Advisory
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Audit & Accounting
An audit provides the highest level of assurance, the primary objective of which is to issue an opinion on the fair presentation of the financial statements in accordance with generally accepted accounting principles. Thompson Greenspon utilizes a risk-based audit approach to develop an audit strategy and comply with generally accepted auditing standards and objectives. Our work includes gaining an understanding of your business, including internal controls, testing selected transactions and communicating with third parties. Based on our findings, we issue a report on whether the financial statements are fairly stated and free of material misstatements. As part of the audit process, we will communicate to management and those charged with governance any deficiencies in internal controls as well as make recommendations to strengthen your company’s operational efficiency.
The objective of a review engagement is to obtain limited assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in accordance with generally accepted accounting principles. A review is less extensive than an audit, but more involved than a compilation. A review engagement consists primarily of analytical procedures and inquiries of management. If the financial statements or supporting information appear inconsistent or otherwise questionable, we may need to perform additional procedures. A review does not entail an in-depth evaluation of your company's internal controls or verification of data with third parties. Reviewed financial statements must include all required footnotes and other disclosures.
An audit provides the highest level of assurance, the primary objective of which is to issue an opinion on the fair presentation of the financial statements in accordance with generally accepted accounting principles. Thompson Greenspon utilizes a risk-based audit approach to develop an audit strategy and comply with generally accepted auditing standards and objectives. Our work includes gaining an understanding of your business, including internal controls, testing selected transactions and communicating with third parties. Based on our findings, we issue a report on whether the financial statements are fairly stated and free of material misstatements. As part of the audit process, we will communicate to management and those charged with governance any deficiencies in internal controls as well as make recommendations to strengthen your company’s operational efficiency.
The objective of a compilation engagement is to apply accounting and financial reporting expertise to assist management in the presentation of financial statements and report without providing assurance that no material modification should be made.
Internal control is an integrated process that encompasses five components designed to provide a reasonable assurance regarding achievement of objectives in the following categories: reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations.
- Risk assessment
- Control environment
- Control activities
- Information and communication
- Monitoring
Thompson Greenspon can assist management by documenting the existing controls and can perform procedures to test whether your current internal controls are operating effectively. We will provide a report listing our findings and any recommendations for changes to the design of the internal controls. Our services assist management in their assessment of the design and effectiveness of their internal control system specific to their business activities and circumstances.
The “Yellow Book” refers to the Generally Accepted Government Auditing Standards (GAGAS), and contains standards for financial and performance audits of a governmental agencies and organizations. While the standards were established for audits of the federal government, they are also used as a framework for auditing local government organizations. In addition, CPA firms who perform local government financial audits that include an A-133 "single audit" must follow Yellow Book standards. The purpose of a “Yellow Book” audit is to provide an opinion on the financial statements of a government organization, while also assessing internal control and compliance issues.
A balance sheet shows a snapshot of your business' financial condition at a specific moment in time. Balance sheets, along with income statements, are the most basic elements in providing financial reporting to potential lenders such as banks, investors and vendors who are considering how much credit to grant you.
A general ledger is the main report that summarizes all of the transactions that occurs with the entity. The general ledger is used to compile all the information into the entity’s financial statements.
The income statement is one of the major financial statements prepared by an entity. Also sometimes called a “Profit and Loss Statement”, the income statement reflects an entity’s profitability by showing financial transactions which have occurred during a given business cycle. Some of the key elements of the income statement are revenues, expenses, gains and losses. These key elements help to determine important financial metrics, such as gross profit and net income. The income statement can be useful both internally, such as to management and those charged with governance, as well as externally, such as to potential investors and creditors. When considering the differences between the income statement and another major financial statement, the balance sheet, it is important to keep in mind that the income statement captures a period of time, while the balance sheet captures a specific moment in time.
When in QuickBooks, go to File, Back Up Company, and choose Create Local Backup; choose where you would like to back the file.
