Welcome to Flagstaff Accounting

If you have found your way to this site, chances are you are searching for a quality Flagstaff accounting firm.

Flagstaff Accounting - Financial Planning and Review of Year End ReportYou see, when an individual or business is looking for a local accountant or needs help with bookkeeping, business formation, accounting services, or tax preparation, there is a good chance that he or she will pull up Google and type in: “flagstaff accounting” in order to find a local area Flagstaff accounting practice.

And I wanted you to find my website because unlike other sites that may pop-up, I do not own a flagstaff accounting practice. I am actually an impartial consumer who was once in your shoes. When I was getting started with my small business, I needed help to properly set up my business. I also needed a lot of advice on how I should record sales, pay quarterly taxes, and manage my finances. As a new business owner I had a lot of questions concerning which state and local taxes I should be paying, which transactions required sales tax, etc. I also needed help with relatively simple tasks such as setting up and using accounting software like Quickbooks.

I’ve learned a lot about choosing and working with an accountant, as well as many things to avoid. My goal for this site is to pass along some of that information to you. I’m not going to talk down about any particular business, but I will give you advice on selecting the best Flagstaff accounting firm for your needs. I will also give you a very strong recommendation for a Flagstaff accounting firm that I do business with and you can trust to take care of your finances, whether it’s for your individual needs or for your business.

So, if you need help with accounting, bookkeeping, or tax preparation, this site is for you. A Flagstaff accounting practice can help you with many things important to your business such things as payroll, business formation, business plan development, business structures, financial advising, retail accounting, professional services accounting, accounting software, budgets, financial projections, cash flow projections, financial statement preparation, payroll, and account reconciliations. Basically, they can help you will everything necessary for the financial success of your business, enabling you to spend more time growing your business.

Before I got started in my search to find a qualified Flagstaff accounting firm for my business, I knew very little about accounting. All I knew was that it was vital to the success of my business and that I should learn all that I could.

I’d heard the terms double entry bookkeeping and single entry bookkeeping before. I knew about the importance of paying quarterly taxes but not how or when I should pay them. I also didn’t know which transactions were taxable and how to properly account for internet income and expenses.

Maybe you are in the same predicament right now?

No worries. I hope to cover a lot of this at Flagstaff Accounting. We will cover various accounting principles, the different types of accounting services and how they are important to you.

Most importantly though, this site will help you find a Flagstaff accounting firm that is honest and professional. The last thing you need is to have some fly-by-night accountant messing around with your finances and income tax preparation.

Hopefully after spending a few minutes at my site, Flagstaff Accounting, you will be able to make an informed decision on who to hire for all of your tax preparation and business accounting needs.

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Tips For Choosing A Flagstaff Accounting Business

This post on Flagstaff Accounting will focus on choosing local Flagstaff accounting firm for your business.

First and foremost on a business owner’s mind is how much will it cost?

Keep in mind that you are hiring a highly qualified specialist. If you are just getting started in business, it may feel hard to part with some of your hard earned income for accounting services. But the costs for hiring a Flagstaff accounting firm, especially in the early stages of your business is well worth it in the long run. A good accountant will help you set up your accounts, properly structure your company, prepare for taxes, and save you a lot of unnecessary expenses over the next few years of your business. Plus, your accountant will help you develop a solid financial strategy designed for the long term success of your business.

Accountants normally base their fees on the time required to perform the services you request and the type of work performed. They are determined by many factors such as the type of services you require, the complexity of the work, the prevailing costs in the community, and the accountant’s level of expertise.

Don’t be afraid to talk to your accountant ahead of time. Discuss the anticipated work and what fees he or she will charge. Make sure the work will be done by the CPA or by a staff accountant under the supervision of the CPA. The fees may vary from firm to firm and it is certainly your right to shop around.

It is also important to know what organizations the accounting firm belongs to and whether they have a Certified Public Accountant (CPA) on staff.

In order to be awarded a CPA, an accountant needs to pass a rigorous uniform national examination. In addition, a CPA must have at least a college degree or equivalent with 150 academic credit hours. 36 of those credit hours must be devoted to accounting and 30 additional hours must be devoted to business related courses such as finance, statistics, economics, business administration, etc. In addition to academic training, they must also have at least one year of full time professional accounting experience supervised by another CPA.

One of the biggest professional organizations is the American Institute of Certified Public Accountants. All members of the AICPA are governed by a very strict code of professional ethics. In addition, members must stay current with extensive continuing education requirements. They also must undergo a review of their accounting and auditing practice once every three years.

