Category: tax

Decide Suitable Business Structure With Assistance of Contractor Accountants

With the changes in marketing policies and business strategies, people are moving towards the profit-making business development. It could be a very good move to start new own limited company. As a contractor or a freelancer, you will get more financial benefits with many opportunities. People can start new business with a good proposition and commitment. Besides, it is also necessary to optimize your business performance through the useful advice of an expert. Professional will provide right direction on business essentials including cash-flow management, funding, payroll services, book-keeping, project planning, etc. Generally, experts give full support to their clients to maintain efficiency in business.

The planning is an initial step for establishment of new limited company with long-term goals. You have to make proper planning on financial assets, business tactics and new contracts. The expert contractor accountants are working for their clients with the primary objective of successful execution of accounting services. Each new business entity needs extra attention on each new contracts and deals. The working as a freelancer or contractor has become most popular due to availability of several opportunities and financial benefits. People can get following advantages through working as contractors:

-Flexibility in work and time: As a contractor, you will enjoy your work with more flexibility because you are a boss of your own firm. It allows you to execute your work according to your own decision. You are liable to choose right working place and time. Without any pressure, contractors can take holiday according to their requirements. You can choose project on the basis of your working capacity and skills. You can develop new business relationships after complete analysis due to flexibility of time.

-Working facilities with more financial benefits: Freelancers are earning more than full-time employee. Many contractors are working on high rates and getting extra benefits with overtime working facility. With assistance of an expert accountant, you can get opportunities for better tax planning. Expert will try to reduce overall tax burden and claim personal tax return. Expert will always try to earn maximum tax benefits on taxable income and extra earnings.

-Opportunity for career and skill development: If you are working as a contractor, then you can develop career according to your knowledge and field of interest. As well as, you can analyze your working strength and skills. The opportunity to work in each field provides you extra advantages to develop new skills and experience. Indeed, you can work on different projects with different working style and skills.

To get above-mentioned advantages, you have to decide a suitable business structure as a limited company, businessman, sole-trader, partnership, freelancer, etc. Expert will support you with their useful services. For a successful organization, it is necessary to make proper business planning and financial management. Indeed, as a contractor, you need support of a team of experts. Contractor accountants will give new business ideas and solutions for trading forecasts. The establishment of a good working relationship with clients and bank is also an essential factor for successful execution of business assets.

Brief Definition of Managerial Economics Managerial Accounting & Financial Accounting

Economics plays a major role in giving business newer heights and contributes a lot towards the feat of wide range of managerial duties. Economics is required as it meets the expense of several analytical tools and techniques that managers employ to accomplish the goals of that particular organization they are given to manage. Therefore, the branch Managerial Economics enables the managers to gather some operational knowledge of economics and gives an extra edge to managers so that they can fundamentally practice proper managements of accounts and use their knowledge in betterment of the company. Managers equipped with the basic knowledge of economics help in providing successful solution regarding finance and accounts related matters of the organization.

In every organization managers are responsible for achieving the main purpose of the firm to the maximum possible extent and this should be done within the limited resources that are made available to them. Essentially, maximization of the organization's goal has to be achieved by utilizing limited resources. When the resources are unlimited, the problem of economic utilization of resources or resource management does not seem to occur. Mangers most of the times face the problem of limited resources which include problems of finance, workforce and material. The managers with the help of these resources take the responsibility of optimizing the use of these resources. Economics donate to managerial functions which includes Managerial Accounting. Management accounting is essential for providing information so that managers can take better decisions.

It has been seen that economic theory has put forth a lot of contribution to business economics. According to thinker Baumol, three main contributions of economic theory to business economics are found. Firstly, the practice of building analytical models, that assists in recognizing the structure of Management Economics that help in eliminating minor details. Furthermore, analytical models help in eradicating tangential problems and aid the management in retaining focus on core issues. Secondly, economic theory encompasses a founding pillar of business analysis that helps in solving specific business problems, and also enhances the analytical capabilities of the managers. Lastly, economic theories offer an unambiguous perspective on the various concepts that are used in business analysis, which enables the manager to change direction from conceptual pitfalls.

A firm when decides on the nature of production, what to produce, how to produce and how much to produce and for whom to produce also stresses on the proper utilization of accounts. Financial Accounting, although a little different in character from management accounting is mostly of the same nature. A firm can influence the buying behaviour of customers through advertisements, by allocating more budgets the firm tries to influence the buyers and create demand for the products or services.