When in QuickBooks, go to File, Open or Restore a Company, and choose “Restore a Backup Copy”. Find the file of which you would like to restore and follow the instructions on the box.
Starting a Small Business
There are a lot of variables that go into starting a business. There are a few things you need to think about before you do start a business. Do you have a business idea or business plan? You should do market research once you decide on a business idea. Is there a market for what you are doing? Is anyone else already doing what you want to do? Once you decide upon these things you then have some steps to go through in order to officially begin your business. What kind of business do you want to start; an LLC, corporation, partnership, or another type? You need to decide upon a business name and register your business. You’ll need to get a Federal tax ID and a state tax ID. You should also think about obtaining any trademarks, copyrights, or patents pertaining to your business. Once you have the structure for your business, you need the finances to kick start it. You could fund the startup yourself, pursue a bank loan or line of credit, or even pitch the idea to family or friends who may be interested in making an investment. If you need help starting a business, feel free to contact us for assistance.
There are many factors that should be considered when choosing the structure of your business, but the three primary factors are liability protection, taxation, and cost of formation and administration.
A sole proprietorship is the easiest type of entity to form, and all income and deductions are reported and taxed on the sole proprietor's individual income tax return. However, the sole proprietor is liable for all debts and losses of the business.
A partnership involves two or more owners who agree to share in the profits and losses of a business. A partnership files an informational tax return, and the income and loss is "passed through" to the partners to report on their individual tax returns. Each general partner is personally liable for all debts and losses of the business.
A C Corporation is a separate legal entity that is created to conduct business, and it files its own income tax return. The main advantage of a C Corporation is the avoidance of personal liability by its owners. However, C Corporation owners are subject to double taxation. First, the corporation is taxed on its profits and then the owners are taxed on the dividends they receive.
While, an S Corporation has the liability protection of a C Corporation, the income and loss is reported on an informational return and is "passed through" to the shareholders, which avoids the double taxation issue. However, there are limitations placed on the number of owners allowed and types of entities and individuals who can be owners.
A Limited Liability Company, or LLC, allows business owners to take advantage of the liability protection of a Corporation, but is generally treated as a partnership for income tax purposes. Depending on the type of structure you choose, you may be considered self employed and the income you earn may subject to self employment taxes as well as federal and state income taxes.
When considering accounting software for your business, you need to also consider your business needs. Take time to complete a thorough analysis addressing both managerial and financial needs as well as future growth. Consider what type of business you operate as different sectors have specialized modules or add-on packages to keep specialized data. Do you need a software that can track inventory and handle parts and labor? Are you a doctor’s office that needs specialized billing for insurance companies? If your business has an accountant – either an outside consultant or in-house – consult with the expert prior to making any decisions. Don’t forget to also check with your IT department and assess your hardware needs. Make sure you know your budget limitations for the software, but also consider the growth potential for your business, and if the software can grow with you, otherwise you may be doing this all again in a couple of years. It also helps to create a wish list of items that you are looking for the software to help with. It can be an extensive and exhausting process to find the software that is right for your business, so if you would like help with this process, feel free to contact us.
This will all depend on the business that you plan on starting as no business is the same. According to census data, more than 40% of all small businesses started up for under $5,000. In order to calculate how much you personally will need to start the business of your dreams, you will need to take into consideration the following:
- Initial Startup Costs
- Business permit/license and/or incorporation fees
- If it’s a brick and mortar store, the cost to rent or build including security deposits
- If it’s an online store, the cost for website development, computer software, office equipment and hardware
- Marketing materials such as business cards, stationary, signage, etc.
- Six months of ongoing monthly costs
- Projected Ongoing Monthly Costs
- Salaries/wages for you and/or your employees
- Business insurance
- Utilities, rent or mortgage
- Ongoing services such as accounting, public relations, hosting/maintenance
- Supplies and inventory
- Taxes
If this process seems a little daunting, don’t worry, we’re here to help. Thompson Greenspon offers a wide array of business formation advisory services to help you determine the amount of capital you will need in your specific situation. Feel free to contact us today for a free consultation.
