Sukanya Banerjee

Every business, be it small or big, should have a distinct pathway to manage their finances. Usually, the big business houses have their own finance departments who look after the financial needs of the company, their projections, profit and loss and so on.

Priyanka Das

A financial audit is an objective examination and evaluation of the financial statements of an organization to make sure that the financial records are a fair and accurate representation of the transactions they claim to represent.

Jory Mirtil

Nonprofit accounting refers to the unique system of recordation and reporting that is applied to the business transactions engaged in by a nonprofit organization.

Raymond Thai is a Thaddeus Accounting Intern who strives to achieve his dreams of becoming a Certified Public Accountant(CPA). He currently attends the University Of La Verne as an accountant major and is continuing to work towards his goal of becoming an accountant.

Property tax is money collected from real estate investments from individuals who bought the property. Whether it is a house, building, apartment, or other real estate investment, property taxes are always there to balance out the economy.

Vivianna De La Torre

In this blog, I will be touching on what tax brackets are and a common misconception associated with the tax brackets. In addition, I will touch on the tax brackets for capital gains as well as what the alternative minimum tax is and its purpose.

Vivianna De La Torre

Each country has different financial reporting practices that public and private companies must follow. There are many reasons why each company has developed its own national GAAP, such as differences seen in their legal system, taxation, financing system, inflation, and political and economic ties.

Jory Mirtil

Payroll is the compensation a business must pay to its employees for a set period or on a given date. It is usually managed by the accounting or human resources department of a company. Payroll is a major expense for most businesses and is almost always deductible, meaning the expense can be deducted from gross income lowering the company's taxable income.

Charmaine Machingauta

This is the acquisition of a number of assets as a group or a lump sum in a single purchase transaction. When an investor purchases a basket of assets, it means that in a single transaction, the investor is able to buy many assets as a group at a price under their combined market values. This basket of assets may be different securities, equipment, property, or facility purchased as a group.

Jory Mirtil

Cash management is the process of collecting and managing cash flows. Cash management can be important for both individuals and companies. In business, it is a key component of a company's financial stability. For individuals, cash is also essential for financial stability while also usually considered as part of a total wealth portfolio.

Vivianna De La Torre

Key performance indicators are useful when understanding the financial position of a business to determine whether one should invest in a business and for business owners who want to keep track of the company’s performance. There are ratios to determine the liquidity, solvency, and profitability of a business. In this blog, I will go ahead and explain what these financial ratios are and how to calculate them.

Sapna Agnihotri

A special journal is used to record and post transactions of the same type. Special journals accumulate debits and credits of similar transactions and post amounts as column totals instead of individual amounts.

The writer of this blog is, Jory Mirtil. He works at Thaddeus as an Accounting Intern. He chose Thaddeus because of the work environment and the mission it stands for. He is someone who aspires to be an Accountant one day. His career path journey will involve a ton of work experience and education in accounting in order to reach his dream to become a CPA.

Forensic accounting utilizes accounting, auditing, and investigative skills to conduct an examination into the finances of an individual or business. Forensic accounting provides an accounting analysis suitable to be used in legal proceedings.

Vivianna De La Torre

With tax season around the corner many individuals and small businesses may find themselves in a position where they are paying more in taxes than needed. In order to help inform and alleviate stress, I have compiled a list of a few tips that can be done to reduce taxable income.

Vivianna De La Torre

While there are many preventive measures put in place to prevent fraud, fraud is still reoccurring. In fact, some of those preventive measures were created due to some well-known frauds. In this blog, I want to talk about some of the most well-known frauds that have occurred. I will discuss the type of fraud, the problem, as well as the solution to the Wells Fargo Bank fraud, Savings and Loans Scandal, and the Sub-Prime Mortgage Fraud.

Sapna Agnihotri

Accounting is the backbone of every business today, and it will always remain in demand as there is the need for an Accountant in every industry. Small companies may hire one specialized accountant for accounting services, whereas bigger companies may use the services of accounting companies with different finance departments for multiple branches of accounting.

Gurpeet

If you are a small business owner seeking guidance on how to perform account reconciliations, you’ve come to the right place! I will walk you through it. I will also discuss different types of reconciliations, why you should reconcile your accounts, and when reconciliations are completed.

QQ

It would be uncomfortable and intimidating for many people in the workplace when asked to do something that’s related to Microsoft Excel. From the complicated formulas to the endless columns and rows of numbers, you could easily lose a whole afternoon staring at spreadsheets.

