{"@context":"http:\/\/schema.org","@type":"Blog","publisher":{"@type":["AccountingService","Organization"],"contactPoint":{"@type":"ContactPoint","url":"http:\/\/simplycounted.com\/contact\/","name":"Sales","description":"Sales contact information for Simply Counted Business Services","telephone":"+1 616-738-0044","contactType":"sales","areaServed":"https:\/\/simplycounted.com\/contact\/#State","availableLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","@id":"https:\/\/simplycounted.com\/contact\/#Sales"},"url":"https:\/\/simplycounted.com\/about\/","employee":"https:\/\/simplycounted.com\/about\/tricia-diekema\/","alternateName":["Simply Counted and Tax","Simply Tax","Simply Counted"],"image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2019\/07\/Staff-Picture-Updated-7-2019-1.jpg","name":"Simply Counted & Tax","description":"Simply Counted and Tax is an accounting firm in Holland, MI offering services to support small and medium sized businesses, as well as individuals.","logo":{"@type":"ImageObject","url":"https:\/\/simplycounted.com\/wp-content\/uploads\/2024\/12\/Simply-Counted-Tax-Logo-500px.jpg","name":"Simply Counted and Tax logo","height":"156","width":"500","@id":"https:\/\/simplycounted.com\/wp-content\/uploads\/2024\/12\/Simply-Counted-Tax-Logo-500px.jpg"},"telephone":"+1 616-738-0044","address":"https:\/\/simplycounted.com\/#SimplyCountedAddress","sameAs":"https:\/\/www.facebook.com\/SimplyCountedBusinessServices\/","legalName":"Simply Counted & Tax, Inc.","naics":" 541219","foundingDate":"1997-07-01","subOrganization":"https:\/\/simplycounted.com\/#SimplyTax","geo":"https:\/\/simplycounted.com\/#GeoShapeOrGeoCoordinates","openingHoursSpecification":["https:\/\/simplycounted.com\/about\/#MondayHours","https:\/\/simplycounted.com\/about\/#WednesdayHours","https:\/\/simplycounted.com\/about\/#TuesdayHours","https:\/\/simplycounted.com\/about\/#FridayHours","https:\/\/simplycounted.com\/about\/#ThursdayHours"],"priceRange":"$$-$$$","founder":{"@type":"Person","url":["https:\/\/simplycounted.com\/about\/diana-kasza\/","https:\/\/simplycounted.com\/about\/"],"name":"Diana Kasza","description":"Founder and former President, Simply Counted Business Solutions, Inc.","email":"info@simplycounted.com","sameAs":"https:\/\/www.linkedin.com\/in\/diana-kasza-3764833\/","alumniOf":"https:\/\/en.wikipedia.org\/wiki\/Ferris_State_University","gender":"Female","@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"numberOfEmployees":"9","memberOf":"https:\/\/en.wikipedia.org\/wiki\/National_Association_of_Tax_Professionals","@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"blogPost":[{"@type":"BlogPosting","isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H56M0S","wordCount":330,"url":"https:\/\/simplycounted.com\/3-reasons-to-incorporate-your-business\/","dateModified":"2018-10-01T18:35:26+0000","mentions":["https:\/\/www.wikidata.org\/wiki\/Q149789","https:\/\/www.wikidata.org\/wiki\/Q8161"],"mainEntityOfPage":"https:\/\/simplycounted.com\/3-reasons-to-incorporate-your-business\/","image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2018\/10\/3Reasons1.jpg","name":"3 Reasons to Incorporate Your Business","headline":"3 Reasons to Incorporate Your Business","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"When starting a new business, one of the first decisions to make is whether to form your company as a sole proprietorship, partnership, Limited Liability Company (LLC) or incorporating a business. Incorporating an existing business brings up other questions of when, why and how. There are advantages and disadvantages to each type, but the benefits of incorporating your business should play a key role in your decision-making process. Here are the top 3 reasons to incorporate your business:  3 Reasons to Incorporate Your Business Infographic     1. Protecting Your Personal Assets When you incorporate your business, it creates a separation between your personal assets and the assets of your company. Reducing this liability means things like your home, vehicles, and personal savings will be protected.  2. Save On Your Taxes Rather than paying self-employment taxes at the end of the year for a non-incorporated business, you gain the advantages of a deductible salary in an incorporated business. And for Sub S corporations, you\u2019ll avoid double taxation on dividends. In addition, employee benefits for both yourself and your employees \u2013 like health insurance, retirement accounts, etc. \u2013 can be deducted from your annual taxes.  3. Raise Capital for the Business In the end, the goal of any business is to make money! Incorporated businesses make it easier for you to raise capital so you can grow and expand. Hiring new employees, purchasing equipment, and expanding the workplace all typically require increasing capital and could have you hitting new benchmarks that may unattainable in a sole proprietorship status.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"When starting a new business, one of the first decisions to make is whether to form your company as a sole proprietorship, partnership, Limited Liability Company (LLC) or incorporating a business. Incorporating an existing business brings up other questions of when, why and how. There are advantages and disadvantages to each type, but the benefits [\u2026]","datePublished":"2018-10-01","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":"https:\/\/www.wikidata.org\/wiki\/Q3178478","copyrightYear":2018,"isFamilyFriendly":true,"@id":"https:\/\/simplycounted.com\/3-reasons-to-incorporate-your-business\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/7-small-business-retirement-plans\/","dateModified":"2022-10-26","mentions":["https:\/\/www.wikidata.org\/wiki\/Q29933838","https:\/\/www.wikidata.org\/wiki\/Q1206798","http:\/\/www.wikidata.org\/entity\/Q7370386","https:\/\/www.wikidata.org\/wiki\/Q6025330"],"mainEntityOfPage":{"@id":"https:\/\/simplycounted.com\/7-small-business-retirement-plans\/"},"image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2022\/09\/small-business-retirement-plans.jpg","name":"7 Small Business Retirement Plans","headline":"7 Small Business Retirement Plans","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"Choosing the best retirement plan for small business owners and their employees is no simple matter. Learning the nuances between a traditional IRA, including the Simple IRA and SEP IRA, can make your head swim. Add to that 401k plan options like Traditional, PEP, Solo, Roth, and Safe Harbor 401k, and you\u2019re practically under water.  The small business owner needs a good strategy to help wade through the primary retirement plan options available. She can start by reviewing retirement plans at a high level. Then zero in on two or three that might work for her business. Finally, she can dig deeper to find the best retirement plan for the business and its employees. Doing the research and implementing a plan will eventually help both business owners and their employees save for retirement. This is a goal well worth the effort.  Benefits of Offering Retirement Plans Unlike some other countries, the U.S. government does not offer retirement benefits to individuals. Nor are businesses required to offer retirement savings plans to their employees.  Instead, both large and small businesses offer retirement plans for employees as a benefit designed to attract good employees. Retirement plans also help maintain the loyalty of small business employees. Employees feel safer and more secure when they rely on a retirement account that gradually builds up until they retire.  Company-sponsored retirement plans for small businesses can also offer significant tax-deferred benefits. Not only can employer contributions be deducted as an expense, but several plans offer tax credits or incentives as well.  Finally, business owners themselves may wish to set up their own nest egg for when they retire. Entrepreneurs often work diligently to create the best retirement plans for their employees. Sometimes they neglect to implement the right individual retirement solution for themselves.  Types of Retirement Plans Three eggs setting atop $100 bills with inscriptions \"IRA, Roth, and 401K\" symbolizing ways to save for retirement There are several retirement plan options for small business owners to offer their employees, and in some cases, themselves. Some are much more complex than others and all have details that may or may not be deal breakers.  Most retirement plans fall into one of two categories: IRAs or 401k. Below is a high-level summary of seven small business retirement plan options that a business might consider. Two types are IRA plans and five types are 401k plans. Armed with this information, choosing a small business retirement just got a little easier.  Traditional IRA\u2019s Most traditional IRAs are set up by individuals, not businesses. Individuals create their own IRA account. Then they contribute money either as an annual contribution or as regular contributions throughout the year. Often the contributions are made on a tax-deferred basis. This makes traditional IRA\u2019s a favorable way to reduce tax burdens during high-income earning years. They can be withdrawn (and taxed) for living expenses during lower income \u201cretirement\u201d years.  There are two special types of IRA\u2019s designed as retirement plans for small business owners, not solely for the individual. These include the Simple IRA and the SEP IRA.  Simple IRA A Simple IRA (Savings Incentive Match Plan for Employees of Small Employers) can be the right retirement solution for your small business if:  You have no more than 100 employees who earned $5,000 or more during the previous calendar year You are not offering any other retirement plan to your employees The SIMPLE IRA plan has lower start-up and annual costs. It is also simple to operate when compared to other small business retirement plans. Further, businesses could receive a tax credit of up to $500 per year for the first three years.  Small businesses either match employee contributions or contribute a fixed percentage of the employee\u2019s pay. The employer contribution amount can be one of two methods:  2% \u201cnon-elective\u201d employer contributions. Here the employee receives a contribution equal to 2% of their compensation, whether or not they contribute that much themselves. In 2021, the compensation limit was $290,000, or a maximum contribution of $5,800 for that employee. Dollar-for-dollar match: Using this method, the employer matches the employee\u2019s contribution to the plan up to 3%. For example, if an employee contributed $10,000 to their plan, the employer would contribute a maximum of 3% or $300. While employer contributions are capped at a low amount, Simple IRA funds can add up over time for the employee. For the employer, the paperwork and oversight is significantly reduced compared to traditional IRA\u2019s.  SEP IRA Simplified Employee Pension IRAs, or SEPs, are savings plans can provide significant income for employees when they retire. Businesses of all sizes, from self-employed individuals on up, can establish a SEP IRA. It is a simple plan.  Implementing a SEP IRA is an excellent option for businesses with fluctuating revenue  There are no start-up or operating costs and no filing requirements by the employer. Here are some other features of a SEP IRA:  Allows contributions of up to 25% of each employee\u2019s pay Only the employer contributes to this plan, not the employee The employee is always 100% vested; the SEP-IRA funds belong to the employee even if they leave the company The employer must contribute using a formula that is equal for all eligible employees. Annual employer contributions are flexible Employees may have mixed feelings about SEP IRAs. They might prefer to be paid directly via a higher wage or bonus, rather than contribute to their retirement plan. And employees don\u2019t always consider the added benefit as a part of their wages since it is not easily accessible.  Yet implementing a SEP IRA is an excellent option for businesses with fluctuating revenue. The employer can create a plan where they can lower the contribution amounts or not contribute at all. This is especially helpful if the business had a bad year. Employees may not appreciate a lower contribution, but the bite could be worse. Instead, their wages could have been reduced or risk a layoff so their employer could compensate for the bad year.  401k Plans The 401k plan might very well be the most widely used retirement plan for both small and large businesses today. The plan allows employers and employees to add much more to retirement savings than an IRA. In 2022, the employer-sponsored 401k maximum contribution is a whopping $20,500 vs. $6,000 in an IRA. It also offers a larger catch-up contribution for individuals over age 50: $6,500 vs. $1,000 in the IRA. Usually, the contribution limits apply to the sum of contributions of all 401k accounts that an individual maintains.  Fortunately, there are some new options for small employees to offer 401k retirement accounts. They eliminate much of the paperwork and reporting burden.  