When trying to figure out how much borrowing power you have there are three things you need to take into consideration. What is your annual net income? What are your annual expenses? What’s the reason for borrowing? You should consider what kind of business you operate as this can vary with the type and size of your business. It is also important to think about your budget to borrow after you think you have figured out your borrowing power, but also take into consideration the possible progression for your business. When looking at something like your borrowing power, it always helps to consult with an expert on the topic before you borrow. Figuring out your borrowing power is tough, and even once you have done so, proceeding from there is also difficult. If you would like help with this process, feel free to contact us.
Bank financing involves creating an appropriate business proposal to demonstrate to the banking community your individual business needs and financial situation. Thompson Greenspon can assist you in preparing your proposal with the following services: Executive Summary, Pro-forma Cash Budget and Financial Statements, Owners Personal Financial Statements, and Representation.
Optimal billing and collection procedures are going to vary based on the type of business you operate. No matter the type of business you operate, you will want to ensure timely payments. Some businesses may be able to do collection at time of service, while others may need to issue invoices with due dates attached to them. If you are unable to do collection at time of service, there are a few ways you can help ensure timely collections. Offering payment options or payment plans, such as an auto-payment each month, can be helpful in order to make payment as convenient and easy as possible for your clients. Whatever type of business you may have, feel free to contact us with more help on billing and collection procedures.
A federal employer identification number (FEIN) is a unique nine digit number assigned by the IRS that is used to identify a business entity operating in the United States.
There are several methods you can use to apply for an FEIN. You can apply online through the IRS website, by fax, by mail, or by telephone (if you are an international applicant). Many taxpayers prefer the online application method, as the information is validated during the online application and the FEIN is issued immediately, while the fax, mail, and telephone applications require the taxpayer to complete Form SS-4. All of the forms and instructions to apply for an FEIN can be found on the IRS website at https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers
As a business owner, you should be aware of many types of insurance including, but not limited to, professional liability, property, workers compensation, keyman, health, life, disability, buy/sell, etc. We can assist you in determining the right types of insurance for you business.
A strategic business plan is a written document that outlines how the objectives of a company comports with the needs of the market place. A strategic business plan defines goals, objectives, and targets for a company and outlines its resources will be allocated in order to achieve them. It will pair the company’s objectives with the needs of the market place. A strategic plan is long-term in nature and focuses on where you want the business to be at some future date.
A strategic business plan is necessary to optimize market research and obtain market share for your business. The plan establishes a focus for your business in the marketplace and helps you focus your business efforts in that area.
A strategic business plan is essential for communicating your vision to investors, managers and employees, and it illustrates the process by which that vision will be made real. Some of the situations that would require a strategic business plan include:
- Responding to the launch of a new product from a competitor
- A technological upgrade on your production floor
- Handling the requests of a new customer base
Running a Small Business
A business may be subject to various state and local taxes depending on the jurisdictions in which it operates. Although this list is not exhaustive, below are common types of taxes for which a business may be liable.
- Income taxes: income taxes are calculated based on a business’s net income.
- Franchise taxes: some jurisdictions have a franchise tax rather than an income tax. A franchise tax is calculated based on something other than net income, such as gross receipts or capital.
- Personal property and real property taxes: these taxes are based on the value of a business’s personal or real property, and are generally owed to the jurisdiction in which the property is located.
- Business, professional, and occupational license (BPOL) taxes: these taxes are often based on a business’s gross receipts or gross purchases. The tax rate can vary depending on your business or profession and taxing jurisdiction.
- Payroll taxes: payroll taxes are based on the amount of wages that a business pays to its employees. They include taxes owed by the employer and taxes withheld by the employer on behalf of its employees. Both quarterly and annual filings are often required.
