How Do I Interpret Balance Sheets

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Balance Sheet

A balance sheet – which is commonly conceived as a “statement of financial position” – reveals the basic financial condition of a corporate entity. Balance sheets do this by showing a company’s assets, liabilities and owners’ equity (net worth). If you be a shareholder in a company, it is vitally important that you to know how to read a balance sheet and be able to analyze it accurately.

Below are the critical components of interpreting balance sheets:

Balance Sheet Equation

The main formula behind a balance sheet is: assets = liabilities + (shareholder) equity

Know the Current Assets

Current assets are known to have a life span of one year or less, meaning they can be converted easily into cash.

Know the Non-Current Assets

Non-current assets are defined as the assets which are not turned into cash just as easily; this often means that these assets are generally expected to be turned into cash value within a year.

Learn the Different Liabilities

On the flip side of the balance sheet, there are liabilities. These are generally financial obligations which a company owes to outside parties.

Learn about Shareholders’ Equity

Shareholders equity is the amount of money generally invested into a business.

Analyze with Ratios

Financial ratio analysis use formulas to help you gain insight into the company and its operations.

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Should You Do Your Own Taxes or Hire a CPA?

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Hiring a CPA

One of the biggest questions which plagues many individuals during tax season is the following: should I do my own taxes or hire a CPA? It’s a question that many professionals still don’t know how to adequately answer. In our opinion? You should hire a CPA, unless you’re a CPA yourself and in that case, go for it!

Hiring a CPA can help you in ways which you would never be able to help yourself. CPAs can help you as you navigate through the tax filing process and can also make sure you receive the biggest refund possible.

Here are just a few reasons that should let you know that you need to hire a CPA

  • Do you own a business?
  • Are you unsure how you should file your taxes?
  • Did you recently get married?
  • Did you recently have children?
  • Did you recently experience any other life changing event?

If you answered “yes” to any of these questions, it is an indication that you should hire a CPA to do your taxes. The more unique your situation is, the more likely it is that you will need to hire an accountant to avoid making mistakes. While it may seem like an inconvenience to hire an accountant during tax season, hiring a CPA can actually save you money in the long run.

What other reasons have helped you determine if you need to hire a CPA or do your own taxes? Leave your comments below and let us know about your experience.

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Four Risky Accounting Mistakes Which Could Harm Your Business

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Risky Accounting Mistakes

Accounting mistakes can play a large role in slowing down the growth of your small business. Unfortunately, mistakes are all too common, especially for start-up businesses. Here are four accounting mistakes which can cause substantial harm to your business:

Keeping Track of Your Receivables

As much as everyone enjoys getting paid, a surprisingly large number of people do a horrible job of keeping track of their receivables. Because of this, many people fail to track how much money they have coming in each year.

Discarding Expense Receipts

One of the biggest mistakes you can make as a business owner is discarding your expense receipts. These may not seem important immediately, but you will need these expense receipts when it’s time to file your taxes.

Refusing to Record Cash Transactions

We all love to receive cash as business owners; however, receiving cash transactions can get tricky because cash can be hard to track. This is where an accountant can come in. They have the ability to help businesses record their cash transactions.

Trying to DIY

There are many educational resources available which can teach people how to act as their own accountant; however, trying to do it on your own could be detrimental to your business if you don’t do it correctly. That’s why it’s always important for you to hire a professional if you have any bit of doubt as to your accounting abilities.

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How an Accountant Can Help Launch Your Start-Up Company

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Accounting Steps to Complete

The nuts and bolts have been secured, you have done all your paperwork, and now you are ready to officially launch your start-up company. Although it is an exciting time, there are still several accounting steps that you need to implement before you’re fully prepared to launch your start-up correctly. Here are four steps that your accountant can help you complete as you attempt to get your start-up company up and running:

Opening a Bank Account

Once your business has been legally registered, one of the first things you are going to want to do is open up a business bank account. Having a bank account that is separate from your personal expenses will not only make it easier for you to keep your eyes on your money but it will make it much easier for you when tax season arrives.

Tracking Your Expenses

Whether your business has been around for 6 days or 6 months, it’s important that you work with your accountant to track your expenses from day one. This includes tracking those days you go out to lunch with a current or potential business partner, any conferences or professional development workshops you attend and a host of other things. Keeping track of all of these expenses will help you not only see where you’re sending your money but it will again help you during tax season when you’re trying to figure out what can or cannot be written off.

Setting Up a Payroll System

As with any business, whether large or small, it’s important that you establish a payroll system simply because you have no real idea when your business will experience sudden substantial growth that will lead you to have to hire new talent. Setting up a payroll system will give you the ability to distinguish between employees, contractors and freelancers.

