Common Accounting Mistakes

 

Many people, like small business owners, manage their financial accounts themselves. In such cases, there are high chances of errors. Small mistakes can be easy to correct, but a severe mistake can affect the financial health of your business. Taking the help of a professional and hiring an accountant for freelance workers or small business owners can reduce accounting mistakes. In this column, we will learn about the top 4 accounting mistakes.

1. Failing to reconcile accounts

The first thing to do is recording cash flow and other financial data in your books. Then, you should also ensure that your bank account reflects the same balance as your books, transaction timing aside. A gap between the two can be an error that needs immediate action.

2. Not recording small transactions

This is a very common mistake. People often neglect small transactions and don’t keep receipts or records for them. Keeping record of every expense is essential to your business, no matter how insignificant it may seem: eventually, small transactions add up.

3. Not backing up data

Most people use accounting software for bookkeeping and/ or other operations. But along with the various advantages, there is a problem to this: if you lose your data and don't have it backed up anywhere, you will face troubles. There are high chances of data or financial information being lost, hacked, or stolen. So, it is essential to keep a backup of your data.

4. Lack of planning

Accounting and bookkeeping require excellent planning and organization skills. Tracking and storing your information properly is necessary. A small mistake or error may cause you trouble.

The final word

If you want to prevent these technical errors, avoid managing your own financial accounts. Rely on a professional accountant instead. It will reduce the chance of errors, and you will get better and more reliable results.

If you are looking for an affordable Certified Public Accounting firm that is an expert in company formation, then please know that at Agro Accounting CPA, we have a range of solutions that can help you in every aspect of your business. We do everything from tax preparation to bookkeeping, company formation & tax ID issuance, and audit representation.

A Guide to Tax Settlement: Benefits and Eligibility Criteria

 

A tax settlement is a discounted arrangement regarding taxes owed that is acknowledged by the IRS or the state taxing authority. It is also known as an offer in compromise. Under this settlement, a taxpayer is allowed to extinguish an outstanding tax debt for less than the actual amount owed. Some extenuating circumstances that have prevented taxpayers from paying their taxes owed are accepted by the IRS. Taxsettlement services can be best carried out through proper guidance.

 

Not every kind of situation is considered for tax settlement. Tax settlement may be based on the current circumstances of the taxpayer and applicable tax regulations. Let’s discuss tax settlement in this blog.

 

How can an IRS settlement benefit you?

 

Negotiating a tax settlement can benefit you in these ways:

 

●     Pay less: The first obvious benefit is that you will be able to pay less to the tax authority than you actually owe. Given the situation of the taxpayer, a tax settlement can be determined and presented in a short time span. Once you pay the balance on the mutual agreement, the tax account is taken to be settled in full, leaving you with no late fees and other penalties.

 

●     No need for Liens and Garnishments: The other benefit offered by a tax settlement is that the taxpayer does not need to suffer from a tax lien on his/ her home or business.

Who is eligible for a tax settlement?

 

The IRS offers the settlement option to taxpayers who have a difficult time paying off their tax debts or have a valid reason for their penalties to be abated. Not everyone is eligible for such tax settlement.

 

The main factor considered is the financial hardship of the taxpayer. Their financial situation is analyzed, and if the tax authority comes to the conclusion that the financial situation is not favorable, then the taxpayer is taken to be eligible for tax settlement. Financial hardship is a good indicator of tax settlement.

 

For more clarity, you can take the help of Tax Services for Freelance Workers to check if you are eligible and how a tax settlement could benefit you.

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.