Insurance Secrets

Choose your accounts. Think of these in terms of assets and liabilities. Choose your accounts. Think of these in terms of assets and liabilities. Assets include checking and savings accounts, accounts receivable (money owed by customers), inventory, and even equipment that could be converted into cash. Assets include checking and savings accounts, accounts receivable (money owed by customers), inventory, and even equipment that could be converted into cash. Liabilities include the money you owe to others (accounts payable), your credit card balance, and any other liabilities that are scheduled to be paid in following fiscal year (this could include sales tax, payroll taxes, insurance – bangkok.thaibounty.com – , etc.). Liabilities include the money you owe to others (accounts payable), your credit card balance, and any other liabilities that are scheduled to be paid in following fiscal year (this could include sales tax, payroll taxes, insurance, etc.).

You need to find an accountant that you can build a friendly and trusting relationship with. You might think that your small, sideline business doesn’t merit a software program that looks, from the splashy box, like it could run the government of the District of Columbia. For help locating an accountant or CPA, there are many searchable databases on the Internet, but the best bet is to get referrals from friends, business associates, your legal advisors, bankers, or other trusted sources. Do they have good references? Software or Shoe Box? Do they have experience with your size and type of business? Are they licensed to practice in your state? An early question you’ll want to answer is whether to set up a manual system or purchase a software program.

This is the money that your company owes to its vendors. Think of a Polaroid picture. This is a snapshot of where your company is on a particular date. It lists assets, liabilities, and produces your equity — the net worth of your company. Most accountants recommend accrual basis accounting if you bill your customers or incur debt. This is the process of entering data into an accounting system, including the amount, date, and source of each revenue or expense. This is the money that your customers owe to your company. This is the accounting system in which reports are drawn from accounts payable, accounts receivable, cash sales, and cash payments.

If, on the other hand, you deliver goods or services and are paid sometime later, or if you take delivery of supplies and pay for them at another time, an accrual basis might make more sense for you. If you are already doing business and it is not strictly cash, you can try it both ways. Choose a month (or a quarter, if you don’t have many transactions) and for that month, record cash in and cash out — actual payments you receive and make. These two bases of accounting produce wildly different results.