While this is probably not an issue you are likely to encounter, it is advisable to make sure your accountant is licensed to practice in the state by the Arizona Board of Accountancy. You can check with them for any complaints or problems with a particular practice.

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Flagstaff Accounting – Why Should You Choose A Professional?

Deciding who to entrust with the financial details of business or personal finances can be tricky. Whether you choose a local Flagstaff accounting firm, an online service, or a software package, your decision will have profound implications on the future of your business and income.

Of all the options, the superior choice is to go with a professional Flagstaff accounting firm. Whether you are a local business owner or individual, the advantages are obvious. Your accountant will have detailed and specialized knowledge of local city and state business requirements. He or she will be able to advise you on exactly how to keep your accounts, when and how to file quarterly taxes, and other financial requirements vital to the success of your business. The money that you spend consulting with an accountant now could save you thousands later on.

Every business is different. No piece of software or automated online service will be able to adequately understand and handle the intricacies of your business. For this reason it is important to consult with someone who specializes in your area.

For example, a retail store needs to account for sales, property, franchise fees, state and local taxes, and much more. An IT consultant may have a completely different set of requirements such as when to collect sales tax, professional memberships, consulting fees, marketing expenses, inventory, resale, outsourced development, health care plans, etc. Financial and managerial accounting practices can vary dramatically between businesses.

Some people, especially business owners that are just starting out would prefer to do their own accounting. As a new business owner, you are already overworked and overwhelmed by all of the other tasks that you are responsible. The best advice is always to consult with a professional. You have enough things to worry about. Let a professional Flagstaff accounting firm help you navigate the financial requirements of operating a business in Arizona. Save your valuable time as a business owner on the tasks that actually make you money.

Not only will a Flagstaff accounting firm help your manage your money throughout the year, they will also help you hold on to more of it come tax time. For best results, locate a Flagstaff area accounting professional. Because they value long term relationships with their clients, a good accountant will fight to provide the best possible service and work to save you the most money at tax time. You’ll never get that kind of service from a software program.

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Flagstaff Accounting – The Balance Sheet

In this post on Flagstaff Accounting, we will discuss the very useful tool known as a balance sheet.

A balance sheet is a quick picture of the financial condition of a business at a specific period in time. The activities of a business fall into two separate groups that are reported by an accountant. They are profit-making activities, which includes sales and expenses. This can also be referred to as operating activities. There are also financing and investing activities that include securing money from debt and equity sources of capital, returning capital to these sources, making distributions from profit to the owners, making investments in assets and eventually disposing of the assets.

Profit making activities are reported in the income statement; financing and investing activities are found in the statement of cash flows. In other words, two different financial statements are prepared for the two different types of transactions. The statement of cash flows also reports the cash increase or decrease from profit during the year as opposed to the amount of profit that is reported in the income statement.

The balance sheet is different from the income and cash flow statements which report, as it says, income of cash and outgoing cash. The balance sheet represents the balances, or amounts, or a company’s assets, liabilities and owners’ equity at an instant in time. The word balance has different meanings at different times. As it’s used in the term balance sheet, it refers to the balance of the two opposite sides of a business, total assets on one side and total liabilities on the other. However, the balance of an account, such as the asset, liability, revenue and expense accounts, refers to the amount in the account after recording increases and decreases in the account, just like the balance in your checking account. Accountants can prepare a balance sheet any time that a manager requests it. But they’re generally prepared at the end of each month, quarter and year. It’s always prepared at the close of business on the last day of the profit period.

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Flagstaff Accounting – Corporations

In this post on Flagstaff Accounting, we discuss the business structure known as a corporation.

Most businesses start out as a small company, owned by one person or by a partnership. The most common type of business when there are multiple owners is a corporation. The law sees a corporation as real, live person. Like an adult, a corporation is treated as a distinct and independent individual who has rights and responsibilities. A corporation’s “birth certificate” is the legal form that is filed with the Secretary of State of the state in which the corporation is created, or incorporated. It must have a legal name, just like a person.

A corporation is separate from its owners. It’s responsible for its own debts. The bank can’t come after the stockholders if a corporation goes bankrupt.

A corporation issues ownership share to persons who invest money in the business. These ownership shares are documented by stock certificates, which state the name of the owner and how many shares are owned. the corporation has to keep a register, or list, of how many shares everyone owns. Owners of a corporation are called stockholders because they own shares of stock issued by the corporation. One share of stock is one unit of ownership; how much one share is worth depends on the total number of shares that the business issues. the more shares a business issues, the smaller the percentage of total owners’ equity each share represents.