There can be a lot of paperwork and red tape to establish and maintain a 401k plan. The business must:  Create a document that describes the plan Coordinate a trust for the plan\u2019s assets Develop a system for record-keeping Create and offer plan information to all employees that are eligible to participate in the plan Finally, the annual testing requirement for a traditional 401k plan can be substantial in terms of cost, time and complexity. This is especially true for small businesses.  Fortunately, there are some new options for small employees to offer 401k retirement accounts. They elminate much of the paperwork and reporting burden. Pooled Employee Retirement Plans often designate a parent organization to handle both administrative requirements and annual testing. Safe harbor 401k plans do not require annual testing but also remove some of the retirement plan flexibility.  Traditional 401k Plans The traditional 401k plan offers the most flexibility for the employer. This includes defining which employees are eligible, and both the match percentage (if any) and the cap. Many plans are tax-deferred, meaning employees are not required to pay taxes on the contribution amounts until they withdraw them.  Annual Testing Requirement for traditional 401(k)s Traditional 401k plans have an annual testing requirement that ensures the plan provides fair and proportional benefits. Every level of employee will be tested: rank and file employees, managers, and owners. There is a risk of penalties on the employer\u2019s part if the rules are not met. And the level of reporting complexity can be cumbersome and time-intensive for many small businesses.  Pooled Employee Retirement Plan (PEP) Fortunately, there are some organizations that make a 401k plan more attractive for small businesses. These are called pooled retirement plans (PEP). The PEP strategy was created by the SECURE Act (Setting Every Community Up for Retirement Enhancement) of 2019. This act allows employers from all industries to band together to create a 401k retirement plan. Many parent organizations that offer PEPs provide both the administration work (trust options, record keeping). The also absorb the annual testing and any related liability on behalf of their member 401k companies. Seeking an organization that offers a PEP can be a real game changer when it comes to offering a \u201ccorporate-like\u201d small business retirement plan.  Solo 401k A Solo 401k is a savings account for self-employed individuals to set aside money earmarked for their future retirement. Only owners and their spouses may apply for a Solo 401k. A business with employees is not eligible. The plan is designed to help self-employed entrepreneurs save for their own retirement.  With a Solo 401k, contributions can be contributed as a business expense by the employer. In addition, the business owner and spouse can contribute personal funds. The brokerage firm you use may also offer a Roth option as part of the Solo 401k.  . . . in a nutshell, a Solo 401k is an exceptional plan to shield the most money possible from taxes  There is a hard contribution cap per person which generally increases each year. The maximum contribution is:  Individual contribution limit \u2013 $20,500 (plus catchup noted below) Non-elective employer contributions (the company part) \u2013 up to 20% of net self-employment earnings. Combining both of the above together, there is a total cap of $61,000 per person per year. There is also a catch-up contribution of an extra $6,500 for those 50 or older.  There are many other rules about Solo 401k\u2019s. But in a nutshell, a Solo 401k is an exceptional plan to shield the most money possible from taxes. Employing your spouse also allows a double-dip tax advantage of sorts. Finally, this type of plan can shield the individual from taxes when income is generated by a side business. When combined with a Roth IRA, the Solo 401k is one of the very best retirement plans for self-employed business owners.  Roth 401k\u2014and a little about a Roth IRA The Roth 401k has been the preferred retirement plan among employees since the 1960s. There is also a Roth IRA, which can make things confusing. With both types of Roth retirement plans, individual contributions are taxed the year that contributions are added to the account. This taxable factor is the main difference between Roth and many other plans. Almost all other retirement plan contributions are tax-deferred and not taxed until the funds are withdrawn.  Some funds in both types of Roth accounts are tax-deferred though. This includes any dividend income that is received and reinvested in the account.  Main Differences Between Roth IRA and Roth 401k In addition to the fundamental differences between IRAs and 401k\u2019s, here are the main difference between a Roth IRA and a Roth 401k:  A Roth 401k can have a matching employer contribution. The amount is generally between 2% and 5% of an employee\u2019s paycheck. The employer portion is not taxed. It is another part of a Roth 401k that isn\u2019t taxed until it is withdrawn. There are no income limits for a Roth 401k. If an employer offers a Roth 401k, it must be available to all employees, regardless of their salary or wages. There is a required minimum distribution (RMD) on a Roth 401k. This means that the account owner is required to start taking minimum distributions from the account beginning at age 72. This assumes they are no longer working or are not a 5% owner in the company sponsoring the plan. These withdrawal requirements are not included in a Roth IRA. Deciding on a Roth 401k retirement plan is usually based on desiring the tax payment when the income is earned. Combining a pretax Roth with another type of 401k is often a good solution. This is an instance where small business owners should consider offering more than one type of retirement plan.  Safe Harbor 401k 401k safe harbors can be used to create a variation on traditional nontaxable 401k options. Timing for the small business owner when offering this type of retirement plan is critical. The plan must be in effect for 3 months of any calendar year to claim that year\u2019s tax benefits. This would make October 1 the deadline for implementing a safe harbor account. The caveat here is that employees must receive \u201creasonable\u201d notice about the safe harbor offer. Since notice can be between 30 and 90 days, the defined benefit plan must be in effect much sooner. Otherwise, that year\u2019s tax benefits for the company\u2019s retirement plan cannot be claimed.  The largest difference between a safe harbor retirement plan and other plans is the removal of the IRS annual nondiscrimination testing requirement  While the safe harbor 401k is similar to a traditional 401k, it does have some differences:  The largest difference between a safe harbor retirement plan and other plans is the removal of the IRS annual nondiscrimination testing requirement. For small businesses, this can take a big burden off their administrative staff. Safe harbor plans require employers to contribute to their employees\u2019 retirement plans. Many traditional 401k\u2019s do not require that contribution. The safe harbor employer contribution can either be: A minimum of 3% of the employees\u2019 compensation\u2014regardless of whether they contribute to the account themselves, or A matching contribution. This strategy encourages the employee to contribute to their retirement as well as their employer. Safe harbor retirement plans require all contributions to be 100% vested. The employee legally owns this retirement account and can take it with them if they leave the employer. Conversely, other types of retirement plans may have stipulations where the employee is not entitled to all of the contributions for up to 6 years. When can the safe harbor 401k might be the best retirement plan for a small business? If they wish to offer benefits of traditional 401k retirement accounts yet avoid the mandatory government compliance testing. Safe harbor plans are one way to do this.  Start Your Small Business Retirement Plan Today With so many options for small business retirement plans, it\u2019s a great time to create a plan. Alternatively, it may be the time to switch plans from one that is not working. As a small business owner, you\u2019ll attract better employees and maintain their loyalty, all while experiencing tax benefits. The best retirement plans are those that are right for your particular business and employee situation. You\u2019ve already taken the first step by reading this. Now it\u2019s time to take the next one.  Feel free to contact Simply Counted with any questions about retirement savings accounts or 401k options. We\u2019re happy to help you and your employees save for retirement with the best retirement option for you.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"Not all retirement plans are equal. New, less complex plans for small businesses can compete with the big corporations and help employees feel more secure.","datePublished":"2022-09-26","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":"https:\/\/www.wikidata.org\/wiki\/Q7316838","copyrightYear":"2022","isFamilyFriendly":true,"wordCount":2543,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H9M15S","citation":["https:\/\/www.sbam.org\/retirement\/","https:\/\/hackyourwealth.com\/solo-401k","https:\/\/www.irs.gov\/retirement-plans\/plan-sponsor\/simplified-employee-pension-plan-sep"],"@id":"https:\/\/simplycounted.com\/7-small-business-retirement-plans\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/9-paper-documents-to-keep-forever\/","dateModified":"2019-03-30T18:38:22+0000","mainEntityOfPage":"https:\/\/simplycounted.com\/9-paper-documents-to-keep-forever\/","image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2018\/03\/9-documents-to-keep-in-physical-form-forever-with-logo.jpg","name":"9 Paper Documents to Keep Forever","headline":"9 Paper Documents to Keep Forever","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"As tax season comes to an end and you file away your records, you may be looking at your ever-growing file cabinet and wondering, \u201ccan I get rid of some of these documents?\u201d While there are many reasons to keep or discard certain paperwork, there are some documents you should never throw away! (IRS Tax Returns and supporting documents should be kept for 5-7 years, by the way.)  Below are the 9 paper documents you should keep forever in their original form:  Infographic of nine documents to keep forever in their original physical form   9 Paper Documents You Should Keep Forever in Their Original Form Vehicle Titles & Loans Social Security Card Identification Cards & Passports Marriage License(s) Wills & Power of Attorney Pension Plan Birth Certificates & Death Certificates Business License(s) House Deeds & Mortgages","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"As tax season comes to an end and you file away your records, you may be looking at your ever-growing file cabinet and wondering, \u201ccan I get rid of some of these documents?\u201d While there are many reasons to keep or discard certain paperwork, there are some documents you should never throw away! (IRS Tax [\u2026]","datePublished":"2018-03-30","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":"https:\/\/en.wikipedia.org\/wiki\/Documentation","copyrightYear":2018,"isFamilyFriendly":true,"wordCount":221,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H0M30S","@id":"https:\/\/simplycounted.com\/9-paper-documents-to-keep-forever\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/accredited-business-accountant\/","dateModified":"2021-07-19","mentions":["https:\/\/www.wikidata.org\/wiki\/Q1056337","https:\/\/www.wikidata.org\/wiki\/Q873451","https:\/\/www.wikidata.org\/wiki\/Q192907","https:\/\/www.wikidata.org\/wiki\/Q4116214","https:\/\/www.wikidata.org\/wiki\/Q8161","http:\/\/www.wikidata.org\/entity\/Q3707847","wiki-business"],"mainEntityOfPage":{"@id":"https:\/\/simplycounted.com\/accredited-business-accountant\/"},"image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2021\/06\/financial-folders.jpg","name":"Why Hire an Accredited Business Accountant?","headline":"Why Hire an Accredited Business Accountant?","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"Looking for an accountant that meets your business needs can be confusing. There are many certifications that can be earned, from a basic college degree in accounting to specializations in fraud, bookkeeping, and internal auditing.   So how do you know who to hire? Like choosing a doctor, you want your accountant to have the skills and knowledge to do a trustworthy job. And like a doctor, that accountant should be certified by a well-known accreditation council.  Let\u2019s take a look at what an Accredited Business Accountant is and if hiring one is right for your business.  What is an Accredited Business Accountant? An Accredited Business Accountant (ABA) is a financial professional that is certified by the Accreditation Council for Accountancy and Taxation (ACAT) through testing on common accounting standards. The ABA credential is a prestigious designation that proves an accountant is proficient in general accounting.  