Sapna Agnihotri

An Accounting software is a type of software that helps any business to manage the account with complete ease. This is basically an application software that keeps a check on every transaction made anytime. It includes the managing of functions such as accounts payable, accounts receivable etc. This software also manages your customer’s data. There is enough reason for anyone to choose accounting software and bring it into practice right away.

Matthew Dauer

Auditing typically refers to financial statement audits or an objective examination and evaluation of a company’s financial statements – usually performed by an external third party.

Katrina Marie Echeverria

As we moved in to globalization in the 21st Century, it became a necessity to standardize most of the common financial and managerial accounting events between business giants or enterprises across the world. This is even made convenient during any intercontinental negotiations aiming to build long-term relationship. As everything became virtually possible to connect in any country and breaking national barriers, the adoption of International Financial Reporting Standards became widely used by some countries for the dynamism of business and trade.

Sapna Agnihotri

When owning a construction business, you have to deal with a lot of moving parts, from managing contracts and scheduling projects to basic business ownership responsibilities like hiring and filing taxes.

John Velasco

For accounting firms, advisory services are becoming more prevalent as a service demanded from clients. Advising on apps can be a huge part of that. While QuickBooks offers many features in addition to the basics of tracking expenses and managing payments, small business owners rely on integrating apps that give them more tools to run their business more effectively and efficiently. While firms expect the business to utilize their apps to collect data to be categorized, figuring out the right app may be a daunting task.

Harshal Choudhari

All small businesses need a record of their financial transactions. The accounting journal entry is the first step in the financial reporting process. It is the basis for all the other financial reports prepared by the business. Each financial transaction requires a debit to one of the business's accounts and a credit to another to fully show the transaction. This is called double-entry accounting and it acts as a safeguard that allows a business's books to balance. The first step in double-entry accounting is to record journal entries for every financial transaction that your business makes on a daily basis.

Sapna Agnihotri

No one can run a business without an Accounting Department. The duty of an Accounting Department is to present a financial picture of the business. Accounting shows two basic aspects of a company: what it owns and what is owes. Assets are resources a company owns or controls. The claims on a company’s assets - what it owes - are separated into owner (equity) and nonowner (liability) claims. Together, liability and equity are the source of funds to acquire assets.

Harshal Choudhari

What is the revenue recognition principle? The revenue recognition principle says that revenue should be recorded when it has been earned, not received. The revenue recognition concept is part of accrual accounting, meaning that when you create an invoice for your customer for goods or services, the amount of that invoice is recorded as revenue at that point, and not when the money is received from the customer. This is one of the major differences between accrual basis accounting and cash basis accounting, since with cash accounting, revenue is recognized when payment is received, not when it’s earned. 

Jory Mirtil

A trial balance is a bookkeeping worksheet in which the balance of all ledgers is compiled into debit and credit account column totals that are equal. The general purpose of producing a trial balance is to ensure the entries in a company's bookkeeping system are mathematically correct. The trial balance gives a simple way to check that every transaction includes debit and credit correspondence. This gives you the fundamental basis of your balance sheet, as well as your profit and loss account which is also known as, the income statement. You can prepare your trial balance at regular intervals to make sure your books are balanced. A company prepares a trial balance periodically. For example, many organizations use trial balance accounting at the end of each reporting period.

Eliza

While we can’t avoid the costs of overhead if we want to keep a nonprofit running, we also wouldn’t want to completely avoid overhead costs either. In the following paragraphs, I will explain a bit more about what overhead means exactly, and more importantly why it is so important to Non-profit organizations.

John Velasco

Internal controls are all around is from traffic signals to parking meters. They are implemented by businesses as a means to limit the behavior of managers, employees and customers. Controls in accounting systems also assure users that the information in financial statements is reliable. In short, internal controls provide reasonable assurance that assets are safeguarded, information is accurate and conforms to generally accepted accounting principles (GAAP), and involved parties comply with the laws and regulations.

