Can we all agree that debt is just one of those things that sort of creep up on you? In the beginning phase you feel in control of it all but all along the way you start to notice things like -- invoices are not being paid, revenue is not be posted to the correct accounts or a vendor is being overpaid due to duplicate payments. These are all errors that can and will allow for debt to become your number one priority in business instead of the least concerned aspect of the business as a whole.
The first moment many business owners think about the word "debt" is when they are deciding if a business-line-of credit is right for them are when completing their first bank loan application for their business after already consuming huge amounts of debt. While the moment of creating business debt may be inevitable, Fontenot & Associates Solutions, LLC is here to share a few tips on how to handle it and stay on track.
In addition, business owner's should consider determining their debt ratio before committing to more debt. The current formula to this equation is Debt Ratio = Total liabilities/Total Assets. The debt ratio should be compared to competitors and industry averages. Industries that have stable earnings can handle more debt than industries that have cyclical earnings. These are the evaluations business should have consistently in order to know what needs to be improved. If as a business owner, you are unsure of how much of incoming cash flow is used to pay liabilities each month -- than you are to far away from the reality of your business.
One of the key tools to improve this starts with implementing extensive policies and procedures. These procedures would be designed not only to ensure accuracy from the staff handling the day to day finances but used also as a great reference tool for management to understand more of the details with-out being hands on into the day to day details. It's never to late to get started with improvements -- choose to start yours today!
If you know of a business seeking to identify the allocation of their cash flow and/or improve current processes, Fontenot & Associates Solutions, LLC is here to support with their business needs.
“There’s lots of bad reasons to start a company. But there’s only one good, legitimate reason, and I think you know what it is: it’s to change the world.” – Phil Libin, CEO Evernote
Why should accounting be your profession of choice? When I made the decision it's one that never changed. It started with taxes then lead to financial and banking support which now leads me to an even broader window of teaching and fulfillment. Now, why should you join me and many others on this journey?
Perhaps the American Institute of Certified Public Accountants (AICPA) summarized it best in its newly issued pamphlet: "Accounting: The One Degree with 360 Degrees of Possibilities": "You may already have an idea about what you want to do for a career. Then again, maybe you're not so sure. Either way, there's one degree that gives you the education to succeed at just about anything in the business world. It's an accounting degree. Accounting opens doors in every kind of business coast to coast. It can give you the foundation you need to go on and become a CPA. It can prepare you to become a partner in an accounting firm, to pursue a career in finance or corporate management, to work in government, or even to become an entrepreneur. In fact, no matter what you decide to do, having an accounting background can open doors wide."
Accounting is a profession for those interested in math, business and who also have the skills to think outside of the box. An accounting degree can open up many opportunities in varies industries with rewarding compensation.
USA Today has done most of the work for our young professionals by listing the "Top 10 colleges for an accounting degree". Check it out to see if your college selection made that list. If you're an entrepreneur seeking to strengthen this area of your business, visit our webpage for a free consultation. We look forward to hearing from you.
The Accounting profession rules!
. “High expectations are the key to everything.” – Sam Walton, founder Walmart
Accurate Payroll from Their Employer Is Key
Every time you state what you want or believe, you’re the first to hear it. It’s a message to both you and others about what you think is possible. Don’t put a ceiling on yourself.” - Oprah Winfrey
As a business owner your current and future staff depends on you to process their payroll accurately and timely. Therefore it is important for a business owner to decide if this process will be managed internally or externally by a third party. Even if the vast majority of your payroll process in issuing 1099s, their must be a process outlined and defined. In the world of Accounting, payroll refers to the amount paid to employees for services they provided during the period.
A company's payroll is important for the following reasons:
Just think? Salary usually refers to payment for managerial and administrative services. Salary is normally expressed in terms of a month or a year. Wages usually refers to payment for employee manual labor. The rate of wages is normally stated on an hourly or a weekly basis. The salary or wage of an employee may be increased by bonuses, commissions, profit sharing or cost-of-living adjustments.
To illustrate computing an employee's earnings, assume Karen Douglas is a office manager employed by Fontenot & Associates Solutions LLC. Karen's regular rate is $55 per hour, and any hours worked in excess of 40 hours per week are paid at 1 1/2 times the regular rate. Karen worked 45 hours for the week ended June 10. Her earnings are as follows:
Earnings at regular rate (40 hrs. X $55) = $2,200
Earnings at overtime rate [ 5 hrs X ($55 X 1 1/2)] = $413
Total earnings $2,613
We all can agree that this is one process that can be straight forward or very complex due to the many factors such as taxes, which makes the matter very serious for all employers. Developing an extensive business guide to support the responsible professionals with monthly deadlines and compliance regulations should be a focus for this weeks goals and significant business accomplish.
Try, try, try, and keep on trying is the rule that must be followed to become an expert in anything. – W. Clement Stone
The income statement reports a corporation's net income for the period of time indicated in its heading. The income statement is also known as the statement of income, statement of earnings, statement of operations, profit and loss statement, or P&L.
The historical cost principle means that most of the amounts shown on the income statement reflect a corporation's vast number of actual transactions that were recorded by the accounting system. In addition the income statement will include some adjusting entry amounts entered by the accountant in order to comply with the accrual method of accounting.
