After your business has closed, you are probably ready to get rid of whatever you do not need and move on to your next endeavor. Unfortunately, not keeping key documents can get you in trouble with the IRS or state treasury department long after the business has closed. However, companies generate a tremendous amount of paperwork every year between tax filings, employment records, benefits information, licensure, property certificates, financial reports, and insurance documents. While it is less common, the Social Security Administration, Equal Employment Opportunity Commission, and Immigration and Naturalization may also ask for business records after your business has ceased operations as well.
So, what should you keep, and for how long?
Small businesses with less than $25M in annual revenue can choose whether they prefer to use cash or accrual accounting. However, you must declare which you are using when filing business tax documents during formation and plan to stick with your choice for the foreseeable future. New businesses are often tripped up by which they should use because they do not truly understand the implications of each type of accounting.
What are the differences?
Are there advantages to using one over the other?
Do bookkeepers and accountants work with both?
The decision about which type of accounting system to use depends on size, payment terms, business goals, available resources, and third-party financial requirements. Management should consider all these factors before deciding and consult with a professional accountant as needed during the process.
Both cash and accrual accounting methods result in the same bottom line when all your accounts receivables are collected. The differences are when that revenue is recognized and what kind of tax obligation is incurred as a result.
The possibility of business fraud is the dirty little secret that business owners tend to ignore. Unfortunately, there will always be unscrupulous individuals that try to take what is not theirs, even during hard times. Recent reports of bookkeeper fraud serve as a reminder to business owners that fraud never stops, even when businesses are down on their luck. In fact, a global fraud study found that, on average, companies lose 5% of their yearly revenue to fraudulent activities.
While it is easy to imagine fraud occurring by faceless cybercriminals or strangers sneaking in to rob your company of cash and valuable assets, most perpetrators have deep ties to the business, and many are first-time offenders. Many times, the people you least expect are the ones responsible for fraudulent activity – long-time employees, close friends, and even family. These bonds can make it difficult to spot the warning signs, causing fraud to go undetected far longer than it should.
Do you need to hire a bookkeeper? If you are asking the question, the answer is yes!
Most commonly bookkeepers are brought in due to lack of time, lack of financial expertise, or growing business complexities. Whether a bookkeeper is freeing up time for an owner to engage in revenue driving activities or providing deeper financial knowledge, this professional role can be a crucial hire at a growing business.
When you are looking to hire a bookkeeper for your small business, will any bookkeeper do? Or do you need a bookkeeper that specifically works with small businesses? And, what can a small business bookkeeper offer that you cannot do yourself with QuickBooks or another accounting software?
We see it every day – businesses that put off hiring an accountant for too long. By the time they come to us, they have finally hit the breaking point, and now they need someone immediately to get their books in order and implement strategic financial planning. They ask questions about how quickly an accountant can be onboarded and approach the hiring process with panicked urgency.
So, you secured a Paycheck Protection Program (PPP) loan from the SBA, now what?
Most businesses do not need help figuring out how to spend this money. However, when it comes to accounting for the loan, plenty of businessowners are confused about how to handle it correctly.
You asked, so we are providing a guide to help you navigate the waters. Follow this PPP bookkeeping how-to guide to keep your books clean after receiving your loan:
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