There are three steps to get an ABA accreditation:  Complete the ABA examination with a score of at least 70 Have a total of three years of accounting experience through work and study. This may be college classes that were completed or work at an accounting firm, for example. Participate in Continuing Professional Education (CPE) after the exam is completed in order to stay up-to-date on changing accounting practices. The ABA examination is broken into two parts known as Practice 1 and Practice 2, each with 100 multiple-choice questions. These parts can be taken separately or at the same time, as long as they are completed within 18 months of one another. Six main areas are covered during the exam, with a disproportionate number of questions:  Financial Accounting Financial Statement Preparation, Presentation, and Reporting Compilation & Review Managerial Accounting Business Law Taxation Ethics pie chart of areas covered in the accredited business accountant exam: financial accounting 25%, financial statement preparation 25%, taxation 25%, managerial accounting 13.5%, business law 7.5%, ethics 4% With an ABA certification, an accountant can help with tax returns, give financial business advice, compilation and review, and prepare financial statements, including balance sheets, income statements, and cash flow statements. Because the ABA credential is well-rounded, these accountants can provide broader services than a specialized professional.  While Accredited Business Accountants are allowed to work with any size business, they generally work with small-to-medium sized businesses, individuals, or families.  What\u2019s the difference between an Accredited Business Accountant and an Accredited Business Advisor? Depending on the state in which a professional is licensed, an Accredited Business Accountant may be referred to as an Accredited Business Advisor. These terms are synonymous, but state law dictates under what circumstances an accounting professional is allowed to call him- or herself an \u201caccountant\u201d.  In 21 states \u2014 including New York, California, and Texas \u2014 only a Certified Public Accountant (CPA) is legally allowed to advertise themself as an \u201caccountant\u201d. In states like Iowa, Minnesota, and Michigan, however, an ABA is allowed to refer to him- or herself as an \u201caccountant\u201d. If you are unsure about the laws where you live, it is best to check with your state\u2019s financial licensing department for more information.  Benefits of Hiring an Accredited Business Accountant Business owners sometimes believe that a CPA is the best person for accounting because the certification takes longer to achieve. This is not the case! A CPA does have the authority to perform certified audits that an ABA cannot and official reports on financial statements.   But if these services are not required, hiring a CPA may not be a good fit. CPAs are generally more expensive to hire than other financial professionals and using them for anything other than their specialized tasks may not be the best use of your resources. For general accounting, ABAs are just as competent and provide an alternative with many of the same skills and experience as CPAs while fitting your budget.  On the other hand, hiring a non-certified professional is taking a risk with your business. Since ABAs have proven knowledge and training in accounting, they can be trusted to complete projects correctly.   Accredited Business Accountants are established financial professionals to hire for most accounting tasks. It takes years of studying and experience to prepare for and pass the ABA exam, not to mention continuing to learn new rules and regulations required to maintain the certification. This provides security in hiring an accountant without overpaying.  If you are looking for an Accredited Business Accountant to work with your business, contact Simply Counted Business Services for financial help.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"What an Accredited Business Accountant does and the benefits of hiring an ABA over other certified accountants.","datePublished":"2021-07-19","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":"https:\/\/www.wikidata.org\/wiki\/Q4672852","copyrightYear":2021,"isFamilyFriendly":true,"wordCount":745,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H2M43S","@id":"https:\/\/simplycounted.com\/accredited-business-accountant\/"},{"@type":"BlogPosting","copyrightYear":"2023","isFamilyFriendly":true,"wordCount":1346,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H4M53S","mentions":["https:\/\/www.wikidata.org\/wiki\/Q626741","http:\/\/www.wikidata.org\/entity\/Q43015","http:\/\/www.wikidata.org\/entity\/Q6452684"],"mainEntityOfPage":{"@id":"https:\/\/simplycounted.com\/business-internal-accounting-controls\/"},"image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2023\/08\/small-business-internal-controls.jpg","name":"Overcoming Internal Accounting Controls: Challenges for Small Businesses","headline":"Overcoming Internal Accounting Controls: Challenges for Small Businesses","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"Having solid internal accounting controls is important to make sure your company\u2019s financial operations run smoothly. These controls not only reduce the risk of fraud or errors but also keep your assets safe from loss or misuse. Internal controls also give you reliable financial data for making smart management decisions. So don\u2019t forget to these safeguards in place!  There are three main categories that internal controls fall into:  Preventative \u2013 stop an error before it occurs Detective \u2013 detect an error after it has occurred Corrective \u2013 actions after an error is found in the detective control process Here are some examples of types of actionable internal controls that fall under these categories.  Preventive Controls Create a separation of duties Use dual signatures Physically secure assets Have well-documented policies and procedures Detective Controls Perform reconciliations Schedule audits from outside accounting professionals Perform internal audits Corrective Controls Updates to policies and procedures Disciplinary actions Software updates As a small business owner or manager, you have a lot on your plate. Creating and implementing an accounting system with internal controls provides a way for you to have checks and balances. Here are some examples of internal control challenges you could face in a small business and how to overcome them.  Accounting Controls Challenges for Small Businesses Challenge 1: Inadequate internal controls accounting balance sheet, financial statement and calculator Small businesses operate with limited resources which makes it difficult to implement effective internal controls. When you ensure proper segregation of duties and establish thorough procedures, you strengthen financial practices and enhance overall operational efficiency.  Recommended resolution: Invest in hiring or consulting with a qualified accountant to ensure that your internal control systems are up-to-date and effective. An accounting firm can provide you with a guide to make it easier to keep up on internal controls systems and stay on track.  Challenge 2: Lack of understanding of financial regulations large binders with accounting compliance, regulations, small business finance laws Many small business owners, especially those without a finance background, often find themselves unfamiliar with intricate and complex financial regulations imposed by government agencies. This lack of awareness can often lead to challenges and uncertainties when it comes to maintaining compliance and ensuring accurate financial records. In this case, it becomes crucial for small business owners to seek guidance and resources that can help them navigate and understand these regulations to effectively manage their financial operations.  Recommended resolution: Consult with an experienced tax advisor or CPA to ensure that they are compliant with all relevant financial regulations and have a secure accounting system in place.  Challenge 3: Manual processes for recording transactions business owner with paper receipts, manually entering accounting paperwork Many small businesses depend on manual processes for recording and tracking financial transactions. But relying on manual methods can cause an increase in errors or omissions, jeopardizing the accuracy and integrity of the financial records maintained by these businesses.  Recommended resolution: Invest in electronic filing systems and software solutions designed to automate accounting tasks such as financial reporting, which will reduce the risk of errors and improve accuracy.  More Ways to Improve Internal Accounting Controls Small businesses work with limited resources for protecting financial statements, sensitive data, and physical assets. So having an organized and well-kept accounting system is important for a small business to not only stay afloat but to thrive. Here is a list of more helpful ways that your small businesses can improve internal accounting controls.  Large Transaction Control: As a preventive controls procedure, it is recommended to require the approval of senior management for large transactions. This ensures that significant financial decisions are carefully reviewed and evaluated by experienced leaders who possess a comprehensive understanding of the organization\u2019s goals and risk tolerance. By implementing this measure, companies can enhance transparency, accountability, and risk management in their financial operations. Separation of Duties Policy: By separating certain tasks to different individuals in a company you can ensure the integrity of your bookkeeping process. This internal controls policy works by restricting employees\u2019 access to only one stage, preventing any unauthorized interactions, and maintaining a secure and streamlined workflow. Internal Audits and Reviews: These are a type of detective control to help you find errors and maintain compliance with applicable laws. Have a qualified staff member perform regular audits and reviews of financial records and reports. During these reviews make sure to have a checklist of necessary documentation to support the burden of proof in the event of an IRS audit. Account Restrictions\/Access Controls: Implement proper access restrictions and limit access only to authorized personnel for your account information. Carefully monitor the accounting control systems for any unauthorized or suspicious activity to safeguard financial data and prevent potential security breaches. Double-Entry Accounting System: Adopt a double-entry accounting system with independent accounts for debit and credit transactions to keep account balances in check. The system is tracked through trial balances to ensure that the total debits match the total credits. This process also helps identify errors in accounting records. Banking Authentication Access Controls: Add an extra layer of security for your financial transactions during online banking activities with two-factor authentication. By implementing this additional security measure, you can enhance the protection of your sensitive information and significantly reduce the risk of unauthorized access to your accounts. Preventative Controls to Reduce Fraud: Implementing an internal preventive controls policy that mandates regular vacations for executives helps minimize the chances of employee fraud or misuse of company funds and assets. When the executive is on vacation and hands off their workload to peers their work is inspected which reduces the chance of embezzlement of funds. This measure not only enhances financial security but also ensures transparency and accountability within the organization. Reduce Manual Entry: Automate data entry processes as much as possible, with manual override when necessary. This is an example of a preventive internal controls procedure put in place to reduce human error and improve accuracy in record-keeping. Third-Party Accounting Audits: Perform regular independent accounting control audits by outside professionals to verify the accuracy of financial statements. This is a form of a detective controls system you can put in place to identify any fraudulent transactions. Benefits of Third-Party Auditing of Internal Controls For a small business, having a third-party audit of internal accounting controls can be an invaluable asset. An independent third-party audit helps provide peace of mind for those involved in running a small business. Here are some of the main benefits of having a third-party review your accounting systems and records.  Catch Errors with Risk Assessments This helps you to identify any potential areas of financial weakness or mismanagement before it becomes too late. Risk assessments by an outside source can help to ensure that any accounting errors in financial reporting are discovered are addressed quickly, reducing any long-term potential losses.  