Accountant Lingo & Finding the Right Accountant

In last month’s blog, we covered the benefits of having an accountant and what the difference is between CPAs, accountants, and bookkeepers. Now the question is “Where do I even start when looking for the right accountant?” Everything in the accounting realm can be confusing at first or it may simply take up too much of your time. Gaining an understanding of basic terms in accounting may help you feel more secure in your business and even help you find the right accountant.

Finding the right Accountant

If you’re considering an accountant, you may have no idea where to start. A good place to start is overall communication and guidance. Having an accountant should be a vital part of your team and they should be willing to work with you and help you really understand the money side of your business. This means detailing the explanations for any questions you may have and teaching you aspects of money handling so you are able to do some things on your own later on (if needed/desired.) Having good communication goes in hand with availability. Having someone you can never get ahold of can make it frustrating for you in the long run. Remember that relationships are a two way street and everyone should have a good relationship that works for both parties.

Although there are many questions to consider asking an accountant before you hire them; we are only going to review a few that will aid in finding the right accountant for you. Are they willing to teach you about finances and do they offer additional consulting if needed? Do they offer standard packages or can they customize services based on your needs? Are they able to help with 1099s and any further subcontractor needs? Do they have any specialities? When looking at bigger firms it may also be worthwhile to ask if they outsource any of their work or if they perform it personally and if they don’t perform it personally, will the person you deal with change? Will you get a regular person to discuss your finances with?

After hiring an accountant, you’ll want to really dig deep and work towards the best financial plan you can for your business. Here are some things to think about when deciding what you need. For one, contemplate what taxes you’ll need done and what records you need to keep for filing and in case of audits. Whether you do or don’t know what taxes need to be done for your business, an accountant can help you figure it out or even file for you (in most cases.) Next, you’ll want to work with them to better manage your cash flow and know your breakeven point. A break-even point is when sales and expenses are equal. It’s essential to know your break-even point because it can help you figure out a pricing strategy and make your budget more accurate. Working with an accountant should improve your business by figuring out what changes your business needs.

Understanding common terms in Accounting

When you’re new to the accounting world, there are many terms that you may be lost on. Although your accountant should be willing and able to review any terminology you don’t understand, learning some of the basic accountant lingo for yourself can be beneficial to helping you grasp more of the financials of your business. Let’s begin with assets and liabilities. Assets and liabilities show how much your business is worth. Assets are property (either tangible or intangible) that adds value to your business. Assets could include things like inventory, (paid off) vehicles, and even your brand value. Liabilities are any long-term or short-term monies your business owes. Examples of liabilities include credit card payments, bank fees, and loans. Additionally, accounts receivable is an asset while your accounts payable is a liability. Accounts receivable (AR) is the money you owe to any person/vendor while accounts payable (AP) is the exact opposite (so money owed to you by people/vendors).

Another thing you’re going to see or hear about a lot is P/L reports and the balance sheet. P/L stands for Profit and Loss. A P/L report is a report showing all the expenses and income you had in a certain period of time. The balance sheet shows the business as it currently stands including all assets, liabilities, and equity. Equity is money remaining after all liabilities are gone and all assets sold. It basically shows the owner(s)/investor(s) stake in the company. Just like there are different types of assets and liabilities, there are also different types of equity in a business. You can run both P/L reports and balance sheet reports by month, week, yearly, or any other custom setting to find a time you’re looking for.

Accountants and all their terms

Knowing what you’re looking for in an accountant can elevate your business even higher. Don’t forget to check out last month’s blog for all the reasons why having an accountant is valuable in your business! Additionally, having a basic understanding of frequently used accounting terms helps you better understand the money going through your business and further your involvement in your finances with your accountant.

Accountants vs. CPAs vs. Bookkeepers

Accountants, CPAs, and bookkeepers- We’re sure that you hear these words all the time. In the world of accounting, these titles are often bounced around and sometimes interchangeably. Even though they all do many of the same tasks, they are different and it’s important to know their differences.

Accountants, CPAs, and Bookkeepers – What’s the difference?

Let’s start with bookkeepers. Bookkeepers are usually the basis for accounting in business. There is no formal training required to become a bookkeeper and they typically work under accountants. Bookkeepers handle the daily financial transactions and usually other tasks like: payroll, loan payments, creating invoices, and billing. They also create financial reports that an accountant can then review with a client. So onto accountants, accountants can do everything a bookkeeper does but they also have other responsibilities. Primarily, they are there to help with long-term financial planning and any other financial consulting advice. This means that atop of overseeing bookkeeping tasks, they can: create and review budgets, correct any accounting discrepancies, calculate tax liabilities, and give tax advice. Finally, we have CPAs. CPAs are also known as certified public accountants. They can do any tasks that a bookkeeper or accountant can do but CPAs are the only ones who work with the IRS which means they are the only ones that can file yearly taxes for you. Not all accountants are CPAs but all CPAs are accountants. This is because in order to become a CPA, one must have a bachelor’s degree in accounting, a certain amount of hours under a CPA (hours dependent on the state), and pass the CPA exam.