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How Different is Accounting from Bookkeeping Services

Bookkeeping may be the recording of financial transactions. Transactions consist of sales, purchases, income, and payments by an individual or organization. Bookkeeping is generally performed by a bookkeeper. Bookkeeping ought to not be confused with accounting. The accounting process is generally performed by an accountant. The accountant creates reports from the recorded monetary transactions recorded by the bookkeeper and files forms with government agencies. There are some common techniques of bookkeeping such as the Single-entry bookkeeping program and also the Double-entry bookkeeping system. But while these systems may be seen as "real" bookkeeping, any process that involves the recording of monetary transactions is really a bookkeeping procedure.

A bookkeeper (or book-keeper), also recognized as an accounting clerk or accounting technician, is a individual who records the day-to-day financial transactions of an organization. A bookkeeper is generally responsible for writing the "daybooks." The daybooks consist of purchase, sales, receipts, and payments. The bookkeeper is responsible for ensuring all transactions are recorded within the correct daybook, suppliers ledger, customer ledger, and general ledger. The bookkeeper brings the books towards the trial balance stage. An accountant may prepare the earnings statement and stability sheet using the trial stability and ledgers prepared by the bookkeeper

Bookkeeping systems

Two common bookkeeping techniques utilized by businesses and other organizations are the single-entry bookkeeping system and the double-entry bookkeeping program. Single-entry bookkeeping uses only earnings and expense accounts, recorded primarily in a revenue and expense journal. Single-entry bookkeeping is adequate for numerous small businesses. Double-entry bookkeeping requires posting (recording) each transaction twice, using debits and credits.

Single-entry system

The primary bookkeeping report in single-entry bookkeeping may be the cash guide, that is similar to a checking (chequing) account register but allocates the earnings and expenses to various income and expense accounts. Separate account records are maintained for petty cash, accounts payable and receivable, as well as other relevant transactions for example inventory and travel expenditures. These days, single entry bookkeeping can be done with DIY bookkeeping software to speed up manual calculations.

Double-entry program

Main article: double-entry bookkeeping system

Daybooks

A daybook is a descriptive and chronological (diary-like) record of day-to-day financial transactions also called a guide of original entry. The daybook's details should be entered formally into journals to enable posting to ledgers. Daybooks include:

  • Product sales daybook, for recording all of the sales invoices.
  • Product sales credits daybook, for recording all the product sales credit notes.
  • Purchases daybook, for recording all the buy invoices.
  • Purchases credits daybook, for recording all the purchase credit notes.
  • Cash daybook, generally known as the money book, for recording all cash received too as cash paid out. It might be split into two daybooks: receipts daybook for money received in, and payments daybook for money paid out.

Petty money guide

A petty money book is a report of little value purchases usually controlled by imprest program. Items for example coffee, tea, birthday cards for employees, a few dollars if you're short on postage, are listed down in the petty money book.

Journals

A journal is a formal and chronological record of financial transactions before their values are accounted in general ledger as debits and credits. Journals are recorded in the journal daybook, which is one from the books of first entry. For every debit journal there should an equivalent credit journal. There must be at least two journal entries for every transaction recorded.

Ledgers

A ledger is a report of accounts, these accounts are recorded separately showing their beginning/ending stability. Unlike the journal, which lists monetary transactions in chronological order without showing their balance but displaying how much is going to be charged in each account. The ledger takes every monetary transactions from the journal and records them into the right account for every transaction listed. The ledger also sums up the total of every account that is transferred to the balance sheet and earnings statement. There are 3 various kinds of ledgers that deal with book-keeping. Ledgers include:

  • Sales ledger, which deals mostly using the Accounts Receivable account. This ledger consists of the financial transactions made by clients towards the company.
  • Buy ledger is really a ledger that goes hand and hand using the Accounts Payable account. This may be the purchasing transaction a company does.
  • General ledger representing the original 5 primary accounts: assets, liabilities, equity, earnings, and expenses.

Chart of accounts

A chart of accounts is really a list of the accounts codes that could be identified with numeric, alphabetical, or alphanumeric codes allowing the account to be located within the common ledger.

Computerized bookkeeping

Computerized bookkeeping removes many of the paper "books" that are utilized to report transactions and generally enforces double entry bookkeeping.