Stock shares come in different classes of stock. Preferred stockholders are promised a certain amount of cash dividends each year. Common stockholders have the most risk. If a corporation ends up in financial trouble, it’s required to pay off its liabilities first. If any money is left over, then that money goes first to the preferred stockholders. If anything is left over after that, then that money is distributed to the common stockholders.

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Flagstaff Accounting – Sole Proprietorships

In this post on Flagstaff Accounting, we discuss the most basic business structure, the sole proprietorship.

A sole proprietorship is the business or an individual who has decided not to carry his business as a separate legal entity, such as a corporation, partnership or limited liability company. This kind of business is not a separate entity. Any time a person regularly provides services for a fee, sells things at a flea market or engage in any business activity whose primary purpose is to make a profit, that person is a sole proprietor. If they carry on business activity to make profit or income, the IRS requires that you file a separate Schedule C “Profit or Loss From a Business” with your annual individual income tax return. Schedule C summarizes your income and expenses from your sole proprietorship business.

As the sold proprietor of a business, you have unlimited liability, meaning that if your business can’t pay all it liabilities, the creditors to whom your business owes money can come after your personal assets. Many part-time entrepreneurs may not know this, but it’s an enormous financial risk. If they are sued or can’t pay their bills, they are personally liable for the business’s liabilities.

A sole proprietorship has no other owners to prepare financial statements for, but the proprietor should still prepare these statements to know how his business is doing. Banks usually require financial statements from sole proprietors who apply for loans. A partnership needs to maintain a separate capital or ownership account for each partners. The total profit of the firm is allocated into these capital accounts, as spelled out in the partnership agreement. Although sole proprietors don’t have separate invested capital from retained earnings like corporations do, they still need to keep these two separate accounts for owners’ equity – not only to track the business, but for the benefit of any future buyers of the business.

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What Are Partnerships and Limited Liability Companies?

In this post on Flagstaff Accounting, we discuss partnerships and limited liability company structures.

Some business owners choose to create partnerships or limited liability companies instead of a corporation. A partnership can also be called a firm, and refers to an association of a group of individuals working together in a business or professional practice.

While corporations have rigid rules about how they are structured, partnerships and limited liability companies allow the division of management authority, profit sharing and ownership rights among the owners to be very flexible.

Partnerships fall into two categories. General partners are subject to unlimited liability. If a business can’t pay its debts, its creditors can demand payment from the general partners’ personal assets. General partners have the authority and responsibility to manage the business. They’re analogous to the president and other officers of a corporation.

Limited partners escape the unlimited liability that the general partners have. They are not responsible as individuals, for the liabilities of the partnership. These are junior partners who have ownership rights to the profits of the business, but they don’t generally participate in the high-level management of the business. A partnership must have one or more general partners.

A limited liability company (LLC) is becoming more prevalent among smaller businesses. An LLC is like a corporation regarding limited liability and it’s like a partnership regarding the flexibility of dividing profit among the owners. Its advantage over other types of ownership is its flexibility in how profit and management authority are determined. This can have a downside. The owners must enter into very detailed agreements about how the profits and management responsibilities are divided. It can get very complicated and generally requires the services of a lawyer to draw up the agreement.

A partnership or LLC agreement specifies how profits will be divided among the owners. While stockholders of a corporation receive a share of profit that’s directly related to how many shares they own, a partnership or LLC does not have to divide profit according to how much each partner invested. Invested capital is only one of the factors that are used in allocating and distributing profits.

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Flagstaff Accounting – Profit and Loss

In this post on Flagstaff Accounting, we discuss the terms profit and loss and what they mean to business.

It might seem like a no-brainer to define just exactly what profit and loss are. But of course these have definitions like everything else. Profit can be called different things, for a start. It’s sometimes called net income or net earnings. Businesses that sell products and services generate profit from the sales of those products or services and from controlling the attendant costs of running the business. Profit can also be referred to as Return on Investment, or ROI. While some definitions limit ROI to profit on investments in such securities as stocks or bonds, many companies use this term to refer to short-term and long-term business results. Profit is also sometimes called taxable income.

It’s the job of the accounting and finance professionals to assess the profits and losses of a company. They have to know what created both and what the results of both sides of the business equation are. They determine what the net worth of a company is. Net worth is the resulting dollar amount from deducting a company’s liabilities from its assets. In a privately held company, this is also called owner’s equity, since anything that’s left over after all the bills are paid, to put it simply, belongs to the owners. In a publicly held company, this profit is returned to the shareholders in the form of dividends. In other words, all liabilities have the first claim on any money the company makes. Anything that’s left over is profit. It’s not derived from one element or another. Net worth is determined after all the liabilities are deducted from all the assets, including cash and property.