Developing a Sales Tax Procedure

Believe it or not, it’s actually easier to sell internationally to customers than it is to sell domestically simply because in many cases you don’t always have to charge sales taxes when selling out of the country. Regardless, you’ll want to make sure you develop a sales tax procedure to help you have more structure when you’re ready to begin selling.

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Five Daily Tasks an Accountant Can Do For Your Business

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Daily Tasks of Accountants

Just like any other person who works inside of your office, accountants tend to have a set number of tasks that they must complete every day. These tasks could include things which are very tedious, or things which are more interesting. Whatever their list of tasks may be, accountants generally have a fixed number of things which they have to get done on a daily basis.

Many accountants often report that many of their friends, families and even colleagues ask what they do all day. In an effort to combat any false ideas about what accountants do all day, here is a list of five accounting tasks which an accountant can do for your business on a daily basis:

Accounts Payable

Being able to keep track of the money your company owes can be challenging, and if you’re not versed in accounts payable your accountant can do this for you and practically do it on auto pilot.

Accounts Receivable

Having up to date accounts receivable will greatly help you monitor your cash flow. Keeping a handle on the money that’s coming in (and out) can be really stressful, and so to eliminate that stress your accountant can make sure all the money that you are owed not only comes in on time but that you don’t have to play the role of constantly chasing money your clients owe you.

Payroll

Tired of having to worry about how to pay your employees and when to pay them to ensure they get their money on time? Hire an accountant. Payroll is essential to your company, especially if you have employees, and everyone knows that happy employees also mean a happy company. Get your payroll in order and hire an accountant.

Inventory

Do you know what items you have in your office? Do you know how much money you spend on these items? When they’ve been outdated and when they no longer have value? That’s where an accountant comes in. They step in and make sure that you are actively managing questions and reports about the goods your company has on hand.

Cash Management

Do you have a cash flow management process for your business? Cash management is a critical financial responsibility for your business, and it should never be taken lightly. Hiring an accountant can be life saving to your cash management and flow.

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What Role Do Accountants Play in a Company?

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The Role of an Accountant

Many businesses owners realize that hiring an accountant will add value to their business. They understand that accountants bring a valuable skill set to a company and have the potential to keep a company in good financial condition. However, not every business owner understands this; many employers have no sense of what value an accountant can add or even what role an accountant plays in a company.

The primary responsibility of an accountant is to help the company prepare its financial records. He or she is also responsible for ensuring that all records are not only accurate but also that taxes are paid on time. While this could be viewed as a wide scope of what accountants do, their jobs can actually include so much more than what meets the eye.

Here are just a few other roles (according to allbusinessschools.com) which an accountant can play within your company:

  • Examine statements to ensure accuracy
  • Ensure that statements and records comply with laws and regulations
  • Compute taxes owed, prepare tax returns, and guarantee prompt payment
  • Inspect account books and accounting systems to keep up to date
  • Organize and maintain financial records
  • Improve businesses efficiency where money is concerned
  • Make best-practices recommendations to management
  • Suggest ways to reduce costs, enhance revenues and improve profits
  • Provide auditing services for businesses and individuals

What role does your accountant play in your business? We want to hear all about it. Leave your comments below and let us know what we’ve missed.

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Three Reasons Why Your Start Up Needs to Hire an Accountant

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Why Your Start-Up Needs an Accountant

Start-up companies are beginning to revolutionize how we view the work world. Every day, thousands of new ideas are being brought about by start-up companies, and many of these ideas will undoubtedly transform how we live our lives. But even though plenty of start-ups manage to get set up, a high percentage of these start-ups quickly fold due to lack of funding or horrible financial management.

Most start-up founders create their companies simply because they have a great idea, but sadly many founders lack the skills necessary to be able to adequately run a business. In turn, this leads many businesses to amass debt and financial distress before they even have the opportunity to get their companies off of the ground.

If you’re a start-up in the making, or a company which has been in business for several years, you should be aware that there are resources available which can help you manage your company. Before hiring anyone else, you should take the steps necessary to hire a capable and qualified accountant. Why is this? Because a good accountant can help you succeed in some of the most vital areas of your business. Don’t believe us? Here are three reasons why your start-up needs to hire an accountant.

To Help Your Business Make Money

Most people refuse to hire an accountant simply because they feel like they don’t have enough money to spend on such an expensive employee; however, as the old saying goes: it takes money to make money. If you don’t hire an accountant in your early days (especially if you don’t have good financial management) it could cost you much more money in the long run.  Hiring an accountant can actually be one of the best investments you’ll ever make simply because they can help you see first-hand how you spend money, how you save money and how you manage the little (or a lot) that you have.

To Help You Hire More Employees

Hiring new employees is an exciting time for all new start-ups. In many cases, hiring new employees signifies that your company is growing, and growth is literally something that most founders and co-founders dream of night and day. If you’re ready to hire new employees, believe it or not, an accountant can help. An accountant will be able to look at your financial records and not only let you know when you have the money to hire more employees but they can also help you determine how much money you can spend on your new employees’ salaries.