What is depreciation? Depreciation is the process of deducting the total cost of something expensive you bought for your business. But instead of doing it all in one tax year, you write off parts of it over time. When you depreciate assets, you can plan how much money is written off each year, giving you more control over your finances. How To Account For It? We debit depreciation every year from the asset account up to the estimated life of the asset. it is a non-cash transaction, so it does not directly affect the net income of the company. We pass a journal entry every year debiting the depreciated amount from the machinery account. However, we calculate the amount of depreciation at the time of purchase of the asset. We calculate it through the following method: Depreciation = total cost of asset/ estimated life of the asset Journal entry we pass for depreciation goes like this: Depreciation a/c Dr. To Machinery a/c Depreciation is charged up to the years of estimated life until the original value completely gets eliminated. What kind of assets can you depreciate? The IRS sets guidelines for what types of assets you can depreciate. It needs to meet the following criteria: • You own it • You use it in your business, or to produce income • You can determine its useful life • You expect it to last more than one year Some common examples of assets depreciated by small businesses include: • Vehicles • Real estate • Equipment • Office furniture • Computers What is a depreciation schedule? A depreciation schedule is a table that shows you how much each of your assets will be depreciated over the years. It typically includes the following information: • A description of the asset • Date of purchase • The total price you paid for the asset • Expected useful life • Depreciation method used • Salvage value–how much you can sell it for once it’s past its useful life (e.g., how much a scrapyard would pay for your old work truck) How do I calculate depreciation? You can calculate depreciation in several ways. Generally, you take the original cost of the asset and subtract the salvage value. Then divide that number by the years you expect the asset to be useful. The IRS determines useful life based on a schedule set up for various assets. You can include a specific amount on your business tax return as an expense during each year of the asset’s useful life. There are different methods you can use to calculate depreciation: • Straight-line basis • Declining balance • Double declining • Units of production • Sum-of-the-years’ digits Each method calculates depreciation expenses differently. 1. Straight-line depreciation Straight-line is one of the simplest methods of depreciation. In this method, the value of the asset is split evenly over the useful life of the asset. The value of the asset is calculated by subtracting the salvage value (scrap value) from the original cost incurred to purchase the asset. For example, if an equipment is bought for 10,000 euros, with a useful life of 10 years and a salvage value of 1,000 euros, the depreciation is computed as follows: Depreciation per year= (asset cost – salvage value) / useful life = (10,000-1,000) / 10 = 900 euros per year. Therefore, 900 euros will be written off each year for 10 years. 2. Declining balance depreciation The declining balance method of depreciation is an accelerated version of the straight-line method. Instead of an equal amount of depreciation for each year of useful life, unequal amounts depending upon the use are written off. In this method, more of the assets value is depreciated in the initial years than afterwards. This method is practiced by businesses who wish to recover maximum value upfront. For example, the equipment bought for 10,000 euros with a useful life of 10 years and salvage value of 1,000 will be depreciated by 20% each year, For first year, the depreciable amount will be (9,000*20%) = 1,800 euros For second year, the depreciable amount will be ((9,000-1,800) *20%) = 1,440 euros and so on. 3. Sum-of-the-years’ digits depreciation This method serves a similar purpose as the declining balance method. It allows to depreciate more in the initial years as compared to the later years. It is a bit more even in terms of distribution per year as compared to the declining balance method. The formula is as follows, (Remaining life in years / SYD) x (asset cost – salvage value) Where, SYD is the sum of the years of the asset’s useful life. SYD for an asset with a useful life of 4 years is equal to 11, which we get from (1 + 2 + 3 + 4). 4. Units of Production Depreciation A simple way to depreciate would be to quantify an asset’s use every year. For example, an equipment can be depreciated in proportion to the units produced. This is exactly what the units of production method of depreciation works. The formula is as follows, Depreciation: (asset cost – salvage value) / units produced in useful life. The number will vary each year, depending upon the use of the asset. How to file depreciation To claim depreciation expense on your tax return, you need to file IRS Form 4562. IRS Form 4562, Depreciation and Amortization, is used to depreciate or amortize property you’ve bought for your business. Once you understand what each part of this tax form does, you can plan ways to use it to reduce your tax burden. What do you need to fill out Form 4562 We’ll assume you’ve assembled all the records you need to file your income tax. On top of those, you’ll need the following to fill out Form 4562: • The price of the asset you’re depreciating • A receipt for the asset you’re depreciating • The date the asset was put into use (when you started using it for your business) • The total income you’re reporting for the year in question On top of that, if the asset you’re depreciating is being used for personal reasons, as well as business, you’ll need: • A breakdown, by percentage, of how often the asset is used for work, and how often for other reasons • Any records you have of asset use, such as mileage logs for a vehicle Form 4562 should be included as part of your annual tax return. You should file it for the same year you bought the property you’re planning to depreciate or amortize. Resources: https://bench.co/blog/tax-tips/depreciation/ https://www.meruaccounting.com/blog/depreciation-and-its-accounting/ HTH & Accounting Associates help organizations and business owners with accounting and/or financial consulting services. For Help with accounting or Bookkeeping contact us at accounting@thaddeus.org or call us at 909-599-2111. Thanks for reading Harshal Choudhari

What is depreciation? Depreciation is the process of deducting the total cost of something expensive you bought for your business. But instead of doing it all in one tax year, you write off parts of it over time. When you depreciate assets, you can plan how much money is written off each year, giving you more control over your finances.

