Accounting Gone Global with International Accounting

Posted by in Accounting

If asked, how long would it take a person to name ten multinational companies? These days, it wouldn’t take as long as it used to. The world is becoming more interconnected and accounting is adapting to that. Responsible for more than just balancing spreadsheets and creating quarterly reports, these days, accountants are also expected to have experience or training in international accounting.

With its own rules, regulations, and standards international accounting is growing by leaps and bounds, as are its practitioners. In sectors as varied as oil and gas, banking, investments, entertainment, transportation, and retail, having a strong international footing is essential and employers are recognizing that.

In a recent article, The Journal of Accountancy cited a poll claiming that “almost seven in 10 (69%) of more than 2,100 CFOs in large U.S. metropolitan areas said international experience will be at least somewhat necessary for accounting and finance staff five years from now…” Even small firms are not immune to the need for international accounting knowledge, “Small companies and companies that don’t have international operations need accountants familiar with international tax laws and regulations to determine their impact on business partners, vendors, and suppliers, McDonald said.” Without this knowledge, their ability to be competitive can be impacted.

With the move towards globalization speeding up, the need for international accounting practitioners will increase in step. Having personnel who specialize in this field is as essential to multinational firms as is having business managers who have training in international supply chain management or a legal staff who specialize in international law. As the article notes, to meet the demand worldwide for a higher standard of accountancy education “The AICPA and the Chartered Institute of Management Accountants (CIMA) joined forces to create the Chartered Global Management Accountant (CGMA) designation”.

This move along with others illustrates the need for accounting professionals and firms to recognize that having international accounting training and experience is the way of the future. And some firms have. In order to find work as an international accountant, candidates must often have to possess a masters in accounting, have spent part of their education abroad, be multi-lingual with a broad understanding of various nations’ financial practices, and have at least 2-5 years’ experience. Along with competitive campus recruiting drives and lucrative internships, some of the best accounting firms when searching for new talent, offer extensive on the job training programs and promote strong mentor relationships between new hires and more experienced staff. They also reinvest in their current talent, assisting them with ongoing education and encouraging lateral movement within the company, so that employees gain a wide breadth of experience and training.

International accounting is a profession that is on the rise. In demand everywhere, highly qualified professionals could opt to work abroad or at home, in large multinational corporations or in small boutique accounting firms. The strongest firms are those that will be able to obtain, train, and maintain international accounting professionals. Even companies that do business strictly within the nation’s borders should look at expanding their knowledge in order to cover their bases. The world is growing smaller, and accountancy must adapt to that.

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Why it is Imperative to Use a Small Business Accounting Firm

Posted by in Accounting

The main goal of a company is to financially profit. This is done through a delicate balance of income and expenses. Many companies will begin as a small operation with the owner being the buyer, seller, shipper, receiver, human resource contact and accountant. This is believed to be the most beneficial method. The common belief is that if you do not spend money on hiring personnel, you are saving it. However, this misconception is very misleading. Small business accounting is needed in order to properly expand and grow. While this can be attempted by the owner, it is not the recommended choice for those that want to see a larger return for their investment.

Time is Money

When you are running a one person show, you can only physically and mentally contribute a portion of yourself to each task. You need to multitask at all times if you are to keep your business active and productive. When it comes to accounting, this makes a very noticeable difference. Small business accounting will consist of payroll, tax reporting, bill payments, invoice collections and budgeting. Of course, for each type of business, there will be much more added to that list. When the owner is trying to manage all aspects of accounting, along with every other role of the company, it is very easy for things to get missed. It takes dedicated time to be able to properly work on the accounting side of a company. While you may believe you are money by doing it yourself, you are not. Self-managed accounting in a company will result with loss in other areas. The time spent on accounting will take away from the time needed to generate revenue. If accounting is done in a hurry, money is lost through incorrect tax calculations, payroll, and missed bill payment fines and interest. Hiring an accounting firm that specializes in small businesses will save you both time and money. Time is freed up for you to focus on the rest of your company and money is saved by properly keeping on top of your finances.

Accountants are trained to see the bottom line

While a business owner will know every angle of their company, it is the trained accountant that will know every angle of finances. Cash flow analysis and company forecasting is critical to ensure that your business is moving in the right direction. An outside view of the details of your company is the best way to have an accurate report. It is easy to miss details when you own, manage and run a company. Small business accounting firms can see the larger picture and show you where your company is heading financially. They can accurately show you ways to save money. Small business accounting firms will be able to forecast your financial future and give you a much better warning of decisions to make that will affect your company’s future.