Provide Unbiased Review Physical audits performed by certified accountants outside of your company provide an unbiased and independent view of the accounting practices. By performing regular audits, management can be sure that their efforts to maintain accurate financial records and internal controls are effective, and at the same time provide investors with confidence in their commitment to sound fiscal practices.  Identify New Ways to Improve Internal Operations Accounting control audits can assist management in determining whether processes are being followed correctly or if there is room for improvement. The audit process itself also adds efficiency and security measures throughout the operation. This is beneficial when dealing with sensitive data such as bank statements, customer records, or employee information.  All in all, having an experienced accounting firm audit your internal accounting control systems is invaluable in helping manage risk and promoting good governance over financial activities within your organization. Provide assurance to external stakeholders \u2014 creditors and investors \u2014 that the accounting statements are reliable and trustworthy. Contact the certified accountants at Simply Counted to get us on your schedule for internal control audits. We can also help with business start-up operations by helping you plan and implement a strong internal control framework for your new business from the get-go.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"Learn about internal accounting controls challenges small businesses face and how they can overcome them to create a strong internal accounting system.","datePublished":"2023-08-28","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":["https:\/\/www.wikidata.org\/wiki\/Q4116214","http:\/\/www.wikidata.org\/entity\/Q1109680"],"url":"https:\/\/simplycounted.com\/business-internal-accounting-controls\/","dateModified":"2023-08-28","@id":"https:\/\/simplycounted.com\/business-internal-accounting-controls\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/electronic-filing-system\/","dateModified":"2022-02-10","mentions":["https:\/\/www.wikidata.org\/wiki\/Q732970","https:\/\/www.wikidata.org\/wiki\/Q19644522","https:\/\/www.wikidata.org\/wiki\/Q3494271","https:\/\/www.wikidata.org\/wiki\/Q483639","https:\/\/www.wikidata.org\/wiki\/Q82744"],"mainEntityOfPage":{"@id":"https:\/\/simplycounted.com\/electronic-filing-system\/"},"image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2022\/02\/electronic-filing-system-768x569.jpg","name":"How to Set Up an Electronic Filing System for Your Business","headline":"How to Set Up an Electronic Filing System for Your Business","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"Going paperless is becoming standard in the business world. If your company has not converted to electronic filing, now is a great time to understand the benefits of digital documents and what steps you can take to implement an electronic filing system.  What Are the Benefits of Using an Electronic System? Digital copies won\u2019t deteriorate. Over time, paper documents can fade, fall apart, incur water damage, or disappear altogether. On the other hand, electronic documents that are added to a filing system will stay in the same condition forever.  It\u2019s more secure. Anyone can access a paper document if they are in the same room. Electronic documents are harder to view, particularly when password protected.  You will have a paperless backup. If you love using a physical filing system or need to keep original copies of paper documents, making a digital backup of all files ensures that you don\u2019t lose those documents. As mentioned above, paper can easily get lost or damaged but digital files will stay intact \u2014 especially if you store them in the cloud.  Electronic systems are easily searchable. Finding a misplaced paper document can take a lot of time out of your day. With an electronic system, a quick search will help you find it even if it is filed incorrectly.  Step One: Create a Plan Set Rules Begin by creating standard rules for adding and sharing documents. This ensures that the documents are consistent across the entire system, labeling: folders, documents, section off by years, etc. If you have an existing framework that works for you, implement it in the new digital filing system. Create any templates or guidelines that will keep the process consistent.  Plan Digital Conversion How are documents going to be converted from paper copies to digital? The files will need to be scanned in order to set up an electronic filing system. There are a few options for this:  Purchase a document scanner or use the scanner on your printer. Many printers already have a scanner built into the device and are perfect for scanning important documents. If you don\u2019t have a scanner attached to your printer, compact scanners are available specifically to use in document digitization. Use a mobile app. Apps like Adobe\u2019s Scan to PDF and the Dropbox Scan App allow users to capture PDFs with their camera. Both of these options are free but require a phone or tablet to use. Take a picture. In some cases, simply taking pictures of your documents is the right option. It\u2019s best to convert the pictures to PDFs, but it isn\u2019t a necessity. Naming and filing them correctly is probably more important. Choose Security Protocol Most businesses have sensitive documents in their filing system. Luckily, security protection is offered in most business file management services. If using your computer\u2019s File Manager, secure files by password protecting them. Adobe Acrobat offers a way to secure PDFs with passwords and restrict editing so that they can\u2019t be accessed by anyone without permission.  Communicate to Stakeholders Once you decide on a plan, it is important to let anyone that will be using the system understand how it is structured. Make sure everyone is aware of any rules, guidelines, and methods of accessing files in the new system.  Step Two: Choose the Right Software Business Document Management Systems Document management systems like Microsoft Box or eFile Cabinet  are cloud-based software designed specifically with SMBs in mind. These streamlined tools provide APIs that allow for integration with other business tools and help with tracking documents through the workflow. They also work well for basics like creating, sharing, and editing documents.  Cloud File Management Cloud document storage like Dropbox or Google Drive can also be used for storing documents but doesn\u2019t offer the same business-friendly features. It works like a literal filing cabinet where documents can be stored and secured, but not tracked, and has limited integration capabilities.  File Manager All computer operating systems come with a version of File Manager. On Windows, this is called File Explorer and on Mac OS, it is called Finder. This is the tool that allows you to organize files into folders. Since filing systems follow the same set of rules, it\u2019s easy to implement a filing system that mirrors a physical filing cabinet. While this is the most secure filling setup, as it allows for password protection and local storage, it is also the riskiest in terms of losing data. Always make an external backup of files if you are storing them on your computer.  Step Three: Set Up the System Create a Filing Structure There is no right way to set up a filing structure. Use a structure that works for your specific business, whether that be sorted alphabetically, chronologically, by category, or using another method. Then ensure everyone using the system understands how to navigate the new filing structure.  Use Consistent Naming Consistently naming files makes searching for documents easy. With standard naming rules, users are able to quickly understand what information is in a document. Use the filing structure to your advantage by including any important details in the name, like date or version number.  Download Files that are Already Electronic Many files are already in electronic form. These include credit card statements, bank statements, utility bills, and many receipts. It is not wise to assume those electronic copies will stay on the vendor\u2019s site for as long as you may need access to them. Often they are deleted within 2 years and sometimes sooner. Make sure one of your processes includes downloading all of the electronic files from your vendor sites on a consistent basis, but at minimum once a year.  Step Four: Perform Maintenance Declutter Checks Like buildings, filing systems cannot be built and then ignored. Schedule decluttering checks every 6-12 months to get rid of any files that do not need to be in the system. This may include duplicates, abandoned files, or any other useless data.  Periodically Archive Files While decluttering checks, archive any files that should not be deleted but that are no longer in use. Things like tax documents from previous years or clients that you no longer work with can be archived. Archiving files is as easy as adding them to an archive folder where they are still accessible but don\u2019t interfere with daily operations.  Understand What Documents to Keep It is tricky to know how long to keep different financial records. As a rule of thumb, always keep documents if you\u2019re unsure of how long to keep them. With an electronic filing system, those documents won\u2019t take up that much extra room and can be kept until you are sure you no longer need them.  When in doubt, keep these documents:  Business tax returns Financial statements General ledger Bank statements Credit card statements Check registers New hire forms Receipts Contracts Business agreements Permits and licenses Insurance documentation Payroll records DOCUMENT\tHOW LONG TO KEEP Records on which wage calculations are based\t2 years Income tax return records\t3 years Payroll records\t3 years Sales and purchase records\t3 years Bad debt reduction claim\t7 years Income tax return records if you do not file a return\tIndefinitely Moving your filing system from paper to electronic seems like a big undertaking but will save time and money in the long run. Besides not having to worry about losing documents, an electronic filing system is easier to manage and find information. If you need help setting up your financial filing system, contact Simply Counted Business Services for assistance.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"Why an electronic filing system is beneficial for your business and what steps to take when setting up a paperless system for your documents.","datePublished":"2022-02-10","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":["https:\/\/www.wikidata.org\/wiki\/Q5358250","http:\/\/www.wikidata.org\/entity\/Q5448454"],"copyrightYear":2022,"isFamilyFriendly":true,"wordCount":1257,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H4M34S","citation":["https:\/\/www.google.com\/drive\/","https:\/\/www.efilecabinet.com\/accounting-department-document-management-software\/","https:\/\/www.box.com\/industries\/financial-services","https:\/\/helpx.adobe.com\/acrobat\/using\/securing-pdfs-passwords.html","https:\/\/www.adobe.com\/acrobat\/mobile\/scanner-app.html","https:\/\/www.dropbox.com\/doc-scanner-app","https:\/\/www.dropbox.com\/"],"@id":"https:\/\/simplycounted.com\/electronic-filing-system\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/financial-statement-prep-documents\/","dateModified":"2023-02-22","mentions":["https:\/\/www.wikidata.org\/wiki\/Q243460","https:\/\/www.wikidata.org\/wiki\/Q460184","https:\/\/www.wikidata.org\/wiki\/Q46834","https:\/\/www.wikidata.org\/wiki\/Q208034"],"mainEntityOfPage":{"@id":"https:\/\/simplycounted.com\/financial-statement-prep-documents\/"},"image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2023\/02\/woman-reviewing.jpg","name":"3 Financial Statements and Why You Need Them","headline":"3 Financial Statements and Why You Need Them","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"In a business of any size, financial reporting is critical to the success of the organization. Why are financial statements important? Because when stakeholders need a clear financial picture of your organization, financial statements are the first thing they turn to. The process of financial statement preparation is an important one to be familiar with, whether you require these statements annually around tax time, or on a more regular basis.   Primary Documents in Financial Statement Preparation Although every business has its own unique aspects, they all have one thing in common \u2013 the need for 3 primary documents in the financial statement preparation process. Generally, the 3 financial statements in accounting are the balance sheet, income statement, and cash flow statement. Businesses update them on a monthly, quarterly, or annual basis, depending on the business.  Understanding these three financial statements is key to making informed decisions about the financial health of your business. These are the three documents and a brief summary of what they are used for in a business.  The Balance Sheet A balance sheet is a snapshot of a company\u2019s financial position at a specific point in time. It includes company assets, liabilities, and equity. Its purpose is to illustrate your business\u2019s financial position and whether you have more assets than liabilities (i.e. positive net worth).  