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Cutting Costs? Don?t be Too Hasty Where Your Accountant is Concerned!

Sep 09 2010

In times of economic difficulty, many business owners look for ways to cut costs. Saving money is one thing, but all too often the action taken to save that money can have the completely opposite effect and prove a drastically false economy.

Amongst the most popular courses of action small business owners seem to be taking in order to cope with the effects of the economic downturn is either switching to a cheaper accountant or taking on the task of preparing their own books and figures. However, both these decisions will in the majority of cases only save money in the short term and could have far reaching consequences that end up costing the business dearly in terms of time as well as money.

If you are happy with your accountant and they have been consistently saving you money and providing a good service, but you feel they are simply charging you too much and you have been offered a better deal elsewhere, then you should stand back and ask yourself a few questions before making the move. And these should not be the only questions you ask; you should also have a set for your potential new accountant because there are several things you must get clear before you start working with them.

Firstly you need to make sure that you will receive the same level of service from the cheaper accountant. The old adage, ‘you get what you pay for’ is never truer when it comes to professional services. Will they return your calls promptly? Will they deal with your work with the efficiency you are used to?

Secondly, you need to check their experience and reputation. How long have they been qualified? How long has their practice been trading? Can they provide you with testimonials from satisfied clients?

Thirdly, think about the level of expertise of the firm’s staff. Generally a practice that charges less will pay their staff less; this often indicates that the staff are under or even unqualified, poorly trained, lacking in experience and possibly unsupported by their employer. This of course will not make for a pleasant experience with your new accountancy firm.

Lastly, check for hidden costs. You may have been quoted a figure to prepare accounts and deal with a tax or VAT return, and you may think that is all you will have to pay. But beware, because some firms will charge you every time you telephone them, and some will even make charges for writing to you! Make sure your quote covers everything.

In times of economic crisis it is easy to get carried away with cost cutting exercises, focusing on the savings you think you will make by switching to cheaper alternatives or by doing things yourself. However, it is wise to take some time to seriously consider the consequences of your money saving initiatives, because they could well end up costing you far more than they would have done if you had left them alone!

Tags: Accountant, Concerned, costs, Cutting, don't, Hasty
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Having a Healthy Savings Account Balance

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Sep 07 2010

Saving is a way of life. It’s not just about putting cash away for a rainy day or accumulating an amount to pay for a major purchase, but looking at everything we do in life and seeing how by altering our behaviour we can save money, time and effort. Additionally, altering the way we do things may have a positive impact on our health and also reduce our detrimental impact on the planet.

Everyone can save money in many ways during the course of a single day. Although the savings made on each occasion may seem minor, they will soon add up to significant amounts. For example, many people start the day by popping into their local cafe or franchise coffee shop for an elaborate and usually expensive hot beverage. If instead they prepared their own coffee before leaving home and took it with them in a flask or insulated mug, they could easily save around £2 per day.

Many people automatically drive to work without thinking about whether a car journey is necessary. But by walking or cycling instead they could save a substantial amount over the course of the year, especially if they have to pay car parking each day instead. Even if cycling or walking are out of the question then car-sharing could be an option which can save considerably on your daily travel bill.

There is also the opportunity to save money when paying domestic bills, as many utility and other suppliers offer discounts if payment is made by direct debit. But, these methods of saving money are just a few examples. Savvy savers can look at everything they do and work out ways to save significant amounts of cash.

With spare cash comes the opportunity to invest. When it comes to choosing a savings account a savvy saver will know exactly what they want. If they need to save for the long term, perhaps for a major purchase, they will know exactly when they expect to withdraw a considerable sum. Therefore, a notice account that pays a high rate of interest may be the best place to start for such savers.

For other savers just looking to accumulate cash that they may wish to withdraw at short notice then an instant access savings account would be best, perhaps even an instant access Cash ISA. An Individual Savings Account (ISA) is a tax-free way of saving money and is available to any UK tax-payer over the age of 16. Up to £3,600 can be invested in a Cash ISA each year and the interest paid is tax-free.

But whatever account is chosen, a savvy saver can soon accumulate a fair balance by looking at their day-to-day expenditure and making changes that result in savings.

Tags: Account, balance, having, Healthy, Savings
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Smarter Ideas for Current Accounts

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Sep 06 2010

When we meet new clients and agree to work together, the number one aim we have for them is that they achieve their monetary and non-monetary goals in life.

You have probably heard us discuss some of the component parts to this, such as cash flow forecasting and smarter investing etc. However, one of the areas we cover is being smarter with the everyday issues, such as where do you keep your cash that is needed to cover everyday spending and direct debits etc.