Small business accounting firms are imperative for success. If you own a business, do not overlook the importance of this outside help. You will find that the money spent in hiring a firm will be returned many times over from the income saved. You will find that hiring somebody else to manage the financial side of your company will save you countless valuable hours that you can better dedicate to your business. When it comes to having a profitable business, hiring a small business accounting firm is one of the best moves that you can make.

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R&D Credit- Game Changer for Manufacturers

Posted by in Everything Else

The R&D credit is a boon for companies involved in research. But do you know this big tax break is also intended to boost domestic manufacturing? Many manufacturers have an outdated understanding of the R&D tax credit laws and the financial incentive is not limited to white collar research only.

Despite the name Research and Development, the tax incentive extends beyond basic research to include applied research. The tax credit is also available for manufacturers who want to improve their manufacturing process to make it efficient and environmentally friendly. So, you may wonder what manufacturing activities are covered under the new R&D credit scheme. Here is the list.

Qualifying Manufacturing Activities

Listed are examples of manufacturing activities that are considered as qualifying research activities.

· Improving product quality

· Developing product design using CAD

· Optimizing manufacturing processes

· Development of improved/2nd generation products

· Designing of manufacturing equipment

· Designing cost-effective operational processes

· Alternative material testing process alternatives

· Designing, building and testing prototypes

· Integrating new materials to improve product quality and performance

· Increasing production capacities and manufacturing capacities

· Meeting compliance with changing emission regulations

If you still find the research activities confusing, try answering the questions below.

· Does your company resolve technical challenges through innovative processes and use of products?

· Is your company involved in activities related to process design and development?

· Is your company involved in using innovative materials to create energy-efficient and reliable products and processes?

If the answer to any question is a Yes, it means your company is eligible to receive R&D credit. To get a better understanding of qualified research activities, you need to think in terms of formulas, testing out new building materials, processes, software, and design of any new project involving electrical or mechanical systems.

The information given above makes it quite clear when it comes to determining the eligibility of research activity for R&D credit. Now let’s see how it is calculated.

R&D Calculations

The R&D credit is calculated in any one of the following two ways-

Regular Credit:

Older companies can claim higher tax credit by comparing current year’s research expenses with a base amount that is an average of research expenses incurred from 1984-1988.

Alternative Simple Credit:

Other companies need only three years of prior data to calculate the base amount. While the Alternative Simple credit has lower credit rate, it can still help companies to reclaim a good amount through an R&D tax credit.

When Can Manufacturing Companies Apply for Credits?

Applying for R&D tax credits depends on your company’s tax filing deadline. However, the R&D tax credits can be carried forward to a period of 20 years. The extension of the tax credits and the carry forward condition changes with every State.

Expansion of Benefits

The PATH legislation introduced by Congress in 2015 made the R&D credits permanent. The tax incentive scheme was extended to startups and small businesses which were not eligible earlier as they paid Alternative Minimum tax.

Not Just for the Big Companies

The new changes introduced in the R&D credit laws enable the small and medium businesses involved in manufacturing on a small scale to get the benefits like the big manufacturers. The new provision enables companies with $50 million or less in gross receipts to apply for a tax credit under AMT.

Under the new provision, Qualified small businesses can use all of the year credit, use part-credit or carry the unused tax credits forward against payroll tax (http://www.wikihow.com/Pay-Payroll-Taxes).

R&D Credit – A Tax Savings Tool for All Manufacturers

It is not only the primary manufacturer who can claim tax savings. Even secondary manufacturers who make products for OEM can claim R&D credits.

For example, if a big car manufacturer has given a small manufacturing company a contract to develop parts and prototype based on its design, the small manufacturing company can also claim R&D tax credits as it plays a big role in quality, functionality, and reliability of the parts that will be used in the final assembly of a car.

The R&D tax credit is a game changer for manufacturers as it allows them to claim a part of funds spent on research activities and make the bottom line stronger. Since the eligibility requirements are clearly defined, all they need to do is identify and document research activities to claim R&D credit.

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All You Need to Know About International Accounting

Posted by in Accounting

As a business owner, you know that you must be selective in choosing your accountant. Your accountant will be instrumental in making sure you are following any financial regulation or legislation that is relevant to you, as well as helping you to grow your wealth by helping you with tax savings. For many business owners, their accountants also play somewhat of a financial advising role. One of the areas that an accountant might be able to help you with is structuring your business. Often this means deciding if you should be dealing with holding companies and investments, both of which might end up having an international aspect. If your accountant is advising that your company invest internationally or should start international holding companies, make sure that your accountant is well versed in international accounting. Breaking international tax law can have a very serious impact on your business and on your reputation as a business owner.