The Income Statement The income statement is a summary of a company\u2019s revenue, expenses, and profit (or loss) over a specified period of time. An income statement helps you understand your business\u2019s performance and net income, and whether it is generating a profit.  The Cash Flow Statement A cash flow statement shows changes in a company\u2019s equity over a specified period of time, including contributions from shareholders, profits and losses, and distributions to shareholders. It shows you how much cash you are generating from operations, investing activities, and financing activities, and helps you understand whether you have enough cash to meet your financial obligations.  Does your business have these reports? And if so, what do you use them for? There are several main reasons that businesses need these 3 financial reports.  Why Your Business Needs the 3 Financial Statements business woman making decision at a fork in the road Financial statements are an important tool for small businesses, as they provide valuable information about the company\u2019s financial health and performance. Businesses use them in a number of ways, including:  Make decisions: The information in these reports provides the data and insights needed to make informed decisions about the future of the business, such as whether to invest in new equipment, expand operations, or seek additional financing. Monitor performance: These reports help small business owners track their progress and identify areas that may need improvement. With this information, business stakeholders can track changes in revenue, operating expenses, and profitability over time. Plan and budget: These 3 types of financial reports provide the basis for creating a budget and financial projections, allowing you to plan for the future and make informed decisions about your resources. Tax planning and compliance: Financial statements provide the information needed to accurately report business income, expenses, and other financial transactions to the tax authorities. Apply for a loan: Financial statements are often required for loan applications. They provide lenders with a snapshot of a small business\u2019s financial position and ability to repay the loan. Since loans can be so important in a business, we will delve a little deeper into that reason for these documents. Financial Statements for a Bank Loan button on a keyboard to apply for a business loan Loans can be a key source of cash flow you need to fund a small business. The exact financial statements required when you apply for a loan will vary depending on the size and type of loan being sought, as well as the financial history and condition of the business. However, common financial statements required for a bank loan include the 3 types of financial statements (balance sheet, income statement, cash flow statement) plus a business plan.  Here is how banks use each statement, plus their need for another important document, your business plan:  Balance Sheet. Banks use the balance sheet to assess your business\u2019s ability to repay the loan. Income Statement. An income statement is used by banks to evaluate your company\u2019s financial performance and stability. Cash Flow Statment. A bank uses the cash flow statement to assess your company\u2019s ability to generate positive cash flow and to service its debt obligations. Business Plan. In addition to the 3 financial statements, a business plan is often required so the bank can assess the viability and potential of your business. A business plan outlines your company\u2019s strategy, marketing, and sales plans, financial projections, and other key information in detail. Beyond these documents, banks may also require other information such as personal financial statements for your business\u2019s owners or guarantors of the loan, tax returns, and relevant financial information. The bank will use all of this information to determine creditworthiness and make a decision on whether to approve the loan.  The Importance of Accuracy in Financial Statements Having the necessary types of financial statements for your business is one thing \u2013 having accurate statements is another. When Simply Counted reviews financial statements for businesses that first retain our services, 90% of the financial statements are found to be inaccurate.  The reasons for inaccuracy vary greatly depending on several factors, including:  size and complexity of the business quality of its accounting and record-keeping systems level of expertise of accounting staff internal controls in place Even with the best systems and personnel, errors and discrepancies can still occur in financial statements. That\u2019s why it is important to regularly review your financial statements and have them audited by a qualified professional, in order to ensure their accuracy and integrity.  Financial Statement Compilation and Review Financial statements are an essential tool for small business owners, providing valuable information about the health of the company. Once you\u2019ve compiled the 3 types of financial statements, there are many ways to use them to your advantage. The financial statement review is a step where positive and negative trends, abnormal expenses or gains, and much more can be discovered. Compiling the statements alone is of no use unless they are reviewed and interpreted so your business can make better decisions moving forward.  Simply Counted\u2019s Accredited Business Accountants (ABA) offer financial statement services to compile your business\u2019s financial data and arrange it into conventional financial statement form on a monthly, quarterly, or annual basis. We also offer a financial statement review service where an ABA will apply analytical procedures to identify unusual trends that may need explanation. Finding inconsistencies in your business\u2019s financial health as soon as possible can make all the difference in successfully growing your business. Contact us for assistance in this very important area.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"The 3 key documents of financial statement preparation and how a financial statement review can spot trends, anomalies, and help make better decisions.","datePublished":"2023-02-22","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":"https:\/\/www.wikidata.org\/wiki\/Q192907","copyrightYear":"2023.0","isFamilyFriendly":true,"wordCount":1140,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H4M9S","@id":"https:\/\/simplycounted.com\/financial-statement-prep-documents\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/financial-statement-preparation\/","accessMode":"textual","dateModified":"2021-03-19","mentions":["https:\/\/www.wikidata.org\/wiki\/Q243460","https:\/\/www.wikidata.org\/wiki\/Q460184","https:\/\/www.wikidata.org\/wiki\/Q46834","https:\/\/www.wikidata.org\/wiki\/Q4116214"],"mainEntityOfPage":{"@id":"https:\/\/simplycounted.com\/financial-statement-preparation\/"},"image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2021\/03\/accountant-min.png","name":"What Should A Business Expect From Financial Statement Preparation?","headline":"What Should A Business Expect From Financial Statement Preparation?","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"In a business of any size, financial reporting is critical to the success of the organization. When stakeholders need a clear financial picture of your organization, financial statements are the first place to which they turn. The process of preparing financial statements is an important one to be familiar with, whether you require these statements annually around tax time, or on a more regular basis.   Before we dive into the preparation of financial statements, first let\u2019s explore what exactly they are and what they\u2019re used for.  What Is A Financial Statement? A financial statement is the record of a business or entity\u2019s activities and financial performance. Ideally, this information is presented in an organized and easy-to-read format. There are four types of financial statements:  hand drawing a 'financial statements' chart of components: 'balance sheet', 'income statement', 'cash flow', and 'equity' Balance Sheet \u2013 This is the most basic snapshot of company performance. It shows the company\u2019s financial balances of assets and liabilities. Income Statement \u2013 This statement contains exactly what it sounds like \u2013 the amount of income your organization generated. It includes both revenue and expenses and is sometimes called a profit and loss statement.  Cash Flow Statement \u2013 A cash flow statement shows the impact of your balance sheet and income statement data on the cash flow of your organization. This is broken down into operating, investment, and financing activities. A healthy cash flow ensures you have the cash to pay for expenses when they are due. Shareholders\u2019 Equity \u2013 If your company is privately held, you may not need to create a standalone shareholders\u2019 equity statement \u2013 this information will simply take up a small amount of space on your balance sheet. However, if your company is publicly traded, shareholders\u2019 equity becomes much more complicated and a separate statement will be necessary.  There are some variations to what a \u201ctemplate financial statement\u201d will look like, but financial statements will always contain the same information.  What Are Financial Statements Used For? Financial statements are used for:  A Snapshot of Company Performance \u2013 Is a company making or losing money? Is it financially healthy? These essential questions can be answered quickly by looking at financial statements. Making Business Decisions \u2013 Based on the information found in financial statements, a business may want to take measures to cut expenses, expand operations, or make any number of management decisions.   Investing \u2013 Income, cash flow, and other important benchmarks found in financial statements help investors make informed decisions. These include whether or not to invest in a business and a reasonable amount to invest. Banks \u2013 A bank may request a financial statement for regulation purposes or to determine whether or not to grant a loan. Accounting and Taxes \u2013 A financial statement can provide important information for both your accountant and the IRS to understand a company\u2019s tax situation. For this reason, a financial statement should always be prepared at the end of each tax year. Who Prepares Financial Statements? Financial statements are typically prepared by management, by an in-house accountant, or by a hired external accountant like Simply Counted.  Getting Ready For Financial Statement Preparation close-up view of a hanging folder tab that says 'finance' Each type of financial statement requires different information. While the documents needed to prepare the statements vary, the preparation process for each is the same:  1. Prepare the documents 2. Compile the data 3. Evaluate & review the statements  As a business entering the process of financial statement preparation, you\u2019ll want to prepare the necessary documents. Here is the information needed to prepare each type of statement:  Balance Sheets Assets \u2013 accounts receivable, cash, securities, inventory, property, etc. Liabilities \u2013 accounts payable, expenses, debts, etc. Shareholders\u2019 Equity \u2013 stocks & retained earnings Assets = Liabilities + Shareholders\u2019 Equity, so to ensure your balance sheet is indeed balanced, this equation must be true.   Income Statements Company Revenue \u2013 sales documentation\/accounts receivable Costs & Expenses \u2013 vendor receipts\/accounts payable Earnings Per Share Cash Flow Statements Operating Activities \u2013 cash flow from net income or losses. Ex: overhead Investing Activities \u2013 cash flow of all investing activities. Ex: purchases or sales of long-term assets result in changes in monthly cash that is available Financial Activities \u2013 cash flow from all financing activities. Ex: selling stocks and bonds, loans. Financial Statement Preparation can be intimidating, but once the process is understood, it\u2019s easy to use these documents to a business\u2019s advantage. If you are having trouble putting your business finances in order, contact Simply Counted and our team of financial professionals for assistance. You will be pleased with the expertise in our financial statement preparation services and the clear, no-nonsense explanation of your business\u2019s financial situation.