It may be time to consider hiring a professional if your taxes are too complex, accounting is taking up too much of your time, or if the business is growing up. When it comes to choosing the right professional for you, most people go with an accountant. This is because accountants are usually more cost-effective than a CPA and more often than not, they already work with a bookkeeper. Although this does mean you still have to have someone file your end of the year taxes (or you can do it yourself), it can make it a lot easier when you have an accountant who is taking care of your books all year.

The benefits of Accountants

Many of us love to save money any way we can by doing things ourselves. If your business is small enough, this may not be a problem when it comes to accounting for you. In general though, it is always a good idea to have an accountant for your company. For starters, having an accountant can actually save you money because they can let you know where money is being overspent and what software/programs could save you when doing payroll, inventory, and more. Not having immense knowledge in accounting could also cost you more when it comes to taxes. Common reasons people lose more money in taxes is because they file late, miscalculate their tax bill, or lose out on tax breaks by not claiming them. Next, one of the biggest upsides to having an accountant is that they save you time. If you make any mistakes, it could take hours to fix that could be avoided or handled by an accountant. Also, when you have more time, you can focus on generating more sales or simply putting more time into needed areas of your business. Furthermore, many people use their free time at home to crunch numbers and do all their accounting. This free time could now be used to focus on their families even more or their personal life in general. After this, having a long-term accountant comes with its own set of advantages. If your accountant has been in the industry for a long time, they usually have a vast network of different business professionals. This means that the accountant may have more knowledge on your profession and if they don’t, they can reach out to a specialist in their network and get the help they need to help you. Finally, as the accountant learns more about your books, they become a specialist for your business. They will start to see trends, places to improve, and what could be damaging if continued. They grow with your business and will be able to better predict how new products (or other big business changes) will affect your business.

In Summary

No matter what accounting professional you choose, spend time picking the right one as they save you time, money, and peace of mind!

Small Businesses & Insurance

There are a million types of insurance out there. From medical to auto to renter’s, it seems like we are always shopping for insurance. Just like any other important insurance, business insurance is crucial to take care of your business.

Why insurance is important & Tips to pick the right insurance

Business insurance is extremely important because it protects the business from having to pay out-of-pocket for expensive damages via property damage or legal claims. Most insurance is not required for a business. Although, if you are of a certain size, you may have to pay different kinds of insurance. For example, employers with fifty or more employees are required to provide health insurance to their employees. Despite the fact that most states don’t require insurance, if you own or rent a workspace, there is a good chance you’ll need a business owner’s policy (BOP). BOP usually combines general liability insurance and commercial property insurance. Typically, these policies are flexible and you may add more types of insurance atop of this to get the coverage you desire. BOP is not the only type of insurance out there though, there are many different types of insurance out there for businesses. Finding the right insurance may take a lot of research but it will be well worth it!

When picking insurance out for the first time, it can seem really overwhelming. Remember to really take your time and now what your policies will cover. Although BOP may be a good general blanket for insurance, it has many of its own exceptions and additions you may have to make to cover your business perfectly for you. Furthermore, there may just be other types of coverages that work better for you. Consider a few different things when picking out insurance. For starters, different business industries require specific coverages- make sure you’re finding something that matches the type of work you do. Next, think about where your physical property is located and how much property and other equipment you have. Finally, assess your intellectual property and amount/type of employees and customers. After you’ve determined what you need, make sure you know the risks of the coverage you’ve decided on. Compare quotes to see what will give you the most for your money and the best protection. Last but definitely not least, find a good agent and review your policy regularly!

Working with Insurance Agents – Country Financial with Gabrielle Zenner

Finding a good insurance agent is vital as they are also responsible for helping to protect your business. Country Financial is a boutique, regional insurance carrier that writes coverage that serves homeowners, farmers/ranchers, and small business owners. Their vision is to enrich the lives in the communities they serve. Gabrielle Zenner at Country Financial loves putting together thoughtful recommendations for clients to meet their scope of needs which is essential in having a good insurance agent. She says that her business can sometimes be challenging during inflationary periods in the market because budgets could be made to cost a certain amount but end up being a higher total. Although they experience rates like everyone, their business has made changes to make the loss ratios reduced and continue to give clients the best coverage they can. The number one advice for clients is, “If you want a total loss claim to go smoothly, make a video walkthrough of your home belongings showing manufacturer’s labels every year. You never know exactly what you have when there is a fire, but a video record makes it easy for an adjuster to cut the personal property check.” says Gabrielle Zenner. Another important thing she mentions for clients is to update their insurance policies- especially after renovations. If you don’t update your value on your insurance, you would be getting the old version of something rather than your new, renovated one. Don’t leave your policy the same as the first time you bought it years ago! These are all extremely valuable tips and a good reason to have an insurance agent like this!

Overall Insurance Importance

Even though there are many different types of insurance and most aren’t required by law, it is still very important to insure your business. Having the right agent also plays a vital role in helping you find the right insurance and creating security in your business.