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accounting
Accounting is the formal process for recording revenues and expenses realized by your business. Sound, generally accepted accounting principals are critical to establishing accuracy and credibility for your reported financial results. By law, especially if reported by a public corporation - they must adhere to strict accounting principals and conform to legal reporting requirements.
A small business accountant who ideally is also a tax law attorney or strongly conversant in tax law will make a big difference in protecting your company from unplanned or unforeseen tax liabilities and other expenses in the future.
Accounting results are tallied by a process called bookkeeping. Bookkeeping systems record transactions that represent revenue, expenses, changes in assets, changes in liabilities, and changes in equity. They support the accounting method chosen for reporting financial results.
There are two methods of accounting - single entry and double entry.
Single entry is a simple, cash based system that recognizes transactions when cash changes hands. It is common for very small, single proprietor or simple partnerships to run their business on a cash basis using single entry recording.
Double entry accounting records 2 matching entries for every transaction that occurs. Financial reporting occurs primarily with 2 main reports… the profit and loss statement (P & L or "income statement") and the balance sheet. Most double entry transactions involve an entry to an income statement account and an offsetting entry to a balance sheet account. The asset side of the balance sheet must be equal to the liability plus equity side of the balance sheet. Variances in income and expenses represent profit or loss - and are transferred to the equity side of the balance sheet, under an account referred to as 'retained earnings' at the end of the accounting period.
Al Rasch & Associates maintain a strong presence in tax law and have certified public accountants on staff in order to insure accounting reports that are accurate, legally compliant, and represent the best balance between good business practices and sound tax planning.
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