How to Do Accounting for an LLC: All you Need to Know

Getting your business’s accounting in order has many benefits. Not only does it help with bookkeeping and taxes, but it’ll also bring peace of mind. Additionally, if you’re someone who isn’t detail-oriented, having organized financial records and accounting can be helpful for budgeting and business projections. 

Why should a business be registered as a Limited Liability Company (LLC)?

An LLC includes the features of a sole proprietorship, a partnership, and a corporation. The LLC, therefore, presents itself as the most flexible business structure. As opposed to a sole proprietorship, an LLC protects the individual from debts and lawsuits. When filing taxes, a single-person LLC can file taxes as a sole proprietor or as a corporation. Alternatively, an LLC with multiple owners can file taxes as a partnership or corporation. For example, if you’re looking to start an LLC in Florida please make sure to familiarize yourself with the local laws.

Does an LLC need to open a business bank account?

Laws mandate LLCs to open a bank account. Consider the following when deciding on the bank:

  • What type of account best meets your requirements?
  • The fee charged by the bank.
  • Choice of online/in-person services offered by the bank.
  • Network of branches of the bank in the area of the business’s operations. 

The types of accounts that need to be opened include:

  • Business Checking Account – For the business to receive customer payments and pay business expenses.
  • Business Savings Account – For the business to save a part of the income for tax obligations and unforeseeable business expenses. 

 

Why is it important to separate personal and business finances?

Separation of personal and business finances is vital. Business expenses should not be made from personal accounts and vice versa. Also, don’t transfer funds from the business account to a personal account. Separation of finances helps in consolidating business income and expenses in one place and makes it easier to calculate the business’s tax obligations accurately. One could also enroll in formal accounting/bookkeeping classes to learn the basics. 

 

What are the options in the choice of accounting methods for an LLC?

LLCs can choose to follow one of two options in accounting methods:

  • Cash accounting – In this method, income is recognized and recorded when money is received. Likewise, expenses are recognized and recorded when money is paid. 
  • Accrual accounting – Here, revenue is recognized and recorded when earned, not when received. Also, an expense is recognized and recorded when incurred, not when paid. The drawback of this accounting method is that it does not give a true picture of a business’s cash flow. On the other hand, it provides an accurate picture of its income and expenses during a specific duration of time. 

Whatever accounting method the business chooses, the business will need to stay with it for all future tax filings. 

 

Should the LLCs do their bookkeeping in-house or outsource it?

Bookkeeping is the tracking and recording of the business’s income and expenses. This must be done diligently to accurately track the business’s finances, prepare correct financial statements, and file correct tax returns. Depending on the size and maturity of the business, the available options for bookkeeping include:

  • In-house bookkeeping – Typically, in-house bookkeeping would not be required for early-stage businesses. As the business matures, it may decide to hire a team of bookkeepers to record the firm’s financial transactions. In-house bookkeeping, invariably, works out to be the most expensive option.
  • Outsourced bookkeeping – This bookkeeping method could be done by hiring a part-time bookkeeper or by subscribing to an online bookkeeping service. Businesses could consider services such as InsightsOfficer from PwC.

How should business expenses be tracked?

IRS stipulates and provides a detailed list of business expenses, income earned, and payable taxes that need to be tracked and recorded. The important ones include:

  • Business receipts for office supplies, work-related travel expenses, etc.
  • Bank statements
  • Bill for office utilities, internet/telephone expenses, etc.
  • Invoices
  • Financial statements
  • Payment proofs
  • Tax returns

IRS regulations also stipulate the length of time that each of the different types of records needs to be maintained. The length of time that the documentation needs to be stored varies depending on the type of financial record. Businesses have the option of choosing physical documentation or a cloud-based service.

What are the options available for the business to receive payments?

In addition to the traditional methods of cheque/direct deposits, other options available to the business for receiving payments are:

  • Online payments – Online receipt of payments helps in the faster clearance of invoices. If the business has opted for cloud-based accounting software, the software would normally be integrated with an online payment tool to manage the business’s payments.
  • Automated invoicing – To simplify their invoicing processes, businesses can opt for an automated invoicing system. Most cloud-based accounting systems integrate this feature for recurring invoices.

How should the LLC’s payroll be set up?

Setting up payroll is essential for any business that employs staff. The employees of the business need to be appropriately classified as permanent employees, contractors, part-time employees, etc. After the staff has been classified, the business must design the payroll by factoring in the different financial regulations specific to the different classes of personnel. Insights on payroll management from ADP are a useful source of information. One could also find other reliable resources on the subject.

What are the tax obligations of an LLC?