Showing a profit, or a positive figure on the balance sheet, is of course the aim of every business. It’s what our economy and society are built on. It doesn’t always work out that way. Economic trends and consumer behaviors change and it’s not always possible to predict these and what income they’ll have on a company’s performance.

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Flagstaff Accounting – Inventory And Expenses

In thos post on Flagstaff Accounting, we will discuss the terms: inventory and expenses.

Inventory is usually the largest current asset of a business that sells products. If the inventory account is greater at the end of the period than at the start of the reporting period, the amount the business actually paid in cash for that inventory is more than what the business recorded as its cost of good sold expense. When that occurs, the accountant deducts the inventory increase from net income for determining cash flow from profit.

the prepaid expenses asset account works in much the same way as the change in inventory and accounts receivable accounts. However, changes in prepaid expenses are usually much smaller than changes in those other two asset accounts.

The beginning balance of prepaid expenses is charged to expense in the current year, but the cash was actually paid out last year. this period, the business pays cash for next period’s prepaid expenses, which affects this period’s cash flow, but doesn’t affect net income until the next period. Simple, right?

As a business grows, it needs to increase its prepaid expenses for such things as fire insurance premiums, which have to be paid in advance of the insurance coverage, and its stocks of office supplies. Increases in accounts receivable, inventory and prepaid expenses are the cash flow price a business has to pay for growth. Rarely do you find a business that can increase its sales revenue without increasing these assets.

The lagging behind effect of cash flow is the price of business growth. Managers and investors need to understand that increasing sales without increasing accounts receivable isn’t a realistic scenario for growth. In the real business world, you generally can’t enjoy growth in revenue without incurring additional expenses.

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Flagstaff Accounting – Assets and Liabilities

In this post on Flagstaff Accounting, we discuss the accounting terms: assets and liabilities.

Making a profit in a business is derived from several different areas. It can get a little complicated because just as in our personal lives, business is run on credit as well. Many businesses sell their products to their customers on credit. Accountants use an asset account called accounts receivable to record the total amount owed to the business by its customers who haven’t paid the balance in full yet. Much of the time, a business hasn’t collected its receivables in full by the end of the fiscal year, especially for such credit sales that could be transacted near the end of the accounting period.

The accountant records the sales revenue and the cost of goods sold for these sales in the year in which the sales were made and the products delivered to the customer. This is called accrual based accounting, which records revenue when sales are made and records expenses when they’re incurred as well. When sales are made on credit, the accounts receivable asset account is increased. When cash is received from the customer, then the cash account is increased and the accounts receivable account is decreased.

The cost of goods sold is one of the major expenses of businesses that sell goods, products or services. Even a service involves expenses. It means exactly what it says in that it’s the cost that a business pays for the products it sells to customers. A business makes its profit by selling its products at prices high enough to cover the cost of producing them, the costs of running the business, the interest on any money they’ve borrowed and income taxes, with money left over for profit.

When the business acquires products, the cost of them goes into what’s called an inventory asset account. The cost is deducted from the cash account, or added to the accounts payable liability account, depending on whether the business has paid with cash or credit.

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Parts Of An Income Statement – Part 3

In this post on Flagstaff Accounting, we finish our three part series on income statements.

While some lines of an income statement depend on estimates or forecasts, the interest expense line is a basic equation. When accounting for income tax expense, however, a business can use different accounting methods for some of its expenses than it uses for calculating its taxable income. The hypothetical amount of taxable income, if the accounting methods used were used in the tax return is calculated. Then the income tax based on this hypothetical taxable income is fitured. This is the income tax expense reported in the income statement. This amount is reconciled with the actual amount of income tax owed based on the accounting methods used for income tax purposes. A reconciliation of the two different income tax amounts is then provided in a footnote on the income statement.

Net income is like earnings before interest and tax (EBIT) and can vary considerably depending on which accounting methods are used to report sales revenue and expenses. This is where profit smoothing can come into play to manipulate earnings. Profit smoothing crosses the line from choosing acceptable accounting methods from the list of GAAP and implementing these methods in a reasonable manner, into the gray area of earnings management that involves accounting manipulation.

It’s incumbent on managers and business owners to be involved in the decisions about which accounting methods are used to measure profit and how those methods are actually implemented. A manager can be requires to answer questions about the company’s financial reports on many occasions. It’s therefore critical that any officer or manager in a company be thoroughly familiar with how the company’s financial statements are prepared. Accounting methods and how they’re implemented vary from business to business. A company’s methods can fall anywhere on a continuum that’s either left or right of center of GAAP.

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