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"Simply Counted clearly outlines the financial statements that stakeholders may need to get a clear financial picture of your organization.","datePublished":"2021-03-19","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":"https:\/\/www.wikidata.org\/wiki\/Q192907","copyrightYear":2021,"isFamilyFriendly":true,"wordCount":787,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H2M52S","@id":"https:\/\/simplycounted.com\/financial-statement-preparation\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/hra-the-alternative-health-benefit-option\/","dateModified":"2019-08-06T18:16:41+0000","mentions":["https:\/\/www.wikidata.org\/wiki\/Q5691144","https:\/\/www.wikidata.org\/wiki\/Q942326","https:\/\/www.wikidata.org\/wiki\/Q5458993"],"mainEntityOfPage":"https:\/\/simplycounted.com\/hra-the-alternative-health-benefit-option\/","image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2019\/08\/care-check-checkup-905874-min-1024x605.jpg","name":"HRA: The Alternative Health Benefit Option","headline":"HRA: The Alternative Health Benefit Option","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"Health Reimbursement Agreements (HRAs) have been around since the 1970s, but are getting more attention due to the recent changes implemented by the Departments of Health and Human Services, Labor, and Treasury. On June 13, 2019, they issued a new rule beginning in 2020 that allows employees to use an HRA set up by their employer to pay for health insurance premiums, a perk that was not allowed under previous HRA rules.  What Is an HRA?   \u201cHRA\u2019s can be a good option for small businesses that cannot offer health insurance but want to offer benefits to attract high-quality employees.\u201d  An HRA is an agreement between an employer and its employees in which a fixed, tax-deductible amount is set aside for each employee to pay for medical expenses. Money in an HRA is kept in the employer\u2019s account until an employee presents proof of payment for medical expenses, at which time they are reimbursed by the employer.  HRA\u2019s can be a good option for small businesses that cannot offer health insurance but want to offer benefits to attract high-quality employees. Employees may be able to purchase high-deductible, lower-cost insurance policies on their own and then use the HRA benefit to fund medical expenses close to the deductible amount.  Though the details of an HRA vary by business, the steps are always the same:  The business determines the allowance amount for the year. For 2020, the maximum amounts set by the IRS are $3,550 for an individual HRA, and $7,100 for a family plan. An employee makes medical expense purchases using out-of-pocket funds The employee submits proof of payment to their employer The employer reviews the employee\u2019s documentation to confirm that expenses are eligible The employer reimburses the employee for the purchase(s) made Eligible medical expenses are set by the government, though businesses have the ability to exclude any government-approved expense. The IRS generally defines qualifying medical expenses as costs \u201cprimarily to alleviate or prevent a physical or mental disability or illness. They don\u2019t include expenses that are merely beneficial to general health, such as vitamins or a vacation.\u201d The full list of covered expenses can be found in the IRS\u2019 Publication 502 document. Examples of these include:  Copayments Prescriptions Diabetic supplies Transportation costs associated with medical care Medical equipment and repairs Substance abuse treatment Dental and Vision expenses, such as braces, fillings, glasses and laser eye surgery Examples of expenses that are not covered include:  Health club membership fees Teeth whitening Funeral services Marriage counseling Childcare for a healthy baby \u201cHRA funds do not count towards an employee\u2019s gross income.\u201d  Several employees favor HRAs because of the ability to use funds for expenses that may not be covered by traditional health insurance policies, like dental and vision care. Additionally, HRA funds paid by the employer do not count towards an employee\u2019s gross income. While HRA funds usually roll over to the following year, employers have the option to set a maximum rollover limit.  \u201cWhile HRA funds usually roll over to the following year, employers have the option to set a maximum rollover limit.\u201d  What Types of HRAs Exist?  There are 4 main types of HRAs that currently exist and 2 new types that will go into effect on January 1, 2020.  Existing HRAs: The Qualified Small Employer HRA (QSEHRA) For businesses with fewer than 50 employees Funds are offered in a monthly allowance Doesn\u2019t offer a group insurance policy The Group Coverage HRA An HRA that is linked to a group insurance plan, often a high-deductible plan Only those who take part in the insurance plan can participate Funds are annual and do not rollover The One-Person Stand-Alone HRA Has only one participant Can be offered by any size business Popular with one-person non-profits and churches, as well as entrepreneurs The Retiree HRA Offered to retired employees Can be offered by any size business Annual rollover Can be used as an alternative to expensive retiree healthcare HRAs going into effect January 1, 2020: Individual Coverage HRA Similar to QSEHRA but with fewer restrictions Can be offered by any size business Only available to employees enrolled in individual insurance (no family member plans) Expected Benefit HRA Similar to Group Coverage HRA Available to employers with an offered health insurance policy Capped at $1800 per year per employee What Makes an HRA Different  HRA\u2019s \u201cdo not follow employees to new employers.\u201d  The main difference between HRAs and their counterparts is that they do not follow employees to new employers. Because the HRA is set up by the employer, it can only be used with that specific employer. In 2020, another difference allowing HRAs to pay for health insurance premiums sets them apart from their health account alternatives. Popular health expense payment account include:  Flexible Spending Account (FSA) Paid from pre-tax income by the employee Does not roll over to the next period Health Savings Account (HSA):  Paid by employee or employer from pre-tax or tax-discounted income Rolls over year-to-year Often used with high deductible health insurance plans HRAs can be used in combination with other health accounts but payment priority is set by the employer. While an employer may offer an HRA, they can decide that the employer must pay for expenses from their FSA, and once it is depleted the HRA will go into effect.  Setting up an HRA for Your Business  Many businesses find HRAs to be advantageous because of the flexibility and predictability offered by the fixed account. Since the employer sets the available amount, it can be changed based on budget restrictions and does not change once the agreement has been set. Businesses also do not need to pre-fund HRAs and can add money to the account during the year.   Experts recommend using HRA plan administrator software but it\u2019s always easier to get started with guidance from a professional. For help setting up your business\u2019 HRA, contact a trusted accountant at Simply Counted Business Services.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"Health Reimbursement Agreements (HRAs) have been around since the 1970s, but are getting more attention due to the recent changes implemented by the Departments of Health and Human Services, Labor, and Treasury. On June 13, 2019, they issued a new rule beginning in 2020 that allows employees to use an HRA set up by their [\u2026]","datePublished":"2019-08-06","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":"https:\/\/www.irs.gov\/newsroom\/health-reimbursement-arrangements-hras","copyrightYear":2019,"isFamilyFriendly":true,"wordCount":986,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H3M35S","citation":"https:\/\/www.irs.gov\/publications\/p502","@id":"https:\/\/simplycounted.com\/hra-the-alternative-health-benefit-option\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/llc-advantages-disadvantages\/","dateModified":"2019-03-07T19:26:07+0000","mainEntityOfPage":"https:\/\/simplycounted.com\/llc-advantages-disadvantages\/","image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2018\/11\/3Advantages.jpg","name":"Advantages and Disadvantages of Forming an LLC","headline":"Advantages and Disadvantages of Forming an LLC","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"1. Limited Liability The most popular reason people form an LLC is to protect their personal assets. LLCs ensure that, legally, you are not held personally responsible for the debts and liabilities as a result of the company\u2019s business. This avoids personal litigation, seizure of personal property, and bankruptcy.   2. Less Paperwork Paperwork for this type of company is not as demanding as, for example, incorporated businesses. An LLC can be formed by filing articles of organization and submitting a fee to the state but does not require filing annual reports, creating management bylaws, and other administrative work required when incorporating a business.  3. Tax Flexibility Though the guidelines for running an LLC differ from other types of companies, they can be taxed as a sole proprietorship, partnership, or corporation. There is more flexibility on how the business is classified when it comes to taxes since an LLC is not recognized by the IRS as a taxing entity.  3 disadvantages of starting an llc infographic  1. Self-Employment Taxes If you choose not to tax your LLC as a corporation, it is considered a pass-through business and the taxes are passed through to the owners. This means that the net income is divided equally between owners and each owner will pay that share\u2019s tax on their personal income tax return. In some cases, LLC owners may end up paying more taxes than corporation owners would since profits are taxed instead of salaries.  2. Limited Life In some states, the departure of a partner may force an LLC to dissolve. Ownership of an LLC is harder to transfer than that of a corporation since there are no shares of stock that can be sold and altering ownership must be approved by existing LLC members. If members do not buy the departing partner\u2019s interests at fair market value, the LLC may be dissolved.  3. Confusion About Roles Single-member LLC ownership is straightforward since one member has all decision-making power, however, multiple-member LLCs can be more complicated. Without clear guidelines of the rights and responsibilities of company members in the Operating Agreement, disagreements can quickly arise.  Whether deciding to categorize your company as an LLC or incorporating, Simply Counted can help you get started. Our strategic business consulting can advise on the formation of a new business, while our CFO and accounting services will assist long-term to ensure that your day-to-day operations run smoothly and efficiently so that you can focus on what makes your company unique.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"1. Limited Liability The most popular reason people form an LLC is to protect their personal assets. LLCs ensure that, legally, you are not held personally responsible for the debts and liabilities as a result of the company\u2019s business. This avoids personal litigation, seizure of personal property, and bankruptcy. 2. Less Paperwork Paperwork for this [\u2026]","datePublished":"2019-03-07","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":"https:\/\/en.wikipedia.org\/wiki\/Limited_liability_company","copyrightYear":2019,"isFamilyFriendly":true,"wordCount":507,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H1M30S","@id":"https:\/\/simplycounted.com\/llc-advantages-disadvantages\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/organizing-business-tax-documents\/","dateModified":"2017-03-03T19:42:17+0000","mainEntityOfPage":"https:\/\/simplycounted.com\/organizing-business-tax-documents\/","image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2019\/05\/books-document-education-357514-min-1024x683.jpg","name":"Organizing Your Business Tax Documents","headline":"Organizing Your Business Tax Documents","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"By now, you\u2019ve received (and sent out) various tax documents, statements, and even email notices advising where to retrieve your tax documents. So much information . . . how to organize it all? Here are a few tips on how to organize the source documents and tax information you create and receive.   Source Documents \u2013 What Are They? Source documents are critical to supporting business activity as it relates to a tax write-off. We have seen the IRS disallow expenses reported on a tax return that are not supported with a paper receipt. Keep this from happening to you!  Tax write-off source documents must include the following:  Description of item purchased Name of the purchaser (your business) Date of purchase Who your business purchased the product or service from Saving these valuable documents electronically has become more convenient \u2013 you can do so on a desktop drive, a server, data drive or in the cloud. All valuable source documents (revenue receipts, expenses, loan documents, accounting data files, etc.) must be retained for 5 \u2013 7 years, per the IRS, for any potential audit purpose as well as company reference.  