LLCs are bound by law to comply with tax regulations at the federal and state levels. The leadership enrolling in a course to learn the basics of preparing tax returns will help adhere to compliance requirements. The taxes that the LLC needs to pay include:

  • Income tax – Tax to be paid on the income earned by the business.
  • Employment tax – Federal Insurance Contributions Act (FICA) mandates LLCs to pay employment tax, including contributions towards social security and medicare. 
  • Sales Tax – This tax varies depending on the state in which the business is based. 

Also, to manage its accounting needs the business can decide to either hire or consult with a professional business accountant. A trained business accountant can advise the business on the appropriate legal structure for the firm, tax-related obligations, and financial strategy and oversee financial reporting. 

Accounting plays a critical role in running a business by helping track income and expenses and enabling statutory compliance. It also provides the business’s management and investors with the financial information required to make informed business decisions. 

 

Author Bio:

Matt Horwitz is the founder of LLC University, a website that teaches people how to form LLCs. Matt is the leading authority in LLC education and is featured in CNBC, Yahoo Finance, Entrepreneur Magazine, and the US Chamber of Commerce. Matt holds a Bachelor’s Degree in business from Drexel University with a concentration in business law. LLC University®, established in 2010, was the first company to create free LLC courses in all 50 states.

5 ways to protect yourself against financial fraud in business

 

As you know, scammers can use completely different ways to get your money, today we will discuss how they do it and how to avoid it in your business.

Types of Fraud

I would like to note that there are a lot of them, and the only true advice that fits everything is to be careful.

1. entertainment expenses

Everything happens as follows: the company, after planning negotiations with new clients, pays a fraudulent manager who allegedly pays for the event. For example, a restaurant for a meeting between agreed. But it happens that for some reason the client pays for this service, and the warehouse fraudster takes the money for himself.

How to avoid this? Do not use cash payment, use cards – it is more reliable, and there is a chance to get your money back with the help of the bank with which the transactions took place.

 

2. Fake bonuses.

Here is the following sequence: the authorities support fake reports, according to which the norms and agreements at the enterprise are not observed, after which he receives his benefit in the form of the products of this company or money. For example, a reporting document may indicate that 500 units of a cook were manufactured, more money was spent, but in fact 400 units of goods were conditionally produced. The money, which was supposed to be almost another 100, this man took for himself and, possibly, for the people with whom he is in a conspiracy.

What to do in such a situation?

Keep accurate records on a regular basis. To come to him, it is worth hiring a third-party specialist. It must be a person not from your company. Otherwise, he can be bribed.

 

3. Past the checkout

It happens that employees deceive their superiors, taking their earnings. They do this by saying that there were technical problems in production. For example: they report that there was no light in the barbershop, so there were no customers. In fact, as it becomes known later, there was light, only the employee took the proceeds for himself.

How to avoid such situations? Monitoring. Try to observe the work of your subordinate in the possible ways. Install indoor surveillance cameras. Come with unscheduled inspections and demand activity reports.

 

4. “Non-working territories”

This version of fraud is similar to the previous one, but is more suitable for business with land areas. What is happening: some of the land plots are simply not included in the register of cultivated land, but work is underway on them and all the output is taken away by scammers – a management that secretly extends the harvest and takes profits for itself.

How to avoid this? Constant control of budget distribution, reporting. Be sure to conduct an inventory and reconciliation of the land used in your business. This requires professionals.

 

5. Leasing. 

The landlord puts a false price on the premises. It happens to Chaucer that he demands to pay half the amount in cash, and the other half, the real one, which is indicated in the contract, to the account.

Advice in this case: monitor prices on the market, stay tuned for real estate prices. You can even try to become a “mystery shopper” to see how the answers about prices will differ under different conditions and for different people.

We also want to add about Internet fraud. If you do business on the Internet or just post information on social networking pages, be careful. You may receive fake emails with context about output attachments, as well as bad links. Such links take you to a site that can download a virus to your computer, leaking data about your page to the Internet, and so on. Try to filter such emails. Those that come to the “spam” department are better not to open at all. Delete immediately. If your business is related to investing in cryptocurrencies, we advise you to take advantage of the advice and current news on ICOholder. Protect yourself and your money by avoiding scams on the Internet.

If you do become a victim of fraud in the financial markets, you should seek help from the police or the relevant bank, where they will help you solve the problem. Attach all kinds of evidence: your documents, screenshots of correspondence and letters, and so on.

By the way, it would be nice to have a financial airbag for such a case. at such a moment, it will help not only you, but also the restoration of your business.

 

Conclusion

Only your attentiveness and how you understand your chosen case will help you resolve difficult situations. Try to have more control over your business and the process in it. So there will be less lost nerves and money for nothing.