On the internet bookkeeping

On the internet bookkeeping, or remote bookkeeping, allows source documents and data to reside in web-based applications which allow remote access for bookkeepers and accountants. All entries made to the online software program are recorded and stored in a remote place. The on the internet software program can be accessed from any place in the world and permit the bookkeeper or information entry individual to work from any place with a suitable information communications link.

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Budgeting will Help You in Discovering New Income Streams for Your Business

Since always, the budgeting has been the most important aspect of any business strategy. This tool helps the business owners as well as the CEOs in making sure that they've an efficient system in place. Budgeting is also a process of knowing, how much your company or your firm will be generated over the course of the next five to ten years. Besides, the budgeting is also there to help you find out how much income you'll be needing to produce those kind of results, and thus improving your company's models over a course of time. However, for a normal person the whole process of budgeting might seem like the amount of income one needs to secure to produce the desirable profits over the next few years. But if this is how you'll look at budgeting then you'll just wasting your as well as company's valuable time plus the resources. These kinds of budgeting processes will give you no profits but in turn will end up hurting your company's image in a long term. Therefore, one must understand that budgeting is an important tool to stabilize your company for a long-term growth.

Budgeting is usually known as a process that will help you in understanding what are the products and businesses that your company is providing are giving you the maximum profits and becoming a stable input of income. Besides, the budgeting process will also help you in exploring the other services that have a high growth potential over the coming period. It will also help you determine the cost required to run these services or manufacture these products with huge potential.

Budgeting is also the process of finding out how much money you need to spend and what will be your income, the coming year. Moreover, this process will also ensure that you've performed well during the last one year, and will also help you in finding the ways to improve if you haven't done well.

We take an example of a company that has been providing the business training services and what we discovered is that their half of the revenues are coming from the advanced excel training course. Therefore, when they looked at the result, they were shocked, because the main motive of the Advanced excel training course was to provide a bit of publicity for their consultancy services. Therefore, with the help of the budgeting services, they were able to find out about a service they were providing that had the potential to be huge and that will also provide them a stable income. Therefore, they started putting in more resources into it and thus turned that service into a new income stream. Moreover, at the same time they also put aside a particular amount of their income that helped them into launching a new solution service. This helped them in cutting short their budgeting time in half; however, they didn't take help of the budget planners or else they could have consolidated those numbers at the click of a button.

Therefore, budgeting is actually a profitable method of business management.

tax

Inheritance Tax Planning – How can it Affect Your Family in the Future

Inheritance tax can be fairly complex and the ability to gain an understanding of how it works can help to ensure that you receive everything that you are entitled to. The amount payable can vary from person to person but through effective planning, there are a variety of ways to ensure that the amount which is paid is at a minimal amount.

What is Inheritance Tax

Also known as IHT is payable on all valuables you own when you die. It can be any property or possessions with value such as jewelry, art works, cars and savings. However, there is an inheritance tax threshold, which currently states that the person's estate must amount to over 325,000 before it will be subjected to inheritance tax.

Who is Liable to Pay IHT

More often than not, the legal personal representative of the person who died will have to. Usually they have six months from the date of death to pay the liability. On the other hand, trustees and any person responsible for the trust, will be liable to pay on trusts (assets including money, land and investments).

However, if it takes more than six months to finalize all the details of the inherited property an estimate can be made and dues can be paid straight away. This means you pay an early payment, so in the future when the exact amount of the property has been settled, you need not to pay the outstanding interest. If it happens that you pay more than the exact amount, then you'll take advantage of the interest from the overpayment.

Exemption from IHT

There are times when your property is more than the declared threshold but it can still be exempt. This includes the following circumstances:

Given to Partner -no liability if you have left to your spouse or partner who is permanently living in UK.

Charities - any gifts given to charities, universities, clubs, museums and the national trust are all exempted.

Annual Exemption - You can normally give away up to 3,000 per year inheritance tax free. This is known as the annual exemption.

Small Gifts - you can offer small presents to as many people as you want amounting to 250 but should not be with the same person who received the 3000 annual exemption.

Wedding Gifts - parents of both couples can give out gifts up to 5,000, anybody can give up to 1,000, grandparents can share up to 2,500 (all of these civil partnership gifs should be given on or before the day of the wedding).

When receiving gifts or bequests from someone, it is essential to recognize the taxes involved. If you are not familiar on how these legalities, it is recommended that you seek professional assistance to help guide you throughout the process.