Why Small Businesses Get Big Benefits from Enlisting Outside Accounting Service Part 2
Restaurants also need to keep a tight control on inventory. It’s recommended that inventory be taken each week or once a month at the least to prevent theft and keep food cost under control. Another opportunity for theft occurs due to cash handling and discounts through the POS (point of sale) system. By using appropriate software like QuickBooks, it is possible to run reports to track all discounts, find out who is running them and create audit reports. Restaurants and retailers also need to keep up with sales tax returns.
Proper reporting of expenses throughout the year will make things simpler when it’s time to file annual tax returns. The type of return depends on what type of legal entity is used for the business, i.e. sole proprietor, Limited Labiality Company, Sub S Corporation, partnership or Regular Corporation. All expenses that are ordinary and necessary for the running of the business are deductable against the business income. There are new regulations coming out dealing with what payments can be deducted as repairs and what must be capitalized and depreciated. Also there are new rules as to how income from credit cards is reported and depending on the size of the business, the effect of the “Obama Care Health law.” These regulations can be confusing at best for small business owners.
Bringing in an outside accounting team means having an outside party keeping a watchful eye on operations. It keeps everyone more honest. The accounting team sets up controls, cash drawer counting methods, daily sales tracking and more, making sure that everything balances throughout the year. These experts will also understand complex issues like which payments can be expensed and what must be capitalized and what are ordinary and necessary business expenses. And this all means that tax reporting each year will become a breeze rather than a tornado.
Steve R. Harless, CPA is the Managing General Partner of Harless & Associates.