Written by Lewis Anderton

Ways to Avoid Becoming a Victim of Business Financial Fraud

Introduction

If you’re an accounting professional, and you’re thinking about making your mark in the online world, you should know that there are many ways in which this amazing open environment can lead to all sorts of troubles. According to Business Fraud Prevention, businesses lose up to five percent of their annual gross revenue due to different types of fraud. 

Moreover, the report states that small businesses and startups are the main targets of financial scams, while large corporate entities are less likely to suffer a similar fate. The risk of financial swindles is even greater for those who focus their operations on the internet, which is nowadays an extremely popular method of doing business.

We did some research and came up with these practical pieces of advice that should help you avoid falling victim to financial fraud as an accountant.

Checking a company background

When a potential partner or a client approach, the first order of business is checking for their credentials. This goes for both online and offline communication. However, checking the company address, phone number, website, and other contact information should not be the end of your checkup process because these things are easy to fake.

It’s up to accounting to provide vital decision-making information, checking crucial business data is one of that information. With a proper company background checkup, you could prevent loss of money, and legal issues, and help other people keep their businesses afloat. 

Another important aspect of inquiry should be the list of former partners and companies that did business with the company that you are considering working with. If there’s no evidence of past work, you should plan your future steps carefully. If you’re lucky, you might have been approached with a new business that’s yet to grow its portfolio, but there’s always a chance that the list of previous partners and clients is empty because there were never any.

Keep your monetary flow under control

Although we mostly fear that the risk of fraud comes from the outside, it’s important to understand that many financial fraud cases occur on the inside of a company. Therefore, you should focus your energy on internal elements that control the flow of money.

Regular books audit helps notice any irregularities in cash payments, refunds, product returns, inventory management, or other accounting functions. 

Inform yourself about all the available and popular methods of payment, so you could keep track of all the doors that money can go through. Moreover, organize a list of your teammates that handle cash payments or refunds, and help them get appropriate safety training so they too could avoid scams. This also allows you to hold those people accountable in case they make fraudulent payments because they had the necessary training to avoid such situations.

People who check the legitimacy of payments should also become an important aspect of your concerns. In many cases, company employees are those responsible for financial fraud. Make sure you have trustworthy people on your team that won’t take advantage of your confidence. Some people avoid these types of troubles by hiring accounting professionals with a good background, usually through word of mouth.

Practice safe internet usage

The list of ways in which someone could exploit our lack of concentration or technical inexperience is all but limitless. Everything from malicious emails to websites that are built to capture your banking data is out there and the only way to prevent getting scammed is to be cautious while performing professional activities online. More than banking data, all the essential business files and data can be lost.

If you are about to make a payment for a good or service through a website, make sure it runs under an HTTPS certificate because this means any information you disclose stays safe. Moreover, if you get a suspicious email and parts of that offer include sending money or your banking data it’s best to avoid complying with any of the demands in this email.

Downloading unlicensed software for work is another way to let third-party into your system and risk losing vital business information and money. Shady software solutions could hide malware that steals your passwords or corrupts other software. It’s not unusual for criminals to send out viruses that encrypt all data so they could ask for ransom later. Backing up business essentials is one of the best ways to avoid paying ransom to retrieve stolen information.

Conclusion

Control and focus are your main weapons in defense against all sorts of financial swindlers that are out to get you. This doesn’t mean that you should treat everyone as a potential threat, you don’t want to skip a good business opportunity because of your lack of trust. Keep your hands open for everyone just make sure their hands are just as open as yours and there’s nothing they hide behind their backs.

Best Ways To Keep Tabs On Your Money

When it comes to personal or professional finances, money management and using a financial application that’s specific to your circumstances can help you achieve financial health and monetary growth. Not only will the right app make it easier to manage your various accounts, but it can also give you real-time insights into your personal or professional financial picture. If you’re ready to move to the next level, Universal Accounting provides a range of training and certification programs that will help you grow your career in the finance sector.

Benefits Of Financial Apps

When you’re operating a company, Business News Daily says maintaining your financial health is critical to your overall success. The right apps and software will help you establish fiscally responsible budgets, ensure that you’re meeting your goals and objectives, and it will alert you to any potentially worrisome financial issues before they get too far out of hand. It can also help you get an instant snapshot of your finances without having to log into various accounts, download reports, and conduct an analysis. The key is in finding the right app or apps and software to help you achieve all of your goals.

What A Financial App Can Do

According to the U.S. Chamber of Commerce, one of the greatest benefits of having a financial application is that you can keep all of your information in one place. This helps you easily access all of your financial details at the touch of a button, which in turn, can help you organize both your personal and business finances efficiently. It will also result in fewer errors, and if you’re both a business owner and you’re tracking your personal finances, it’s wise to keep your accounts separate. This is especially critical if you form an LLC, or limited liability company, for your business. If you combine or commingle your funds, you run the risk of losing your liability production and becoming personally liable for debts and losses.