Accounting laws vary from one country to the next. Even within the same country, there might be different laws and regulations for accounting practices in different regions, states, or provinces. A good accountant will know that international accounting does not necessarily follow the same conventions as domestic accounting, and will make sure they don’t venture into international accounting territory without first looking into local legislation. Similarly, a good accountant will make sure that any accounting practices they engage in through your overseas accounts will not violate any domestic accounting laws. Just because a practice is legal in another country, it doesn’t mean that involving yourself in it from home is also legal or advisable. Even of an accounting practice is legal, it still might be looked down upon by your clients and peers, so be sure that your accountant goes through every possible scenario with you.

So how do you know if your accountant can be trusted with international accounting practices? There are different ways. Some accountants might have special certifications or designations allowing them to practice in other countries, or showing that they are trained in the accounting laws of other countries. You can also ask to speak to existing clients as references. Be sure to do a little research to ensure that your accountant has a good reputation when it comes to international accounting.

Seeking business and investment ventures in other countries can help you to grow your wealth, but only if you do it safely and legally. By ensuring that your accountant has a solid grasp on international accounting, you will be protecting your business and your reputation.

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A look at Specialty Accounting in the 21st Century

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Specialty Accounting: Non-Profit, Entertainment, and International Tax

With the globalized economy, booming tech centres and entertainment industries, international and regional non-governmental and non-profit agencies, it is clear that accounting in the 21st century needs to be able to meet the needs of this rapidly evolving and complicated 21st century life. Fortunately, over the last half-century we have seen interesting developments in the sphere of specialty accounting firms. Here is a look at a few different kinds of specialty accounting that are experiencing growing success today.

Non-Profit Organizations and Agencies

A certified accountant who specializes in non-profit accounting is able to ensure that non-profit organizations are able to qualify and comply with the standards that are required for an entity to qualify in the non-profit sector. This is becoming increasingly difficult as standards of operation change, and government subsidy is reallocated. A non-profit accountant ensures that the organization is up-to-date on specialized form and financial statements such as Statements of Financial Position and Statement of Functional Expenses, and ensures that the necessary paper work and financial statements are filed correctly and annually. Timely and accurate accounting is essential for those in the non-profit sector as it is vitally important in order to receive recognition of non-profit status and subsequently, qualify for non-profit tax exemptions. Non-profit accounting firms can help to ensure this, while also staying current with pertinent legal or legislative changes that affect the non-profit sector.

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Entertainment

Who ever said accounting can’t be glamorous? Those who work in Entertainment accounting may have the opportunity to work with high net-worth clients who are primarily involved in film, television, music, or publishing industries. Though, it is not only celebrities that can benefit from the services of entertainment accounting firms; production companies value the expertise that an accountant specializing in entertainment can offer as well as freelance artists and production workers. Entertainment accountants must be proficient in understanding tax exemptions and pushing for deductibles while still working within tax law.

International Accounting

International accounting and international tax accounting firms are becoming ever more important as we continue to expand and integrate within the global market economy. International accountants and international accounting firms have many different roles to play; often times they oversee large accounts for multinational corporations. Some of their responsibilities include ensuring accurate currency exchange between countries, reaching fair value assessments, and providing international insurance contract agreements and financial reporting. It is very important for these accountants who specialize in international accounting to be certified, and members of The International Association of International Accountants (AIA) or other reputable international accounting association. They must also be up-to-date with various international accounting agencies and institutions such as The International Accounting Standards Committee (IASC), The International Accounting Standards Board (IASB), and The International Financial Reporting Standards Foundation (IFRS).

Certification Above All

As always, it is important to remember that those who are practising or have the intention of pursuing work in accounting at a professional level are certified and accredited accountants who have completed finance/ auditing education at a respected institution. When it comes to accountants who specialize in any given field including entertainment, international accounting, or non-profit – experience is the key. Hiring an accountant with a speciality accounting firm can be a very valuable business decision as they are trained to be better able to represent the specific needs of a given business or entity within their area of expertise.