To Help You Alleviate Stress

One of the top concerns many founders have is stress. This stress often comes because founders feel obligated to manage ten million hats at one time.  Hiring an accountant will help you remove one of the most pivotal stresses: finances. Again, if you’re not equipped to handle your finances, why stress yourself out over it?

Are you a start up founder who struggles with why you should hire an accountant? We want to hear about it. Leave your comments below.

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Three Ways a CPA Can Help You Retain Employees

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Retaining Employees

Companies hire CPAs because they want to maximize their financial potential. That is the primary, foundational reason for why companies hire CPAs. But though this is definitely the case, there are other reasons why companies look to hire CPAs alongside this primary reason. Hiring a CPA can help you retain employees and even increase overall employee satisfaction.

Here are three ways hiring a CPA can help you retain employees:

Your CPA Can Help You Plan For Employee Bonuses

One of the many reasons why many companies are unable to offer bonuses for their employees is simply because they don’t know how to manage their budgets throughout the year. Hiring a CPA will help you cut your budget when necessary while also making sure enough money is saved throughout the year.

CPAs Can Teach Your Employees Financial Literacy

The average employee comes into the workplace with absolutely no financial literacy. Because of this fact, many employees find themselves burned out due to low wages and lack of financial means. Because your CPA will be very financially literate, your CPA has the power to create seminars and opportunities to teach employees how to effectively spend money.

CPAs Can Help You Hire New Employees

Are you ready to hire new employees but don’t have enough money? That’s where a CPA comes in. Your CPA can help you designate money in order to prepare for new hires.

What ways has your CPA helped you retain employees. Leave your comments below.

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How Your CPA Can Maximize Your Refund

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Refund Check

Hiring a CPA can be a transformational experience for any business, whether large or small. It can be particularly significant if you be accustomed to owing thousands of dollars each year. A good CPA can help you throughout the year and ensure that you are able to maximize your refund.

Here are a few ways your CPA can assist you with increasing the size of your refund check:

Record Keeping

Any good CPA knows the importance of record keeping and how keeping records not only solidifies your business but creates a paper trail which can be used at the end of the year.

Tracking Mileage

In many situations, miles can be tracked relatively easy via apps. At the end of the year, these miles can be deducted, and can ultimately save your company lots of money.

Health Insurance

Do you find health insurance to be an expensive part of your business? No worries. That expensive health insurance can be the secret ingredient that helps you maximize your refund at the end of the year.

Paying Quarterly Taxes

Most people hate paying quarterly taxes, but paying a large sum at the end of the year is much more stressful. Paying quarterly taxes can save you from depleting your entire business account.

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Four Reasons Why Your Business Desperately Needs a CPA

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Business Growth

Let’s face it. Many businesses know they need a CPA before they ever hire one; however, for whatever reason, they don’t hire right away. There could be several motivations, including: price, timing, or lack of information about who to hire. Despite these possibly valid reasons for not hiring a CPA, here are four reasons which should give you cause to seriously consider hiring a CPA immediately. CPAs tend to confer considerable value upon businesses, and so regardless of whatever reservations you may have, hiring a CPA will likely pay dividends in the long run.

Reason #1: You Are Trying to Grow Financially

If you are looking to obtain financial growth, you can’t do it all by yourself. While most business owners aspire to obtain growth on their own, it can’t be done without the help of your CPA.

Reason #2: You Are Mishandling Money

Anytime you are spending more than you are making, it’s a clear indication that you are mishandling money. While it may be a given that it’s time for you to hire a CPA, not everyone is willing to accept this fact. If you’re having trouble handling money, it’s time for you to let go and put your finances in the hands of someone who can help you get to the next level financially.

Reason #3: You Aren’t Making Enough Money

If you are a business owner you need to ensure you are making enough money to keep the lights on in your office, a CPA can help you figure out new ways to not only increase capital but how to save money in the interim.

Reason #4: You Can’t Keep Up With Your Expenses

Anytime you are struggling to keep up with your expenses it is a clear indication that either you are doing something wrong or that it’s time to do something different. Hiring a CPA can help you in tracking expenses and recording them to ensure you’re not making any unnecessary purchases or incurring any unnecessary expenses.

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  • Huddleston Tax CPAs / Huddleston Tax CPAs – Burien
    Certified Public Accountants Focused on Small Business
    14900 Interurban Avenue S, Suite 271 / Tukwila, WA 98168
    206-229-7169

    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
    QuickBooks consulting, bookkeeping, payroll, offer in compromise debt relief, and business valuation services for small business.

    We serve: Tukwila, SeaTac, Renton. We have a few meeting locations. Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.