Getting Started with Electronic Filing Systems Online access to bank records, credit cards, Amazon, PayPal accounts, etc, brings with it an assumption that these documents will be there forever \u2013 or at least the next 5-7 years \u2013 if needed. However, this is not the case. For example, many banks will only have an account\u2019s bank statements available to access for 12-24 months. Any statement beyond that period will cost you money to retrieve. Retrieving these documents during an audit adds unneeded stress to an already stressful situation. Handling record retention on a daily or weekly basis in a central location by creating an electronic filing system reduces this stress.  The universal document format for email and online receipts is Adobe Acrobat PDF. CutePDF Writer is a great tool you can install to convert documents to this format. The program acts as a printer \u2013 when you \u201cprint\u201d your receipt using CutePDF Writer, it saves the page or document as a PDF file. This will allow you to keep your digital receipts accessible over time, even if the software that originally supported the document disappears. Interested in getting started this year? Read How to Organize Your Computer Documents.  You can download a PDF containing all of the information above for future tax seasons! Download our tax document organization guide here.  Additional Resources Be sure to check out our resources page for a wealth of financial resources for small businesses. We also have business tax planning guides that will assist with many of the common issues found when doing taxes, and can help you save money on your business\u2019 tax returns!","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"By now, you\u2019ve received (and sent out) various tax documents, statements, and even email notices advising where to retrieve your tax documents. So much information . . . how to organize it all? Here are a few tips on how to organize the source documents and tax information you create and receive. Source Documents \u2013 [\u2026]","datePublished":"2017-03-03","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":["https:\/\/en.wikipedia.org\/wiki\/Tax","https:\/\/en.wikipedia.org\/wiki\/Documentation"],"copyrightYear":2017,"isFamilyFriendly":true,"wordCount":459,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H1M40S","citation":["http:\/\/www.netmba.com\/accounting\/fin\/process\/source\/","http:\/\/computerorganizing.com\/","http:\/\/www.cutepdf.com\/Products\/CutePDF\/writer.asp"],"@id":"https:\/\/simplycounted.com\/organizing-business-tax-documents\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/pros-and-cons-of-using-a-per-diem\/","dateModified":"2019-05-13T18:23:42+0000","mainEntityOfPage":"https:\/\/simplycounted.com\/pros-and-cons-of-using-a-per-diem\/","image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2019\/05\/beautiful-business-meeting-businesswomen-1520137-min-1024x683.jpg","name":"Pros and Cons of Using a Per Diem","headline":"Pros and Cons of Using a Per Diem","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"What is a Per Diem? A Per Diem (Latin for \u201cper day\u201d) is a fixed daily reimbursement that a business gives to its employees who are traveling longer than a day for business purposes. Per Diem payments can be given for both lodging and meals & incidental expenses (M&IE) or only M&IE, depending on the situation and where the employee is traveling. For example, the company may have a dedicated condo for employee travel in a specific city and thus would not need to reimburse its employees for lodging there. M&IE includes any expense associated with traveling away from home that doesn\u2019t fall into the lodging category. M&IE examples are meals, room service, luggage handlers, dry cleaning, and tips.  It is generally accepted that employee trips qualify for per diem allowances when traveling greater than 50 miles from their \u201ctax home\u201d (normal residence) and are traveling for more than 12 hours but less than 12 months in the same location. The standard per diem rate for 2019 is $94 for lodging and $55 for meals, though this amount may change based on the city and time of year.  See the per diem link.  Taxing Per Diem Reimbursements Per Diem allowances are tax exempt as long as they fall within the government-regulated guidelines and the employee submits an expense report to their employer. Any amount that is reimbursed to the employee for a per diem expense that is greater than the highest per diem limit set by the government is considered income. The employee is then obligated to pay tax on that amount.  How are Per Diem Amounts Decided? On October 1, the beginning of the United States\u2019 fiscal year, the U.S. General Services Administration (GSA) sets two amounts for per diem allowances: a standard rate for specific destination cities and a \u201chigh-low\u201d rate that can be applied to all cities within the country. Destinations outside of the U.S. are set by the Department of Defense (DOD) or the state department, depending on the city\u2019s location. The \u201chigh-low\u201d method categorizes cities in the U.S. as either high-cost or low-cost and assigned a per diem amount based on their status. A list of high-cost cities is released each year; any cities not included are considered low-cost. Employers generally follow these rate guidelines when deciding how much to give their employees, but can choose any amount.  Advantages For Businesses Reduces paperwork. Because employees are not submitting receipts, employers do not need to deal with the extra related paperwork. Eliminating paperwork reduces the employee hours necessary to do this work. Encourages employees to make more frugal choices. When employees are given a spending limit with an out-of-pocket alternative, they are more likely to stay within the parameters. This may save the business money in the long run. Better for budgeting. Companies will find it easier to budget if they know the exact amount allotted to employees for business trips than to estimate how much they need to reimburse after the fact. Reduces accounting errors. With fewer numbers and receipts to process, fewer errors are made when processing expenses. For Employees Reduces paperwork. Like the business, per diem expenses save employees the time and effort of collecting receipts and submitting to their employer, particularly on work trips that may span months. Retain leftover allowance. Many employers consider per diem to be a bonus to their employees and any amount that is leftover after meals and incidentals can generally be kept by the employee. If you are unsure if this is the case at a certain company, consult the employer. Better for budgeting. Employees can submit a per diem request form before traveling to ensure they have any needed cash for the trip Resolves the lost receipt problem. Even the most careful employees can inadvertently misplace receipts while traveling and not have one to turn in for an expense. Per diem programs ensure the employee is properly reimbursed for the expense. Disadvantages For Businesses Predictions can be incorrect. Though standard rates are set by the government, it can be tricky to really know how much will need to be spent each day. Lodging and meal prices can vary within different areas of the same city. May restrict employee choices. If employees are limited in their spending, they may be less likely to spend money on expenses that benefit the business. For example, picking up the bill at a client lunch looks more appealing if the employee is not worried about exceeding their per diem limit. Less accurate. Employees are required to keep an expense report but without receipts, there is no verification where money was spent. This affects the company\u2019s ability to analyze employee spending, or worse, facilitates fraud. For Employees Possible out-of-pocket expenses. Spending over the per diem limit results in the employee paying with their own money, instead of being reimbursed by their employer. Even if the business reimburses their employee for these expenses it is considered taxable income. Payment inequality. Depending on what time of day employees tend to travel, some may be getting paid less than others for their time. Employees get paid \u00be of their per diem on travel days and workers that leave at, for example, 6 am are getting paid less for their time than those leaving at 5 pm. Per Diem Alternatives The decision to use per diem depends on what works best with the business\u2019 structure. There are two alternatives to the per diem method that several businesses have used for decades:  Keeping detailed expense records or using corporate credit cards. As mentioned earlier, saving receipts can be a hassle for both the employee and the business, but the reporting is more accurate. Using a corporate card or expense account is the most reliable way to track spending and doesn\u2019t require the employer to reimburse their employees, but demands a level of trust. All of these methods are applied often and can be successful for various businesses. No matter what decision an employer makes, it should reflect the needs of the company. In different phases of growth, different methods will work, including a combination of elements from more than one of these methods. Regardless, Per Diem is a much more viable option now after the new law change around non-deductible meals and entertainment.  To consult with accountants that are familiar with the most up-to-date tax rules, contact Simply Counted Business Services, Inc.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"What is a Per Diem? A Per Diem (Latin for \u201cper day\u201d) is a fixed daily reimbursement that a business gives to its employees who are traveling longer than a day for business purposes. Per Diem payments can be given for both lodging and meals & incidental expenses (M&IE) or only M&IE, depending on the [\u2026]","datePublished":"2019-05-13","about":"https:\/\/en.wikipedia.org\/wiki\/Per_diem","isFamilyFriendly":true,"wordCount":1065,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H3M52S","citation":["https:\/\/www.gsa.gov\/travel\/plan-book\/per-diem-rates","https:\/\/www.irs.gov\/pub\/irs-drop\/n-18-77.pdf"],"@id":"https:\/\/simplycounted.com\/pros-and-cons-of-using-a-per-diem\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/segregation-duties-protection\/","dateModified":"2023-10-12","mentions":["http:\/\/www.wikidata.org\/entity\/Q9259968","https:\/\/www.wikidata.org\/wiki\/Q189447","https:\/\/www.wikidata.org\/wiki\/Q3761396","https:\/\/www.wikidata.org\/wiki\/Q622439","https:\/\/www.wikidata.org\/wiki\/Q28813","https:\/\/www.wikidata.org\/wiki\/Q4116214"],"mainEntityOfPage":{"@id":"https:\/\/simplycounted.com\/segregation-duties-protection\/"},"image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2023\/10\/segregated-duties.jpg","name":"How Segregation of Duties Can Protect Your Business","headline":"How Segregation of Duties Can Protect Your Business","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"Running a small or medium-sized business comes with its unique set of challenges. This is especially true when it comes to managing finances. One of the fundamental tools you can use to ensure financial transparency, accountability, and integrity is an internal accounting control called: Segregation of Duties (also known as SoD or separation of duties).  Let\u2019s explore the significance of the segregation of duties including practical examples of how it works. We\u2019ll dive into why you need a separation of duties policy, especially when dealing with cash, be it depositing cash, cash receipts, or managing petty cash. We\u2019ll also touch upon tools that can help you such as a Segregation of Duties matrix.  What Does Segregation of Duties Mean? Segregation of Duties is all about dividing financial responsibilities among different people or departments in your business. When you separate the responsibilities and assign more than one person to look at the process, it prevents a single individual from having too much control over critical functions. This system is a key internal control that creates a checks and balances system to reduce accounting errors, fraud, or misconduct in your financial processes.  4 Common Examples of Segregation of Duties purchase order form representing separate roles of purchasing and approvals in internal controls Example #1: Purchasing and Approvals Whether you\u2019re a small or medium-sized business owner, it\u2019s essential that the person making purchases is not the same person approving them. Separating these roles ensures that expenses are reviewed independently and is a key process in risk management.  Example #2: Accounts Payable and Vendor Approval The person handling payments should not be the same person in charge of approving vendor invoices. This separation ensures that invoices are thoroughly reviewed before payment.  Example #3: Cash Handling and Reconciliation Whoever is responsible for cash should not also be the same person reconciling bank statements and other financial statements. This duty separation ensures that your financial records remain balanced without any bias.  Example #4: Inventory Management and Financial Reporting The person you appoint to track inventory should be a different person from the one with the authority to make changes to your financial records. This duties segregation prevents anyone from tampering with your financial data.  