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Accounting for Law Firms and Getting Trust Accounts in Order

Posted by in Accounting

When it comes to accounting for law firms, one of the hardest accounting tasks to perform is correctly processing client trust accounts. Since a client trust account is a special bank account wherein law firms hold monies for clients to cover expense costs, it has to be separated from all other accounts of the law firm. As well, the funds have to be identified clearly. Every state has their own guidelines to govern the reporting and handling of a law firm’s trust funds. However, in any state attorney’s may not borrow or use trust fund monies to operate their law firm.

SmallBusinessAccountingOne of the obvious methods to account for and reconcile monies held within a trust account is to buy accounting software. QuickBooks is one of the most popular because it is not overly expensive. As well it can be used to manage the other accounting that law firms have to do such as daily transactions necessary to run the firm, including billing. However, an attorney using accounting software as a way to do their accounting for their trust account rather than hiring an experienced accounting firm must be diligent when it comes to using the software. They have to ensure that all financial transactions are properly recorded because there are serious consequences for mishandling trust fund monies.  As well, they need to be careful with regard to who they hire to do their law firm’s bookkeeping.

One common issue related to accounting for law firms is the misuse of trust funds to pay for personal or business expenses, including payroll and taxes.  Rather, fees that are earned should be taken from the trust fund monies and transferred to a separate law firm account, and then the money can be used to pay the attorney’s operating expenses, or be taken personally. Additionally, attorneys should never pay a client with respect to a settlement payment prior to the check clearing. If they do, the advance could end up coming out of funds held in trust for a different client.

Commingling Funds

The most important principle of accounting for law firms is the prohibition against commingling funds. This happens when an attorney combines their own monies with their client’s trust monies.  Attorneys can never deposit their own money into their trust account, except when they have to pay their bank fees. As well, the prohibition against commingling requires that timely disbursements be made from an attorney’s trust account.  This means that attorneys must withdraw their fees as quickly as possible after they are earned.  They should never leave the funds sitting in the trust account.  Law firm accounting also requires that settlement proceeds be paid to the client out of the trust account as soon as the check clears.

Highly experienced firms that deal with trust accounting for law firms are always your best bet. If you are an attorney and think there may be any type of problem with your trust account, make sure that you consult a professional. The last thing you want is to be is wrongly accused of commingling funds.

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Top Six Things to Consider When Hiring an Accounting Firm for Your Business

Posted by in Accounting

As an entrepreneur, your company is your livelihood. Every day, you work hard to make sure it runs successfully and that you are meeting your business targets. For this and many other reasons, you want to ensure your company’s finances are handled by a professional. Every year legislators twist and tweak tax laws, leaving the average business owner scratching their head when faced with financial decisions. Accounting firms stay abreast of the new tax laws, offer financial advice to businesses, and assist them with the development of budgets and other financial goals. Whether you need someone to handle weekly payroll or you just want reliable tax advice, a qualified accounting firm can help you handle your businesses finances with accuracy and ease.

So where do you begin when looking searching through the many accounting firms in your area? Here are some tips to help you hit the ground running:

Your circle: First and foremost, talk to family, friends or business peers to find out what accounting firm they use and if they would recommend them to others.

Your business: Most accounting firms specialize in a few business areas in order to offer clients better service.  Consider the industry you are in and make sure you go with an accounting firm that understands your company’s needs and unique financial goals.

Accounting_Firms

Fees: Billing varies greatly between accounting firms. Some charge a set rate for each financial task they perform, while others charge by the minute: raising your bill every time you call them.  It is important to understand how they conduct their billing system before they start working for you, so you are not surprised with a massive invoice at the end of the month.

What you need: Think about the level of service you require before you start interviewing potential accounting firms. Some can offer detailed advice on how to keep financial records, while other accounting firms compile the necessary financial reports but offer little feedback. The amount of advice you need depends on your own financial knowledge and experience. Additionally, if you need complete bookkeeping services, look for a full-service accounting firm that employs bookkeepers. An accounting firm that does not employ bookkeepers will charge more if a Certified Public Accountant (CPA) handles routine bookkeeping tasks.

Availability: Do you require an accounting firm for tax-filing purposes or day-to-day business needs? Some accounting firms shut their doors in the spring and only re-open for the following tax season. If something comes up, you want to be able to rely on someone who can help … at any time of the year!

IRS support: When the Internal Revenue Service (IRS) calls, it is reassuring to know that your accounting firm will be right by your side. IRS audits are a way of life for some businesses, but facing an audit is undoubtedly a stressful situation. Some accounting firms offer their own offices for audit purposes and provide an accountant to represent your interests.

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