Most clients tend to have ordinary bank accounts that pay very little if any interest, and yet the level of cash kept in these accounts can be many thousands or even tens of thousands of pounds.

So, what options do you have, and is this important anyway?

Well, first of all, we understand that some clients have an emotional attachment to their bank. After all, they may have been with them since they were a student, and the local branch is fine for them.

However, it could damage your wealth over time!

You have two main options.

Option 1 – Offset Flexible Mortgage With Current Account

Many of our clients have this type of mortgage. In recent years, the interest rates on these have reduced, meaning that the rates are almost as competitive as the cheapest deals.

If you are self-employed or have private practice income, this option is even more useful, since you can park your tax monies here.

For higher rate tax payers, this means that you are obtaining as an interest rate the actual mortgage rate of, say, 5.5%. But of course this is tax free, compared to a normal account being taxed at your highest rate.

However, just looking at a balance level on average of say £7,500 in a given month, the savings could come to over £400 a year. If you take this over 10 years, then we don’t think £4,000 is to be sniffed at.

Option 2 – Current Accounts That Pay Interest

If the mortgage option is not relevant, it makes sense to ensure that on any balances in your account, you get a decent rate of interest.

There are many more banks and building societies now offering competitive rates. Taking one offering from the Halifax, it gives 6.17% gross providing you pay in at least £1,000 per month. So instead of recieving little or nothing on your account, you could earn £462 a year.

This is taxable of course, which would mean net interest of £370 for basic payers, and £277 for higher rate payers. On a joint account it would be circa £323. Still, over time this adds up, and we would much rather you had this than adding to the bank’s profits!

The Financial Tips Bottom Line

Make sure you get the best value you can on each and every part of your financial planning, as it can soon add up to substantial amounts over time.

ACTION POINT

If you have a mortgage, investigate whether an offset loan would prove your best option. If not, and you are not being offered a decent rate on your current account, switch to a bank who will offer you this.

After all…it’s YOUR money!

Tags: Accounts, Current, Ideas, Smarter
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I Hate This Stock

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Sep 05 2010

I Hate This Stock
Does that mean I should short it?

Building up a Healthy Balance on Your Skills Account

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Sep 04 2010

Amongst all the reports of a credit crisis, a crisis in banking, a crisis in high street finances and other Defcom2-type warnings, there is yet another crisis lurking in the background that has greater long-term implications for the future of UK PLC – a skills crisis.

Lord Leitch’s 2006 final report into the ‘Review of Skills’, commissioned by the government in 2004, acknowledged that there is a problem. But it failed to provide any real, workable recommendations to individual sectors. Instead it focused on providing continued support and funding for generic training schemes that have very little impact on industry-specific areas such as IT.

The latest initiative to be piloted is the ubiquitous ‘Skills Accounts’, which the government hopes will encourage the British workforce to retrain and develop skills throughout their working lives. The principle driving force is to stop people bouncing between short-term employment which does nothing to increase their skills base. A Skills Account aims to provide:

A funding voucher
Careers advice services
A secure online record of learning

As the initiative gains momentum, other benefits and services will be added, including a CV builder, a ‘Skills Health Check’, a statement of learning and employer access to view a learner’s skills and qualifications. The initiative has been a joint-departmental development between the Department for Work and Pensions and the Department for Innovation, Universities and Skills. It is the result of recommendations from the original Leitch report and from the Committee of Public Accounts 13th report, ‘Sustainable Employment: Supporting people to stay in work and advance’. Whether it has any positive impact in the encouragement of skills development within the workforce remains to be seen.

There are fundamental flaws within the Leitch report in particular, and they are issues that Karl Parkinson, MD of Computeach, sees as major stumbling blocks to the success of the initiative. “The Government needs to recognise that different industries require different solutions to skills shortages,” he says. Although the Skills Accounts approach may be a workable solution within industries such as manufacturing, public service or other low to medium skill level industries, for the more high-tech industries such as IT, it has its drawbacks.

The structure of the Skills Accounts scheme is very similar to the ‘Train to Gain’ scheme, which has seen considerable success in recent months. The success has been restricted, though, to industries such as plumbing, electrical and joinery, but has no relevance for those training in IT. The qualifications offered had no direct relation to software-specific skills development, for example. The concern is that the Skills Account will follow the same, narrow path, excluding one of the most important growth industries in the UK, namely IT.