How Segregation of Duties Protects Your Business padlock over wallet and credit card on top of keyboard, representing business finances protection with segregation of duties controls Effective internal controls not only help you make informed decisions for your business, but they also set up a safety net to safeguard your company\u2019s financial health and integrity. Implementing SoD controls provides several advantages for businesses, regardless of their size. It can pose a huge risk if assigned duties aren\u2019t split up and financial accounting systems are solely in the hands of one individual.  Here are some of the major reasons that Segregation of Duties is such an important part of its business processes.  Fraud Prevention: With SoD your business sets up a protective barrier against employees that may otherwise attempt and possibly succeed in skimming or other means of theft. When you have more than one person reviewing bank statements and other financial records, you set up a hierarchy of accountability to prevent fraud. Error Detection: Employees are all human, and are bound to make mistakes. Segregation of Duties can help detect errors or irregularities that may be made in a financial process and address them in a timely manner. This also helps you to notify the employee responsible for an error so they can look out for the same issues in the future. Regulatory Compliance: Some industries require Segregation of Duties controls to meet specific regulations and standards. Examples of government standards that an organization may need to adhere to include: the Sarbanes-Oxley Act (SOX), HIPPA (healthcare industry), and the Dodd-Frank Act (financial institutions). Failure to comply with industry-specific controls puts your company at risk of heavy fines or in some cases closure. Risk Mitigation: Effective implementation of Segregation of Duties controls can help businesses reduce the risk of financial losses, reputational damage, or legal implications that may pop up from financial misconduct. A positive reputation is vital for all businesses. So it is imperative to establish appropriate quality assurance measures like recording and storing relevant documentation for any potential issues that may arise. Use SoD for Cash Controls one-hundred dollar bills representing internal segregated duties for cash managment Cash management is essential for businesses of all sizes. Compensating controls are a type of control used by businesses with less resources to implement stricter SoD controls. For example, if your company doesn\u2019t have the budget for extensive monitoring technology or additional staffing, you can implement compensating controls to minimize risks. In the case of cash management, compensating controls can be set to ensure that handling, disbursing, and reporting cash are conducted securely and effectively. Some key concepts in cash controls are authorization, job roles, and dual signatures.  First, define who is allowed to access and handle business cash. Then create separate job roles for reconciliation and reporting to prevent any single person from having excessive control over your cash operations. Additionally, implement a dual signatures policy for checks or other cash disbursements. Requiring two signatures provides you with supporting documentation for transactions to further enhance employee accountability and protect your accounts.  Petty Cash Accounts SoD Roles Even when handling small amounts of cash, like petty cash, SoD controls are essential. When handling cash there isn\u2019t a bank statement to check for accountability. You need a system for cash accounts that keeps a close eye on the flow. To manage petty cash effectively, assign two distinct roles to different employees.  Custodian Role: A person responsible for managing and disbursing petty cash funds. Reconciliation Role: Another individual to regularly review and balance your petty cash transactions. This ensures that all expenses are properly accounted for. Help to Implement Segregation of Duties There are many challenges that businesses can face when implementing internal controls including SoD. Whether you\u2019re operating a small or medium-sized business, Segregation of Duties is a powerful tool to ensure financial transparency, accountability, and integrity. Even if you understand its importance it can be quite an undertaking to implement it effectively. Here are some ways to simplify the process and get your SoD policies underway.  Segregated Duties Control Matrix To simplify the planning of SoD controls, you can create a Segregation of Duties matrix for your business. A SoD Matrix is a document or spreadsheet that outlines roles and responsibilities within your organization. It helps you to identify which duties should be kept separate for effective internal controls. The matrix streamlines workflow and improves the efficiency of financial processes by ensuring that tasks are assigned to individuals with the necessary skills and expertise. This reduces redundancies and errors.  The matrix can also serve as a valuable resource for training new employees. It helps them understand their roles within the organization and the importance of adhering to internal controls. When employees have defined roles and responsibilities to look at, it promotes transparency. It also becomes easier for management to track who is responsible for each step of a process in turn making it difficult for unauthorized actions to go unnoticed.  Regularly update your segregation of duties matrix to adapt to changes within your business. As your business grows, the matrix can be updated to accommodate changes in roles and responsibilities. It provides a flexible framework that adapts to your organization\u2019s needs.  Hire Professional Business Consultants If you don\u2019t know where to start or have questions when creating and implementing your separation of duties, the business consultants at Simply Counted can help. Contact us for a consultation. We can help you set up shared responsibilities, and transaction processing policies, as well as outline any other control activities to protect your business.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"Protect your business finances with a segregation of duties accounting procedures control policy. Learn about why your business needs separation of duties.","datePublished":"2023-10-12","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":"http:\/\/www.wikidata.org\/entity\/Q1474665","copyrightYear":"2023","isFamilyFriendly":true,"wordCount":1296,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H4M43S","@id":"https:\/\/simplycounted.com\/segregation-duties-protection\/"},{"@type":"BlogPosting","url":"https:\/\/simplycounted.com\/tips-save-money-tax-returns\/","dateModified":"2016-06-21T18:03:36+0000","mainEntityOfPage":"https:\/\/simplycounted.com\/tips-save-money-tax-returns\/","image":"https:\/\/simplycounted.com\/wp-content\/uploads\/2019\/05\/cash-cent-child-1246954-min.jpg","name":"4 Tips to Help You Save Money on Your State and Federal Tax Returns","headline":"4 Tips to Help You Save Money on Your State and Federal Tax Returns","author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"articleBody":"Here are some things to consider that may save you some money when filing your state and federal income taxes:  1. Filing Joint or Separate Returns Typically it works out better financially for couples to file a joint return because the IRS does give joint filers one of the largest standard deductions. However, there are times when it is better to file separately, and here are the top reasons why you may want to:  One person has a high amount of losses to claim One person has a large amount of out-of-pocket deductible medical expenses  2. Sales Tax Deduction You now have the option to take a sales tax deduction instead of deducting state and local income taxes. This is due to the PATH Act or Protecting Americans from Tax Hikes Act. Some states don\u2019t charge income tax, so this deduction would be taken instead. However, there are also other reasons you may want to take this deduction and write off sales tax:  Purchased \u201cbig-ticket items\u201d such as a car, boat, motorcycle, motor home, travel trailer, etc. Made large home improvement purchases such as windows, roof, etc. Note that you can write off sales tax based on your actual receipts or use a more convenient state-by-state table. If you opt for the table, you can still add the sales tax paid on certain \u201cbig-ticket items,\u201d such as cars and boats.  3. Education Whether you are a parent of a child in college, or a college student yourself, there are education credits available that you may be able to take advantage of, including:  American Opportunity Tax credit Lifetime Learning credit Deduction for tuition and related fees Student loan interest payments 4. Home Office Deductions Working from home is becoming more popular, so if you work from home, you may qualify for a home office deduction. If you anticipated this and kept detailed records, you may be entitled to both the home office expenses and a portion of the entire home\u2019s expenses which is based on a percentage of business use in the home. However, if you didn\u2019t keep detailed records, you can use a formula equal to $5 per square foot of the home office, up to a maximum of $1,500.  Please contact your tax adviser before using any of the above suggestions. Your tax adviser can help you make the best decision by performing a side-by-side comparison of your options, discuss the pros and cons, and help you make an informed decision. For assistance with your income tax preparation, please contact a qualified accountant at Simply Counted in Holland, MI.","publisher":{"@id":"https:\/\/simplycounted.com\/about\/#AccountingService"},"description":"Here are some things to consider that may save you some money when filing your state and federal income taxes:  1. Filing Joint or Separate Returns Typically it works out better financially for couples to file a joint return because the IRS does give joint filers one of the largest standard deductions. However, there are times when it is better to file separately, and here are the top reasons why you may want to:  One person has a high amount of losses to claim One person has a large amount of out-of-pocket deductible medical expenses  2. Sales Tax Deduction You now have the option to take a sales tax deduction instead of deducting state and local income taxes. This is due to the PATH Act or Protecting Americans from Tax Hikes Act. Some states don\u2019t charge income tax, so this deduction would be taken instead. However, there are also other reasons you may want to take this deduction and write off sales tax:  Purchased \u201cbig-ticket items\u201d such as a car, boat, motorcycle, motor home, travel trailer, etc. Made large home improvement purchases such as windows, roof, etc. Note that you can write off sales tax based on your actual receipts or use a more convenient state-by-state table. If you opt for the table, you can still add the sales tax paid on certain \u201cbig-ticket items,\u201d such as cars and boats.  3. Education Whether you are a parent of a child in college, or a college student yourself, there are education credits available that you may be able to take advantage of, including:  American Opportunity Tax credit Lifetime Learning credit Deduction for tuition and related fees Student loan interest payments 4. Home Office Deductions Working from home is becoming more popular, so if you work from home, you may qualify for a home office deduction. If you anticipated this and kept detailed records, you may be entitled to both the home office expenses and a portion of the entire home\u2019s expenses which is based on a percentage of business use in the home. However, if you didn\u2019t keep detailed records, you can use a formula equal to $5 per square foot of the home office, up to a maximum of $1,500.  Please contact your tax adviser before using any of the above suggestions. Your tax adviser can help you make the best decision by performing a side-by-side comparison of your options, discuss the pros and cons, and help you make an informed decision. For assistance with your income tax preparation, please contact a qualified accountant at Simply Counted in Holland, MI.","datePublished":"2016-06-21","inLanguage":"https:\/\/en.wikipedia.org\/wiki\/English_language","about":"https:\/\/en.wikipedia.org\/wiki\/Taxation_in_the_United_States","copyrightYear":2016,"isFamilyFriendly":true,"wordCount":430,"isAccessibleForFree":true,"timeRequired":"P0Y0M0DT0H1M34S","@id":"https:\/\/simplycounted.com\/tips-save-money-tax-returns\/"}],"image":{"@id":"https:\/\/simplycounted.com\/wp-content\/uploads\/2024\/12\/Simply-Counted-Tax-Logo-500px.jpg"},"author":{"@id":"https:\/\/simplycounted.com\/about\/diana-kasza\/"},"about":["https:\/\/en.wikipedia.org\/wiki\/Tax","https:\/\/en.wikipedia.org\/wiki\/Finance"],"name":"Simply Counted Blog","mainEntityOfPage":"https:\/\/simplycounted.com\/tips-events\/","url":"https:\/\/simplycounted.com\/tips-events\/","headline":"Blog","datePublished":"2013-01-07","@id":"https:\/\/simplycounted.com\/tips-events\/"}