Find the Right Type of Accountant to Hire

 In today's world of regulated business, there is increasing pressure on companies to have transparency in their financial statements. This push from shareholders and government agencies has caused a large increase in the need for external accounting, transforming audit and tax services into a commodity. The fact that these firms are now so popular means they will offer you many discounts and incentives to obtain your business as a client. In order to obtain the correct firm, it is important to know what type of service professional you need.

First, you need to prioritize the main reason in reaching out to a professional. If you are looking specifically for help with taxes or tax planning there are many small firms available to assist your business. Many of these firms can be franchises such as H&R Block or LedgerPlus or they can also be local private firms. Before committing, it is important to look at the tax firm's employees. Many will have what is called an EA, or enrolled agent. These are licensed tax professionals who are certified by the IRS after taking a test covering all types of business taxes from public to private. This type of professional will be able to do sufficient work for a small business and can be significantly cheaper than hiring a larger or public accounting firm.

If your company is in need of an audit for shareholders, or you are a private firm looking for a professional audit, it is a good idea to go with a public accounting firm. These large firms consist of Certified Public Accountants, or CPAs. CPAs are held to the highest standards by the PCAOB and have to pass a rigorous test and continue education throughout their career. Although public firms will bill you more, they hold themselves to a much higher standard for quality of work. Also, public accounting firms will do a preliminary audit of your business before they decide to take on your company as a client. This is to make sure they do not see any red flags or feel that they could give your company an adverse opinion.

Because of this, you can trust these public firms more being that they do not want to be liable for assuring your financial statements if it later comes out your company has committed fraud. Another bonus of a public firm is their representation if there is ever any litigation against your business. Many times upset shareholders want to sue a publicly traded company because they lost their investment based on so called misleading financial statements. In this case the accounting firm will stand up for you in court and defend your numbers against the prosecuting party.

These are just two basic reasons to choose an accounting firm to help your business. It is very important to evaluate your individual situation before deciding on a specific accounting professional.

Accounting Basics: Current Assets - Accounts Receivable

 Almost as common a term as cash nowadays, accounts receivable is an accounting term meaning amounts owed to a business by other business or customers (individuals or otherwise). An accounts receivable arises anytime when goods are sold but cash is not received immediately; thus when you purchase something for cash at Walmart you are not creating an accounts receivable. If you commit to purchase something (say a lawnmower) and you are offered the option to pay next month, now you have created an accounts receivable on the retailers books.

Unlike a note receivable (to be discussed next), there is generally no signed agreement beyond an invoice for an accounts receivable. They are generally short term in nature (less than a year, if not only a couple months). Because of their short term nature, they are generally listed as a current asset on the balance sheet next after cash.

Accounting Basics: Current Assets - Cash

 Cash is normally the first item listed under Current Assets on the Balance Sheet. What does cash include? Cash includes any deposits available in the bank as well as anything on-hand which might include bills and checks or money orders to be deposited.

Accounting Basics: The Balance Sheet

 One of the fundamental components (for want of a better word) of accounting is the Balance Sheet. The balance sheet is often referred to as a statement of financial position. It can be described as a snapshot that shows the company's financial position at any given moment. Listed in the balance sheet are the company's assets, liabilities and owners equity.

If you view the balance sheet as a two column worksheet, the assets would be in the left column while the liabilities and owners equity would be in the right column. The two columns must be equal.

You won't be able to determine the company's profitability from the balance sheet. What the balance sheet will show is the solvency of the company. Analysts will look at various ratios (i.e. current ratio: current assets / current liabilities) to determine the company's financial well being.

Future entries in my Accounting Basics series will describe each of the components of the balance sheet.

Product Pricing Issues and Strategies

Another good article on BNET (can you tell I like this website). A lot of it is common sense. The helpful thing about the BNET website is how they present the article. It has a very good layout which highlights the main points. This particular article talks about issues and strategies regarding product pricing.

Another Free Office Suite of Products

I haven't looked at this new free office suite called IBM Lotus Symphony; but it looks like it could be pretty good. It appears to be an open suite of products (very universal) and they claim:

"With Lotus Symphony, you can import, edit and save a variety of file formats including Microsoft Office files. You can even export your documents to Adobe® Portable Document Format (PDF). The tools work with computers running both Microsoft Windows and Linux- environments, with support for Apple Macintosh planned for the future."

The suite consists of three products:

1. Lotus Symphony Documents (replacement for Word)
2. Lotus Symphony Presentations (replacement for PowerPoint)
3. Lotus Symphony Spreadsheets (replacement for Excel)

As a former Lotus 1-2-3 user, I'm very interested in these and will have to check them out the first opportunity I get. If anyone has tried them, please comment!

Resume Writing Tip

 Just happened to come across this article on MSN. Some interesting tips on resume writing. Includes a list of 'buzz words' you should avoid on your resume as well as a few what they call 'empty phrases' which should be avoided.