The Skills Account carrot is the training voucher, which will enable learners to gain a grant towards skills development and retraining. But again, these vouchers will only cover certain types of training, leaving those wishing to develop IT skills holding an invoice for their college fees and having to find the funding for themselves without government help. “The IT sector is in desperate need of skilled workers, yet in order to fulfil the number of positions available, people need encouragement to transfer from other areas of the workforce,” says Karl Parkinson. “If the Government is unwilling to subsidise or fund private training schemes which specialise in providing industry recognised vendor qualifications such as the Microsoft Certified Systems Engineer through distance and e-learning, then people will be disadvantaged.

And therein lies the fundamental problem. Yes, the Government is recognising that retraining and skills development is vital to keep the workforce at the cutting edge of a modern marketplace and yes, there will always be a need for plumbers. But in a modern, technology-driven age, there is a desperate need for highly trained IT experts as well. The hope is that the government will realise this and that Skills Accounts when launched proper involves vendor qualifications. The UK has the potential to become the ‘Silicon Valley’ of Europe, but training initiatives must embrace the right qualifications and flexible learning methods such as e-learning if new entrants to IT have any chance of maintaining a healthy ‘Skills Account’ in the future.

Tags: Account, balance, Building, Healthy, Skills
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Litigation, Mediation & Arbitration

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Sep 02 2010

Litigation, Mediation & Arbitration
All companies, regardless of their size or solvency, must ensure that they have appropriate systems for dealing with statutory demands. In my last article, I looked at the use of statutory demands . Time now to go through the looking glass and examine the impact of demands on the companies which receive them.

The Bright Side Of A Recession: Through An Accountants Eyes

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Sep 01 2010

Every New Year brings hope for something better. When the ball drops on December 31st at midnight people begin to make resolutions. There is a yearning for improvement, hope for a fresh start. Most New Years, people decide to loose weight or stop smoking; however, for the beginning of 2009 it is different. Our economy is not doing well; the recession is finally staring to show its effects. Last year there was a mortgage crisis, the Madoff scandal and the fall of the stock market significantly resulting in the loss of homes, retirement funds and jobs. The unemployment rate is rising; so this New Years instead of hoping for weight loss or a nicotine free life people are more concerned with getting a job, affording their house (or finding one) and figuring out a way to get back the savings they thought would be there when they retired. It is a different time and since I am a student about to graduate college and enter the world of job markets and housing it is a great concern of mine.

Currently I am a senior at West Chester University as well as a part-time employee at Thomas Jefferson University Hospital. I am learning about the recession in different ways from both of these experiences. I work in the Nursing Business Office two to three days a week to pay for expenses until I graduate. My boss is the Director of Finance for the Department of Nursing. Our main job involves budgeting and financial reporting. Each year I am responsible for the Capital Budget process for the next fiscal year. I will take purchase requests for each of the nursing units and enter them into a system so they can be approved for next fiscal year’s budget. This year only essential items were allowed to be requested. Even though the amount of requests were drastically decreased from last year’s Capital Budget there were still concerns about whether there would be enough money to even fund those requests. The apprehension does not stop there; there have been numerous budget cuts and every inch of the Nursing Department is trying to cut back on expenses, the next option is to lay off employees which has already been a discussion and definitely all hires are postponed. It does not look good.

At West Chester University there is excitement about upcoming graduation for those of us who are seniors; however, the amount of people graduating with a job is scarce. Many students have decided to go to Graduate School hoping the job market will recover by then. The problem is they are not sure and the future does not seem as promising as our first day as freshmen. Instead of graduating, getting a place of their own and becoming an “adult”, they are continuing the life of a student. I heard students from many colleges discussing this issue and for a moment I was concerned that I would face the same problems. Then I took a breath and relaxed, knowing that my job market is different; I am an Accounting major.

Over the years there has been numerous crises’ with large companies. The fall of Enron is the first to come to mind. How was that issue dealt with? The Sarbanes and Oxley Act of 2002, more regulations were enforced. The increase for audit procedures led to more billing hours for the accountants. Now we are faced with more screw ups by the banks with the mortgages and the Madoff scandal. There are already discussions about ways to prevent these problems, more audits and stricter regulations. Who will be the ones to take on this responsibility? Of course the accountants will take on this task; more work means more distribution of responsibilities and more staff.

So as I come closer and closer to graduation all I feel is excitement because I will start my job in September. Other seniors in my major are as lucky as I am; I have not yet met a senior in the accounting department at West Chester University who does not have a job lined up in the fall. The outcome looks the same for juniors and sophomores; I heard from a professor that internship acceptance for accounting majors is at an all time high this year. As a result, I do not worry about having to continue as a student, I can enter the world of the workforce regardless. While others are stuck in the middle of the chaotic job market I am relived because the accountants are thriving off the downfall of so many companies. The more scandals that occur, the more every company will need to be investigated and reviewed which means, of course, more work for the accountants.

