The Balance Sheet, Inc.

Bookkeeping Company | Tax Service

Accountants In West Palm Beach

(561) 842-1304

5725 Corporate Way, Suite 205
West Palm Beach, FL 33407

You are here: Home / Archives for Financial Statement

The Major Differences You Should Know About Cost Accounting and Financial Accounting

By

accounting services, financial accounting, cost accounting

 

Many people wonder about the differences between cost accounting and financial accounting. Both accounting methods can help make more effective decisions as a business manager. Yet, there are significant differences between the two.

Let’s first start by defining each one.

  • Cost accounting applies costing methods and techniques to reduce business costs. Its main goal is to calculate the cost per unit of your business’ products or processes.
  • Financial accounting classifies, stores, records, and analyzes a company’s financial statements. The goal is to improve the business’s profitability and increase its transparency. Financial accounting presents an accurate financial picture of a company to the stakeholders.

The major differences between cost accounting and financial accounting are as follows:

  1. Cost accounting helps you determine the expenses associated with each of your products. Financial accounting helps better understand a company’s profitability through its financial statements.
  1. Cost accounting is a tool used by management to improve business process efficiency. Financial accounting presents the business’s performance.
  1. Cost accounting focuses on the internal aspects of a company. Financial accounting focuses on its external aspects. While cost accounting helps improve a company’s processes, financial accounting is profit-oriented.
  1. The use of cost accounting is not mandatory in all companies. Only those using manufacturing processes or activities must use cost accounting. Yet, the use of financial accounting is a must for all organizations.
  1. Cost accounting is not performed as per any particular period. Rather, it’s performed in a short interval of time as in the production of a unit or product. Financial accounting records an organization’s financial activity for a given financial period.
  1. Additionally, estimation is important in cost accounting. It helps determine the per-unit cost of sales. In contrast, every transaction in financial accounting is reporting based on actual data.
  1. Cost accounting uses tools to help improve the efficiency of business operations. These include the cost of sales, product margin, and selling price of products. Financial accounting uses financial statements, journals, ledgers, and trial balances.
  1. There are also differences in presentation between the two methods. Financial accounting requires specific format parameters. As for cost accounting, the format of reports can vary.

 

It’s clear that cost accounting and financial accounting are quite different. There are many benefits to using both approaches. Combining these methods is a powerful tool to propel your business to the next level.

Are you looking for accounting help? Contact us for a free consultation at (561) 842-1304.

Sources:

  • “The difference between cost accounting and financial accounting.” AccountingTools. Accessed January 06, 2018. https://www.accountingtools.com/articles/what-is-the-difference-between-cost-accounting-and-financial.html.
  • “The Difference Between Cost Accounting and Management …” Accessed January 6, 2018. http://www.bing.com/cr?IG=DC12E060B6F343D8881D72E81566233C&CID=26D6ADED7CBE6DE625CEA69D7D186C87&rd=1&h=_v5M4ek30sfZxx67H46YHkBpFKpSLonFUTndzw_8l7c&v=1&r=http%3a%2f%2fwww.businessessentials.co.za%2f2017%2f04%2f07%2fdifference-cost-accounting-management-accounting%2f&p=DevEx,5059.1.
  • Anjali «╬♥Áńĵáĺℐ♥╬«, — Follow. “Difference between financialaccounting and cost accounting.” LinkedIn SlideShare. February 18, 2017. Accessed January 06, 2018. https://www.slideshare.net/anjali106/difference-between-financialaccounting-and-cost-accounting-72297700.

 

5 Tax Planning Strategies for Professional Service Providers | The Balance Sheet Inc

By

tax services, tax consultant, tax preparation servicesAs a professional service provider, applying effective tax strategies can help you meet your financial goals. While you may feel too busy with the demands of your practice, it’s crucial that you take the time to plan your tax strategy.

Here are 5 top tax planning strategies that will help you accomplish your business and financial goals this year:

1. Maximize your deductions

If you’re claiming itemized deductions, you may be able to take advantage of the Net Operating Loss Carryover, if available. Keep in mind that the Net Operating Loss Carryover must be clearly shown on prior income tax returns and financial statements. You can claim your Net Operating Loss Carryover within three years of from the year in which the loss was incurred.

2.Leverage your tax credits

Tax credits are for things like energy, offering medical insurance, and more.  To fully leverage your tax credits, you need a knowledgeable tax professional to let you know what credits apply to your business. Feel free to contact us, we’re eager to help.

Corporate income losses from prior years may be used as credits against your income tax due. Losses can either carry back 2 prior years or carry forward for 20 years. Consult with your tax professional on the best strategy for you.

3.Get Charitable

If you’ve made charitable contributions to accredited institutions, you may be able to deduct these fully. However, in order to claim your charitable contributions, you may have to provide a Certificate of Donation. Any time a donation is over $250 a statement is required.

4.Mind your excess income tax payments

If you’ve overpaid your income tax, you may be able to apply that tax credit to the following year or receive a refund. Keep in mind the option to carry over is irrevocable.

5.Track your unappropriated retained earnings

Unappropriated retained earnings refer to the net income that has not been allocated as income to its shareholders or officers. They are usually distributed as dividends and taxable at that time. Timing of distribution can affect your tax bill.

Are you wondering about the best planning tax strategies for professional service providers? Contact us for a free consultation at (561) 842-1304.

Sources:

“Tax planning strategies.” BusinessWorld. Accessed August 26, 2017. http://www.bworldonline.com/content.php?section=Economy&title=tax-planning-strategies&id= 127590.

Hananel, Eric. “Tax Planning Strategies for Individuals in 2017.” Investopedia. January 10, 2017. Accessed August 26, 2017. http://www.investopedia.com/articles/taxes/011017/top-tax-planning-strategies-2017.asp.