Revenues are the amounts earned by a corporation through its main activities such as:
Continue to educate yourself about the accounting profession and how it relates to your business and it's growth. Fontenot & Associates Solutions LLC supports companies with training of new staff and the accounting basics.
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A leader is one who knows the way, goes the way, and shows the way. – John C. Maxwell
Accounting may not be your business strength but don't count it out as a learnable business tool. When outlining your business you must consider the monthly expenses which will be incurred as well as the sources of income your expecting to pay for those expenses. But, how are you tracking the financial information? Whether using an accounting system or manually tracking, here's some information you should know.
Let's talk about -- what is a (accounting) worksheet? A worksheet is a multiple-column form used in the adjustment process and in preparing financial statements. As its name suggest, the worksheet is a working tool. The worksheet is merely a devise used in preparing adjusting entries and the financial statements.
When a company chooses to use one, it prepares financial statements from the worksheet example you see above. The worksheets make it possible to provide the financial statements to management and other interested parties at an earlier date. Fontenot & Associates Solutions LLC offers the professional support to streamline business processes.
What has your company designed to use? Comment on this blog post and share with other business owners looking to build or strengthen their accounting processes.
Remember, education is key and the tools to get you started are here.
Knowledge is key when building a business or team. A great way to build knowledge can start with incorporating your business history and important facts and definitions within the company policies and procedures. Management will see it build company awareness and team cohesiveness. Just know, it's never to late to start. Below is a financial definition and example:
An outstanding deposit refers to a company's receipts (cash, checks from customers, etc.) which have been recorded by the company, but the amount will appear on its bank statement at a later date. An outstanding deposit is also known as a deposit in transit.
To illustrate an outstanding deposit, let's assume that on October 31 a company received cash and checks from customers in the amount of $800. Clearly the company should report the $800 as part of its cash as of October 31. However, the company did not deposit the $800 into its bank account until after October 31. Since the $800 is not on its bank statement as of October 31, the $800 is described as an outstanding deposit or deposit in transit as of October 31.
The $800 outstanding deposit is pertinent to the company's bank reconciliation as of October 31. When the company reconciles the bank statement, the outstanding deposit is an addition to the balance shown on the bank statement as of October 31. (There is no adjustment to the balance per books since the $800 had been recorded as of October 31.)
Understanding how receipts should reflect in your business financials is important for business owners when they want to know how much cash they have on-hand or available.
Visit our website today to get your business started on developing or improving policies and procedures.
In the Oil and Gas industry one of the common related cost is Production Cost. Theoretically, the production cost are part of oil and gas produced and, therefore, allocable to inventory and cost of goods sold. However, crude oil and natural gas inventories are usually insignificant and not recognized on E&P company balance sheets.
In accounting for production costs, one of the first requirements is to determine the functional accounts that will be used. The accounting system must provide information in sufficient detail to permit accounting cost in accordance with recognized accounting principles and at the same time meet the needs of operating personnel in evaluating operations.
In accounting for production costs, it is also essential that the accounting records furnish the necessary data for federal income tax purposes. Production cost are expensed as incurred except in two cases:
Fontenot & Associates Solutions has the skills and knowledge to support companies establish policies and procedures with extensive detail and definitions. Visit our website today.
Understanding the accounting language is important as a business owner. The accounting profession has many definitions and processes to reference depending on the industry of business. Below are a few vocabulary words to get you started thinking about your accounting system and establishing policies and procedures.
Cost basis: Original cost of investment minus prior accumulated depreciation
Goodwill: Purchase price less tangible value of physical assets purchased
Net asset value: Cost basis minus accumulated depreciations (prior total depreciation)
NSF: Non-sufficient funds, typically a returned check
Unrealized gain & loss: Investment that has increased & decreased in value, but not yet sold
A successful business owner understands their cost, asset worth and financial statements. Fontenot & Associates Solutions supports all business with establishing policies and procedures, visit our website today to learn more.
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One doesn’t discover new lands without consenting to lose sight of the shore for a very long time. – Andre Gide
Business Accounting Tip
As you build your business it's important to understand the accounting aspect of depreciation.
"Depreciation is an accounting and finance term for the method of attributing the cost of an asset across the useful life of the asset.
The use of depreciation affects a company's (or an individual's) financial statements, and, in some countries, their taxes. Depreciation is an average or expected view of the decline in value of an asset. For example, an entity may depreciate its equipment by 15% per year. This rate should be reasonable in aggregate (such as when a manufacturing company is looking at all of its machinery), but there is no expectation that each individual item declines in value by the same amount."
A company typically owns a variety of assets that have long lives, such as buildings, equipment, and motor vehicles.
The period of service is referred to as the useful of the asset. Because a building is expected to provide service for many years, it is recorded as an asset, rather than an expense, on the date it is acquired.
Companies records assets at cost, as required by the cost principle. To follow the expense recognition principle, companies allocate a portion of this cost as an expense during each period of the asset's useful life.
Depreciation is the process of allocating the cost of an asset to expense over its useful life.
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