Bookkeeping requires skills, experience, and even the knowledge of specific software used for accounting. Accounting requires a lot of responsibility, but it provides managers with insight into how the business is performing. Check out what are the peculiarities of bookkeeping in Memphis, and why you should use Bookstime services if you need a professional accountant.
Tax Accounting and Accounting Principles in Memphis
In Memphis, businesses should keep track of their financial operations. First, without proper bookkeeping business owners or managers can’t make decisions that benefit the company. Second, it’s important for paying taxes.
Even though in the US, accounting principles and tax accounting are two different sets of rules, they are closely related. According to US law, accounting is needed to keep track of all financial operations of a business. But tax accounting requires only those financial statements that have a tax burden on a business.
Types of Accounting in Memphis
US citizens are taxpayers, meaning, they are supposed to keep records of their financial statements. There are three types of accounting:
- for businesses;
- for tax-exempt organizations.
It is much easier for individuals to keep track of their finances, they don’t require professional help. Businesses, however, need to follow strict rules since accounting is closely related to taxes. A mistake in accounting can lead to fines and even imprisonment.
If you have a small business in Memphis, you are to keep track of all your financial operations. There are two methods that it is possible to use according to Chicago rules:
- accrual accounting;
- cash basis accounting.
Both methods have advantages and disadvantages. If you are planning to use the services of a professional bookkeeper, you can consult them on what method is better for your business.
Accrual accounting is an accounting method that requires recording gains and expenses immediately when they are earned (or used). Notably, it doesn’t matter whether at the moment of recording operations money was spent or earned.
For instance, you have completed a project for a client, so you record the income for the project and expenses spent on the work. This method is chosen more often.
However, it’s important to track the cash flow. On paper, the company may appear as profitable, when in reality the business wasn’t paid yet for any of the successful projects or sales. On the bright side, it offers a better understanding of what to expect in the future.
The cash basis method is less common but may be better for small businesses. According to this method, gains and expenses are recorded only when the money is spent or received.
The reason why smaller businesses choose this method is that it’s easier to maintain. But it doesn’t provide you with an accurate long-term picture of the perspective.
That’s one of the reasons why smaller businesses are better off when using the services of professional bookkeepers. A certified accountant with expertise in the industry can use any of these methods based on what is best for the business in the long run.
Accounting for Businesses
Bookkeeping for business is extremely important. Recording financial operations allow a business to answer a few important questions:
- Is the business profitable?
- How much does a business earn every month/year?
- What are the expenses of the business per month/year?
Accounting also helps with getting a better understanding of the overall performance of the company, and the services or products offered. For example, accounting answers the question of whether the company should keep producing a certain product considering its popularity among consumers.
Thanks to accounting, a business can grow. When seeking new investors, or asking for a loan, you will have to provide financial statements of your company to prove that your organization is profitable. That’s why many businesses delegate this responsibility to experienced accountants.
You can type a request in Google, for example, “accounting services near me” to find an accountant, But it’s a better idea to use the services of a professional and experienced specialist.
For example, Bookstime can help you with choosing the right type of accounting for your business, keeping track of your financial statements, and much more. Plus, the cost of bookkeeper services in Bookstime is much lower than having a separate position of an accountant in your company.
Accounting and Tax Services: Bookstime
Bookstime is an official partner of the QuickBooks expert. We offer the services of experienced bookkeepers who can take off the burden of accounting from you. Here is what we offer:
- Mistakes-free accounting.
- A personal accountant for your business.
- Regular meetings, accounting counseling.
- Regular reports with analysis of the performance of the business overall, and separate parts or services.
- Tax accounting.
With the help of our bookkeepers, you will focus on developing your business, finding new niches, etc. We will take care of accounting to allow you to make the best decisions based on the gathered information.
Author: Charles Lutwidge