What You Should Look For

One of the first things to consider when you’re comparing different personal financial apps is whether they integrate with your other accounts and are easy to navigate. You may need special tools or features based on your particular line of work, and you also want to ensure security. If you’re not terribly familiar with using this type of technology, keep in mind that an application that offers superior levels of customer tech support is invaluable. Ease of use is another critical factor. It doesn’t matter how effective an app is, or how many bells and whistles it features, if it’s too complex, you’re unlikely to use it in a way that makes the most sense for your operations.

Things To Track

When you’re comparing financial apps and software, consider your specific needs and compare them to the features of different apps. For example, maybe you could benefit from accounting features, inventory management, payroll functions, business expenditures, or research and development investments. Look for an app that allows you to utilize analytics, run reports as necessary, and keep your accounting information in detailed, organized order. This will make it easier when it’s time to file your taxes, apply for business grants and loans, and share with investors, if applicable. You want a tool that meets all of your needs, not just some of them. 

Whether you’re managing your finances as a business owner or looking for something to help with personal accounts, an app is only as good as the fiscal planning you establish. If you’re a business, utilize a business plan that includes forecasts and projections. Track marketing efforts to ensure you’re reaching the appropriate audiences, and regularly review your operational functions. If you’re tracking as an individual, set earning and investment goals and work with a money manager to make strategic investments. Once you have the strategy, the right app will keep you on track.

Universal Accounting offers certification in accounting, bookkeeping, tax preparation, and other related financial fields. Programs are designed to meet you where you are and achieve your unique professional objectives. Visit the site to learn more or reach out via phone for a consultation.

by Sharon Wagner

Choosing The Ideal Business Name For Your Brand

So you’ve decided to break through into the big bad world of entrepreneurship.

Great for you! 

But now that you’ve made the decision, there are dozens of items that you’ll need to check off your list before you reap the rewards of all your hard work. 

Although it’s not the most complicated task, one of the first things you need to do is choose a business name. 

It seems easy enough, but there are a few things you’ll need to keep in mind before making your final decision. 

Let’s take a look! 

 

Do Some Research

Every country, county, city and municipality will have different laws that govern business names. 

Therefore, the very first step in choosing your business name is to take the time to research your local legislation and how it might affect you and your business name. 

Then, once you’ve done this, it’ll be time to put on your thinking cap to brainstorm your best options. 

 

Avoid Copying Other Brands

It might seem obvious, but you don’t want to choose a business name that might get you in trouble down the road. 

In most jurisdictions, a business name can be used by multiple entities so long as the name isn’t a registered trademark

However, when it comes to successful businesses, you want your name to be as unique as possible. 

In other words, if you’re selling athletic footwear, you’re going to want to avoid choosing a name like McShoes or anything along that same vein, which could lead to legal troubles later on. 

Not to mention that consumers might think that your shoe company is a subsidiary of the McDonald’s Corporation.

 

Get Creative

Another essential tip for choosing a good business name is to make sure that your business name is catchy, memorable, and unique. In other words, you’ll want to get creative and use words that are related to the products or services that you plan on offering. 

If we use the same example of selling shoes, you’ll want to use words, such as:

  • Shoes
  • Footwear
  • Athletics
  • Feet 
  • Toes
  • Etc. 

Then try combining in different creative ways that consumers can easily remember, giving them a good idea of what your brand is all about. 

In other words, please keep it simple and to the point! 

For instance, you might come up with something like The Athletic Feet Company. 

Not only does this name let people know that your products have something to do with feet. It also lets them know that it’s related to athleticism, which gives a good indication of what type of products you’re offering.

 

Register Your Business Name

Once you’ve decided on a name, the next step will be to register your business name with your local authorities. 

This step is the main difference between having a side-gig and running an actual business. 

After registration, you can then move forward with creating your own branded logo and any other marketing materials that you’ll use to promote your business in the future. If you are operating on a budget try a free logo maker to design your own brand. 

Choosing The Best Business Name

Although there’s much more that goes into creating a successful business, the process of choosing a good, memorable business name should not be overlooked. 

In the future, this name is the way people will first hear about your brand. 

Like your own name, your business name will be a massive part of your business identity. 

So take the time to do a bit of research, get creative, and find a name that won’t only suit your desires but will also be in harmony with your current and future business plans! 

 

Don’t Leave Your Success To Chance

Lastly, when it comes to building the premier accounting business be sure to consider the services available with Universal Accounting Center.  From training, certification programs, coaching and support you can be in business for yourself but not by yourself.

by Bessie Stokes

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