: The value of your business can be undermined by having sloppy records. Your company’s financial statements should accurately reflect the quality of your business. If your records are in good condition, you will be better positioned to sell your company for a fair price.
  • Determining and Explaining Tax Consequences of the Sale: Most businesses are formed as a particular type of entity. Legal entities include: corporations, partnerships, and limited liability companies. Depending on which type of entity your business is, the tax consequences may vary. It is important to understand what your tax liability is under any circumstance.