Tags: Accountants, Bright, Eyes, Recession, Side, Through
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5-Star Stocks Poised to Pop: SQM

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Aug 31 2010

5-Star Stocks Poised to Pop: SQM
Market-trouncing returns could be written in these five stars.

Understanding Accounting Vocabulary

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Aug 30 2010

The following article is an excerpt from the free online course “Using Finance & Accounting in Your Small Business”.

When you learn something new like accounting concepts and terms, it helps to create links between what you know and what you are trying to learn. In some ways, it is like learning a second language and decoding the new word is part of the learning process. For example, trying to translate the Spanish word necesario you might brainstorm with necessary – and you would be right. How about blanco? Blanco is like blank which is like white. So, blanco is Spanish for the color white.

Try to make some logical connections about the accounting vocabulary. Take the word – accounting – and think about it. Really, the accounting system is a basic counting of what goes on in your business.

Let’s move on to transactions. Transactions are the business activities, or actions, that build day by day and become your expenses and income. Try to think about the term – transactions. Actions are business activities, and trans means across or thru. These are the basic building blocks of an accounting system. Transactions are to accounting like what raw materials are to a factory, or gasoline is to your engine – the transactions are real and how your accounting system handles them impacts your business.

You must keep a record of your transactions to know how much money your business earned and how much money your business spent. Sounds obvious, right? Ask your bookkeeper or accountant how obvious some transactions are. It can get tricky quickly if you are not clear about what happened in the transaction and how you want it recorded.

For example, if you were a carpenter you might pay cash for a bucket of nails to assemble hand made wooden deck chairs. The nail purchase is a transaction and will have to be counted as a business expense. In your workshop, you then assemble the chair using a pneumatic nail gun, sand paper, stain and varnish. The next day you deliver the chair to a customer in a neighboring town. You hand the customer a sales slip and they then write you a check. That, too, is a transaction. It is easy to see the transactions when money is spent or received. Did you, however, see the other transactions?

The stain and varnish, nail gun use and chair parts were also part of the transaction. What about the gasoline and truck used to deliver the chair? Did you have any left over nails or did you use them all? Maybe there is a little life left in the sand paper but it is not new anymore, is it? If we do not account for those costs we are missing a piece of the picture-an important piece-that could affect how much money you have at the end of the year.

In all your business activities, try to think in terms of transactions because once you can identify what transactions occur in your business, you will be able to organize them into a meaningful manner. Right now, take a minute to list what transactions occur in your business each day, week and year. Always thinking in terms of transactions might seem miserly, but it is important to be cost-conscious and honest with yourself about all your transactions. Your success in business depends upon it.

Some transactions are initiated by customers and suppliers. Other transactions can take place inside your business or back office. The bookkeeping department creates transactions when they adjust your books for year-end considerations like machinery depreciation or inventory shrinkage.

What is depreciation? Let’s say you bought a brand new car, a 2006 Professor Now Coupe, and you spend $27,500 on this new car. Next year the car has some dings on the doors, wear on the tires, stains on the seats and 20,000 miles on the engine. You know your car is not worth $27,500 anymore. This means your car has lost value or depreciated.

When it comes to business owned equipment, you can deduct this lost value as a business expense. Sure, you did not spend cash on the lost value but with depreciation, this is a transaction your bookkeeper or accountant will force through at the end of the year. On your taxes, it helps you by increasing your expenses like all other cash transactions. Of course, the other side of depreciation means your equipment is not worth as much anymore.

In order for you to get a really clear picture of how your business is operating, you need to be diligent and thoughtful about what your real expenses are. Depreciation is a real expense even though it is not a cash transaction.

Learning to see transactions for what they are takes practice and contemplation. Transactions affect so many areas of your business that you must analyze the daily details so you can piece together the big picture.

Tags: Accounting, Understanding, Vocabulary
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Young- Williams Animal Center to host workshop

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Aug 28 2010

Young- Williams Animal Center to host workshop
The Young- Williams Animal Center in Knoxville will host a two day national fundraising workshop for animal shelter professionals in September.

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Accounting Degree

Archive for the ‘accountant course’ Category

Cutting Costs? Don?t be Too Hasty Where Your Accountant is Concerned!

Having a Healthy Savings Account Balance

Smarter Ideas for Current Accounts

I Hate This Stock

Building up a Healthy Balance on Your Skills Account

Litigation, Mediation & Arbitration

The Bright Side Of A Recession: Through An Accountants Eyes

5-Star Stocks Poised to Pop: SQM

Understanding Accounting Vocabulary

Young- Williams Animal Center to host workshop

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