Elaine Chan

Fixed assets are tangible assets that a company owns, such as Property, Plant, and Equipment, commonly known to be reported as PP&E on the Balance Sheet. Compare to other assets, fixed assets are expected to be used to generate income in long run (Investopia). All fixed assets, except land, are subjected to depreciation costs over its useful years. Therefore, companies have to record the depreciation expense of the fixed asset at the end of a financial period. What are the types of fixed assets?

Jinwei Yu

The statement of cash flow is a mandatory part of the financial statement along with the balance sheet and income statement since 1987. This financial report complements the income statement and balance sheet by summarizing the types and the amounts of cash activities in the company. This report is often unitized as a measure to how well a company manages its cash position, which reflects a company’s profitability and management to a certain extent.

Eliza Craddock

The GAAP is a commonly known set of accounting standards that were developed by the Financial Accounting Standards Board (FASB) designed to keep companies in conformity with their financial reports so they may consistently be understood by both parties, internal (company management) and external (investors and creditors) to the business. On top of these wonderful reasons, other benefits of conforming with the GAAP include improvement.

Tobi

Choosing to create a nonprofit is a great way to serve one’s community, however the process is definitely no easy task. The early stages of a nonprofit requires a lot of time, energy, and of course money. Being able to manage that money effectively is the key to any organization's success.

Jory Mirtil

Bankruptcy is the legal process of paying the assets of debtors who are in debt, distributing the earnings to creditors, and relieving the debtor of any further liability.

Sapna Parakh

Managerial accounting helps the management of a company make various decisions about costs incurred and sales revenue.

Dhruv Patel

We recognize as a small business owner that sales alone aren't a true measure of your company's success. The earnings of any business are really the key sign of quality. Growing total profit for the year normally requires higher sales, but if you're not careful, the expense of increased sales could result in worse profit margins or even a loss.

Katrina Marie Echeverria

Everything is done online now; shopping, banking, meeting, classes, sports and accounting and list goes on. With the advancement of businesses online, cloud accounting becomes highly efficient and convenient as a means to manage finances across all business platforms anywhere and anytime.

Jory Mirtil

The process of making good and moral choices in regard to the preparation, presentation and disclosure of financial information, is ethics in accounting.

Sharon Ma

When accounting for inventory, it is important to be consistent in selecting an accounting method as it can have a direct impact on key financial statements.

HTH Team

Why would small business owners use accounting software? There are many benefits to utilizing accounting software

John Velasco

QuickBooks is an essential tool that helps businesses stay on track. Making adjustments is an important step in the accounting cycle. This process occurs after preparing the Trial Balance.

Sapna Agnihotri

What Is a Cashflow Statement? A Cashflow Statement is a financial summary of Cash and Cash Equivalents that enter and leave the company within a period.

Sapna Parakh

Account reconciliations are activities performed by accountants, typically at the end of an accounting period, to ensure the general ledger account balance is complete and accurate.

Harshal Choudhari

What are Charts of Accounts? Charts of accounts is a list of all ledger accounts and has an identification number assigned to each account.

Vivianna De La Torre

Accounting for nonprofit organizations holds key differences in comparison to for-profit accounting.

HTH Accounting Team

It’s important to figure out how to create a business budget as a new small-business owner.

Sapna Agnihotri

What is Bookkeeping? Bookkeeping is the process of recording and organizing financial data

Sapna Agnihotri

What is the accounting cycle? The accounting cycle is the steps in preparing financial statements

Sharon Ma

Reconciliation, in accounting, is the process of ensuring that two sets of balances/accounts are in agreement and are accurate.

What is IRS Form 990 – Return of Organization Exempt From Income Tax? Do you need to file a 990? A non-profit organization that is tax-exempt is required by the IRS to file a 990 Form on an annual basis.

Sapna Agnihotri

What is Profit & loss statement? The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, usually a fiscal quarter or year.

Often, when we think of lines of credit it's impossible to not think of debt and the crushing weight of when it when it gets out of control. However, not all debt is bad debt.

By: Harshal Choudhari, John Velasco, Sharon Ma ‍

What is a Balance sheet? A balance sheet is a financial statement that reports a company's assets, liabilities and shareholders' equity at a specific point in time, and provides a basis for computing rates of return and evaluating its capital structure. 

By: Harshal Choudhari, John Velasco, Sharon Ma

How it affects small businesses, families and individuals according to IRS guidelines.

If you own a small business, you’re probably juggling a lot with the day to day operations and the thought of dealing with the financial side of things may feel a bit overwhelming.