4 Common Misconceptions about Accounting

Do you think that accounting is a boring job? Are all accountants experts in math? Is it necessary to hire an accountant for freelancers and small businesses? There are myths associated with every profession. But if they remain unaddressed, people start taking them as facts. Let’s learn about some common misconceptions regarding accounting and their reality.

• Accounting is boring

The history of accounting is thousands of years old. It makes people assume that it is a boring and dusty job. But once you understand that accounting is a profession that helps other businesses to expand, you will start loving it. Some of the most interesting accountant jobs include sports accountant, entertainment accountant, and fashion accountant.

• Accounting is just bookkeeping

This is one of the biggest misconceptions about accounting. The truth is that accounting is not only bookkeeping - bookkeeping is an element of accounting. Bookkeeping is the recording of revenue and expenses for a business. Accountants analyze past records of the business to make plans for the future.

• Accountants need to be experts in math

If you want to make a career in accounting but you don’t like math, then here is good news for you: you don’t have to be a math genius to become an accountant! Just adding, subtracting, and basic algebra is enough for this profession.

• Professional accounting is not necessary for business growth

If you are a small business owner and you think hiring an accountant is just an extra expense, you may be wrong. Keep a budget for an accountant; getting professional help will lead you to great results in the future. This column should have dispelled some of your misconceptions about the field of accounting. Most people think that hiring an accountant consultant for freelance workers and small businesses is a waste of money. But actually, accountants can help you to imagine and make real the future of your business.

What You Need to Know About the CP3219A IRS Notice

Have you recently received a CP3219A notice from the IRS, and are you wondering what this IRS notice of deficiency is all about? Don’t worry, you only need to read the essential information given below to clear your concerns :)

What is this notice about?

This notice is sent when third-party information received by the IRS is very different from what you reported on your tax return. This discrepancy, which could range from a slight to major increase or decrease in your tax, can make things uncomfortable.

This notice generally explains how the IRS adjustment amount was calculated, what to do if you agree or disagree with the facts stated, and how you might be able to challenge it in the U.S Tax Courts if you choose the latter option.

Once you receive such a notice, you should decide what to do with the help of your accountant, as he or she can best guide you through the specifications of various tax outcomes.

Make sure you thoroughly prepare to deal with a CP3219A IRS notice with the help of a professional accountant.

Overcoming Accounting Challenges of Small Businesses

Confronting problems with accounting is not an uncommon situation for businesses. You might be dealing with several problems to stay on top of the competition, and accounting is no different.

Accounting poses many challenges to small businesses as not everyone is a pro in accounting techniques. Therefore, the role of accountants for freelancers is imperative.

This blog will introduce you to some of the common challenges of accounting that are faced by small business owners, along with their solutions.

Cash flow

One of the most prevalent problems in a business is cash flow. Many small companies collapse due to unregulated cash flows. It may be due to the inefficiency and lack of knowledge of business executives in dealing with such issues.

The solution is to turn to accounting software that is efficient enough to make your job easier in understanding and, consequently, in making the best out of your existing cash flow.

Analyzing finances

Analyzing finances is the other challenge faced by small businesses. Make sure that when you make a financial analysis of your business, you do it in three steps: interpreting costs, analysing payments, and building on the results. When you do the analysis correctly, you will elevate your financial condition in the market.

Extra expenses

Do not always give attention only to major finances; small expenses equally matter. Expenses like coffee for staff should also be added to your expenditure list. If you do not add each and every one of your expenses, you are at risk of causing significant changes to your business in the long run.

Expense tracking

It is pretty easy to lose track of where your business is spending its money. You might find it challenging to keep track of every business receipt, and you are bound to lose it. You should preferably opt for accounting software packages. Because they are cloud-based, you are able to access your accounts from any device regardless of your location.

Make sure you follow the tips mentioned above to sort out the challenges of accounting. You can also opt for an accountant consultant for freelance workers to provide you with help in your accounting needs.

Essential Bookkeeping Tips for Small Businesses to Use All Year Round

Accounting is a very strenuous job for any business. If your small enterprise does not keep tight books, then doing taxes can turn out to be a nightmare. In the absence of an organized system for your finances, you may find a lot of obstructions and eventually lose your money in the long run. Therefore, accountant consultants for freelancer workers are highly valuable.

However, if you are well versed with simple and effective bookkeeping tips, you can have a better grip over your financial situation, and you can even witness growth in income. Keep reading today’s blog to get essential tips for good bookkeeping.

● Keep business and private banking separate

This should be on the priority list of any new business owner opening a new bank account for their business. Moreover, choose an account with online access to easily keep business funds separate from your personal funds.

● Plan for major expenses

Keep some money aside for major expenses such as inventory, office supplies, maintenance, and repairs. It will be of great help in the future.