- Sales and use tax: Sales taxes are collected by businesses on sales of tangible personal property and, depending on the jurisdiction, on sales of certain services. Use tax is charged to businesses that use tangible personal property purchased from sellers that were not required to collect sales tax by the jurisdiction where the business is located. The returns may be due monthly, quarterly, and/or annually. If you are an online retailer. this can be a especially tricky area.
State and local tax laws are not uniform amongst different jurisdictions, and the required method of filing can vary.
As an employer, you have a couple of options when preparing your payroll tax files. You can prepare them yourself, use a payroll service, or simply hire an accountant to do it for you. If you are interested in doing the payroll tax files yourself, there are some steps you need to take to ensure you are completely and accurately filing your payroll taxes. When you pay your employees, you must calculate and withhold income taxes from their payroll. In order to do this you must determine which federal and state taxes to withhold from your employees’ pay. There is an IRS Withholding Calculator, which can be found online, which can help you to calculate these numbers. When it is time to pay taxes, typically monthly, you must submit your federal, state, and local tax deposits. The final thing you must do is file the tax forms, typically quarterly, and your employees W-2s, which is done at the end of the year. If you have any questions about these procedures, need an expanded explanation, or need help with anything in this process, feel free to contact us.
Employment tax laws are very complex and vary between jurisdictions. Whether you are starting a new business, expanding into a new jurisdiction, or just hiring new employees, you will need to ensure that you are complying with all applicable laws. Although this list is not exhaustive, here are some of the things that you should consider:
- Whether you qualify as an employer, and are liable for payroll taxes
- Whether your workers are employees or independent contractors
- Whether your employee’s services are exempt from employment taxes
- The types of compensation and benefits that are exempt from taxation and subject to ERISA laws
- The types of employment taxes and tax rates applicable for each jurisdiction where you operate or where your employees live
- The quarterly and annual filings you need to prepare for each jurisdiction where you operate or where your employees live
- The amount of any penalties for noncompliance
Yes, the value of these gifts cards should be included in the employee's gross wages. We can assist you with a "gross-up" calculation to factor in the payroll taxes. Gifts to subcontractors are only deductible up to $25 per individual. Anything above that amount is nondeductible.
We work with many small business owners who have questions and are looking for tax advice related to their businesses. We work with both new and established businesses and because small businesses and their owners are very closely integrated, we consider the owner's tax situation in conjunction with the business. Common questions that we deal with include
- What kind of entity to make the business - sole proprietor, limited liability company, partnership, corporation, S corporation, etc.?
- What type of accounting software do I need?
- What expenses are tax-deductible?
- Can I use my home for my office and my car for my business?
- What types of registrations and taxes does my business have to file (county/city business license, gross receipts/revenue and property taxes; IRS income taxes, payroll and contractor payments; state(s) registration to do business, federal and state income taxes, payroll taxes; unemployment insurance, etc.?
Every small business is unique and we would be happy to discuss your small business tax situation and needs so that you can devote more of your time to running your business. Please give us a call.
Whether you are a small business owner with employees or an individual with a household employee such as a nanny or housekeeper, you may have payroll tax return registration, payment, and filing requirements. These may include IRS payroll tax (FICA and Medicare) and withholding filings and payment, state withholdings, and IRS and state unemployment tax requirements.
The requirements may depend on what type of business you are in, what type of employee you have, how much you pay them, and what state they work in. The penalties for failure to remit payroll taxes and filings timely may be severe, so please contact us to discuss your particular situation so that we may assist you with your payroll tax returns.
If your home is your principal place of business (PPB), you may deduct the costs of mileage to a client as a business expense. We can help you determine if your home qualifies as a PPB. We can also recommend how you can satisfy the substantiation requirements for your mileage. If the client sets aside space for you to work, then that would be considered your PPB. As your PPB, traveling to that destination would be considered commuting, and therefore not deductible.
Our specialists are all seasoned professionals who have years of experience working within your industry. Reach out to us today to schedule a consultation.