PricewaterhouseCoopers. “Personal financial services.” PwC. Accessed August 26, 2017. https://www.pwc.com/us/en/private-company-services/personal-financial-services.html.

 

 

Differences Between Bookkeepers, Accountants, Certified Public Accountant (CPAs), and Enrolled Agents (EA)

By

taxaccounting, bookkeeping, tax services

 

You may have heard about the terms bookkeeper, accountant and Certified Public Accountant (CPA), but you may not have heard about Enrolled Agents (EAs). You may also have noticed that these terms often get used interchangeably. Yet, there are some significant differences between them.

1. Bookkeepers

Traditional bookkeepers don’t need to have a college degree. Their main tasks revolve around day-to-day recording of business transactions and monthly accounting cycles. Their duties consist in entering transactions into bookkeeping journals and preparing monthly reports.

In some cases, bookkeepers are also responsible for Accounts Payable or Accounts Receivable. Some of their other responsibilities may include payroll, collection activities and bank deposits.

More experienced or certified bookkeepers grow in their careers to become accountants. In many instances, bookkeepers may work closely with accountants. In terms of salaries, bookkeepers may be less costly to a business than accountants or Certified Public Accountant (CPA).

The Enrolled Agent (EA) will make use of the bookkeepers records to prepare the business’ taxes.

2. Accountants

Unlike bookkeepers, most accountants have college degrees in accounting or 120 to 150 college credits. Their duties generally involve more complex transactions, and adjustments to a company’s books. These include computing the allowance for accounts receivable or depreciation. They are also more likely to work for larger companies.

Bookkeepers record financial transactions. Accountants interpret and classify financial data.

They may also prepare financial statements and perform tax planning activities.

3. Certified Public Accountants (CPA)

Besides a college degree, CPAs also have an extra 30 hours of college coursework. They take a standardized exam to earn their state licenses.

CPAs can handle a variety of complex tasks for businesses and individuals. They perform activities such as tax preparation, financial planning, and investment planning. They may also be in charge of preparing and maintaining financial statements. They can also be involved in audits.

Many careers are available to CPAs in public or corporate accounting. Many CPAs get promoted to high-level executive positions as controllers, for instance. They also give advice in areas like internal and external auditing and forensic accounting.

4. Enrolled Agents (EA)

Enrolled Agent a federally authorized tax professional, who has technical expertise in the field of taxation and is empowered by the US Department of the Treasury to represent taxpayers before all administrative levels — examination, collection and appeals — of the IRS.

Like the CPA they must pass a 3-part exam, all based on tax and tax laws. EAs must complete 72 hours of continuing education every 3 years. They also adhere to strict ethical standards.

When Should Bookkeepers, Accountants, CPAs and/or EAs be hired?

Bookkeepers perform technical transactions requiring less proficiency and training than accountants. The more complex the operations or the organization is, the more important it is to hire an accountant with more expertise.

Accountants or CPAs may perform more technical accounting tasks requiring more expertise. Companies also hire them to provide managerial advice.

Enrolled Agents (EAs) are used for their tax expertise and their ability to represent clients before the IRS.

Are you wondering about the differences between bookkeepers, accountants, CPAs, and EAs? Contact us for a free consultation at (561) 842-1304.

 

Sources:

“The Differences Between Bookkeepers Vs. Accountants Vs. CPAs.” The Finance Base. Accessed August 26, 2017. http://thefinancebase.com/differences-between-bookkeepers-vs-accountants-vs-cpas-4980.html.

Staff, Investopedia. “Certified Public Accountant – CPA.” Investopedia. November 19, 2003. Accessed August 26, 2017. http://www.investopedia.com/terms/c/cpa.asp.

CPA VS Accountant. Accessed August 26, 2017. http://www.accountingedu.org/cpa-vs-accountant.html.

“What’s the Difference Between a Bookkeeper and an Accountant?” QuickBooks. May 19, 2017. Accessed August 26, 2017. https://quickbooks.intuit.com/r/bookkeeping/whats-the-difference-between-a-bookkeeper-and-an-accountant/.

 

5 Tips for Successful Financial Statement Preparation Services

By

Financial Statement Preparation Services

If you need financial statements prepared, you should use a professional accountant.

The financial statements of companies usually include the following: income statements, balance sheets, statements of retained earnings and cash flow, and other financial summaries.

How to Find Great Financial Statement Preparation Services

The best way to deal with financial statements is to hire an accountant. The following tips will help you find a qualified professional accountant to prepare your financial statements.

  1. Research and receive a referral. Ask business colleagues, your bank or an attorney to refer you to a skilled accountant. You can usually find information published by the Society of Certified Public Accountants in your state. Remember that you need a reliable professional for financial statement preparation services.
  2. Interview all the candidates. You will need two meetings with the accountants – one at your site and one at theirs.

Since there are three categories of accounting services, you should know for sure that the accountant you hire can deals with financial statement preparation, specifically with the type of report you need.

  1. Make sure that the accountant’s style is compatible with yours. Ask the candidates how they would handle situations relevant to your business.
  2. Ask about their fee. Accounting companies usually charge per hour. Still, there are others that work with a monthly retainer. Make a comparison between the fees of the accounting companies and choose the one that fits your budget.

Your decision should not be based only on the price.  The accountant who charges higher is usually more experienced and able to work better and faster than an inexperienced accountant who charges less in order to attract clients.

  1. Ask for references. When you receive references and call the companies the accountant has worked for, you will find out valuable information about how their professionalism. A lack of references is a red flag. It could mean that either the candidate is inexperienced or that his/her work is not satisfying.

You can find the right accountant for financial statement preparation if you do your research. Hiring an accountant with references and good professional reputation can save you money in the long run.