● Spare money for taxes

If you keep check of your financial records, you can be prepared for year-end taxes. So try setting some money aside to pay your taxes.

● Maintain your invoices

Avoid factors that can impact your business adversely, like late and unpaid bills. Keep your bills organized and pay them on time. Also, keep an eye on your receipts.

● Keep daily records and reconcile bank accounts every month

Try to double-check your bank accounts and daily records once a month. This practice will keep discrepancies away.

● Find a good advisor

Having a good advisor is essential, as he/she can advise you about your finances. He/she can teach you how to handle your accounting efficiently, fix any mistakes, and resolve any questions. Options for affordable accounting for freelancers and entrepreneurs are available online to help you.

Benefits of Hiring a Tax Consultant for Freelance Workers

Tax consultants are professional Certified Public Accountants who are experts in tax preparation. Many small businesses, freelancers, and independent artists hire specialized tax consultants for freelance workers to prepare and report taxes for them.

Hiring a professional accountant has a wide range of benefits that includes:

Reducing Taxable Income

Professional accountants know the intricacies of tax laws, allowing them to find business deductions that reduce your taxable income and save you money on taxes. Additionally, they also help in tax planning for freelance workers.

Flawless Tax Preparation and Reporting

Professionals have the right tools, skills, and knowledge, and apply attention to detail to accurately calculate, report, and file taxes. They know how to do taxes correctly the first time.

Audit Representation

Your professional accountant can also help you with audit representation in case your tax return is audited. This helps you to defend your rights when necessary.

Because of the reasons listed above, it would be a good idea to hire a tax consultant for preparing and planning your taxes.

When to Hire a Certified Public Accountant

In the past, most U.S. taxpayers either manually completed their taxes through IRS paper forms or outsourced tax preparation to trained professionals. During that time, even human experts and the IRS were not that familiar with the tax preparation information available to filers. However, the situation has changed so much today.

Today, there are a number of ways through which you can file taxes. One of the most preferred routes is hiring a tax preparation professional.

There is no denying that a professional preparer can provide better value for busy filers with several income streams or unusual circumstances.

Tip: If you are a freelance worker, you can seek help from a CPA to do your income taxes for freelance workers.

Here are some reasons to choose professional help:

1. Complex or Unusual Situations

In case of any tax complexity, it is critical to hire a professional. This can be helpful when you encounter situations where an expert’s input is needed to assess deductions or credits for which you don’t qualify! Another area in which an expert may be helpful is for property depreciation that needs to be drawn-out through qualified plan contribution calculations.

2. Multiple Sources of Income

Growing entrepreneurs or freelancers don’t consider their working situation unusual. However, they require expert guidance as they are new to the business of tax reporting. After all, retail investors, especially day traders, carry out dozens of equity transactions every week, so it would be smart to outsource the mind-numbing data entry and processing to a professional.

3. Lack of Time to Do Your Taxes

When you have limited time, you can either invest in making some profit out of it or waste it in a data entry job to which you are new. Because of this, it’s better to outsource professional tax preparation services online.

As far as hiring a professional accountant for freelance workers or entrepreneurs is concerned, you don’t need an excuse. You can outsource tax preparation services anytime according to what you need!

A Few Tax-Simplifying Tips for Freelancers

Any growing business is easy to run when you have professional help, from managing cash flow and planning personal finances, to finding insurance.

While becoming your own boss is exciting, the extra work that you have during tax season can crush that excitement. If you are a full-time freelancer or are starting a side gig, the three tips listed below can help you get prepared for tax season.

1. Be Ready for More Forms

Be aware of the fact that your net profits are taxable. Get familiar with Schedule C—the form where sole proprietors report their business income and expenses. Also, keep in mind that you might need Schedule S.E. to calculate your self-employment taxes.

Hiring a professional accountant for freelancers is a great way to alleviate your tax hassles. However, if you are willing to do it yourself, then you need to be organized, confident, and operational in your specific business.

2. Get Organized

With self-employment, while you experience the excitement of managing your own business, you should also understand that your income is never constant, and often fluctuates. So, to avoid surprises during the year, estimate your tax liability. This way, if you are ever audited, you will be forced to prove the income and expenses on your tax return. To avoid such troubles, keep consistent records and save your financial documentation for at least three years.

Tip: If you feel helpless or stuck with your taxes, then employ income tax services for the self-employed from reliable professionals.

3. Understand 1099-NEC Forms

If your client pays you $600 or more during the year, you should probably get a 1099-NEC Form from them in January or February. This form demonstrates how much your client paid you over the tax year, for which you are required to report. Be as transparent as you can, because your client has the power to send a copy to the IRS, and the IRS will know what they paid you… even if you don't report that income on your tax return.

These are a few tips for freelancers in order to avoid further stress during tax season.