Are You Business Bilingual?

Have you ever traveled to a country with a common language different than your own?

Navigation in an unfamiliar place can instantly become a sweat dripping, nail biting nightmare.  Even simple tasks such as ordering from a menu can become a challenge.  No matter how intellectual a person is, language is something that can make the smartest of people become as useful as a dried out highlighter.  The interesting thing is that even in their normal routine, a person faces many different lingos without even realizing.

For example, a football fan could listen blindly to a sports commentator and know how the game was coming along while a person not familiar with the common terminology would be completely lost.  Most likely they’d even be agitated by the fall of “gibberish” raining down on them.

Many other industries including film production, truck drivers, medical professionals, and even video game fanatics have developed lingo over time that can leave bystanders wondering what planet they’ve just landed on.  Unfortunately for most small businesses, accounting did not escape this phenomenon.

As a business owner with many responsibilities, becoming familiar with common accounting terms can easily fall into the void of that never ending to-do list titled “Eventually”.  However, when it comes to collaborating with your CPA and bookkeeper, you may have found yourself in that “agitated an drowning in mumbo jumbo” type situation.  Becoming familiar with just a few common accounting terms can arm you with a better understating.  

Here are ten to get you started:

Accounts Recievable:  money owed to your business by customers.  You’ll normally hear this referred t as “A/R”

Accounts Payable:  money you owe to vendors.  This account is also commonly shorteded to  (you guesses it) “A/P”.  This is where your business has received goods or services that you need to pay for.

Balance Sheet:  a report displaying your business assets, liabilities and equity at a certain point in time.

Profit and Loss:  a report displaying your business revenue versus expenses to show net profit at a certain point in time.

Liabilities:  financial obligations or debt that is owed from the business to another entity.  Some examples of a liabilities are loans, accounts payable, mortgages, etc. 

Asset:  something your business has acquired or purchased and has monetary value.  This includes tangible things such as cash, buildings and inventory, as well as intangible things such as rights.

Accruals:  a transaction that records an expense or revenue when no physical money has been exchanged.  For example, a customer receives services from your business and agrees to pay at a later time.  While no money was exchanged, the transaction is still recorded to recognize the revenue that has been earned.

Fiscal Year:  a twelve month period that a business uses for accounting purposes such as reporting and budgeting.  A fiscal year does not have to be the same as a calendar year.  For example, a business can have a fiscal year that is October-September rather than January-December.

Equity:  the amount of funds invested in a business plus all historical earnings that have been kept by the business.

Chart of Accounts:  a record of all the accounts in a business accounting system.  An account is simply a special record for each type of asset, liability, equity, revenue or expense account that a business uses.  For example, an account that a business could have listed on the chart of accounts could be “Repair and Maintenance” which would be classified as an expense account.

While these explanations are merely a quick overview of each term, a simple understanding of a wide variety of accounting terms can give you a better grasp of what goes on with your business’s finances.  Navigating through what once used to be unfamiliar and frustrating can become a walk in the park (or should I say office?)

Consider this a first step towards becoming business bilingual! Get in touch with Abacus to have a translator on your side.

Phony IRS Scams

If you’re reading this you’re currently being tracked by a team of local authorities who will soon have you and your family arrested for failing to remit payment to the IRS.  No running now…

Sounds ridiculous, right? Believe it or not, these absurd and aggressive scare tactics are what most scammers use when imitating the IRS.  The sad, yet almost comical, fact is:  it works.

How do IRS scammers bring in the bucks?

The most common techniques involve demanding immediate payment from a person over the phone.  They may ask for personal information such as credit card or even social security numbers.  Some scams are also conducted through email, text or even social media.  The question rises, why would people give into these tricks so readily?

If an IRS scammer were likened to a burglar, it’s almost as though thee house owner’s are literally flinging their doors open, inviting the burglar to go for a nice peruse through their valuables, all while throwing on a pot of tea for that extra touch of hospitality. There are two key factors that enable a scammer to be successful.  They include fear and inexperience.

Combatting  Slimy IRS Scammers

Fortunately for everyone (minus the sneaky tricksters, of course) knowledge eliminates both those elements commonly played on.  By knowing some red flags to look out for, a person can easily identify a scammer and defeat any fear those suckers try to evoke.

Received a phone call before a mailed letter?

IRS red flagsRed Flag. The IRS is known for always sending a proper letter in the mail before contacting  a person by phone.  If all of a sudden you are on the phone with a person from the IRS who is threatening to sue you for all you’re worth, you are definitely being scammed. One tactic is to ask their target to pay in the method of a gift card such as Amazon or iTunes.

Asks for personal information over phone?

IRS red flagsRed Flag.  The IRS does not ask for credit or debit numbers over the phone.  Some are convinced a scammer is from the IRS because they know a lot of your personal information such as birth date and home address.  Some people use this as an indicator that they are legitimate and decide to provide more personal information over the phone.

Threatens or uses aggressive tone?

IRS red flagsRed Flag.  The IRS has strict processes used to ensure professionalism.  A first-time call (remember, the IRS communicates by written letter first) that results in aggressive, bold demands and/or threats is most likely a scam.

Have you been targeted by an IRS scammer yet?

If you suspect you are being scammed, abort mission. Hang up the phone, delete that email, etc.  If you remain on the phone or begin clicking links online, the chances of people getting a hold of your personal information becomes higher.  While that does sound scary, there is no need to be completely paranoid that you’re getting scammed at every corner.  The best thing a person can do is simply keep up to date on the procedures the IRS uses so that fishy scams that seem out of place are effortless to spot. Simple as that.

Protect Yourself From Scammers

Need a professional in your corner?

Your small business cannot afford the financial burden of getting burned by an IRS scam. Save yourself the headache, and contact us to learn how to protect yourself.

What’s the Deal with Bookkeepers, Anyway?

What’s the deal with Bookkeepers anyway?

I’ve heard it a million times.  And it always goes something like this:  “Oh, you’re a bookkeeper.  Cool.  (I added that part.)  I was thinking maybe I’d start doing some bookkeeping too.”

ME:  Oh, cool.  ( I really do say that.)  What kind of training or experience do you have?

THEM:  Oh, well, I had an accounting class back in college and I’ve always been pretty good with numbers, so, yeah, I think I’d be pretty good at.

OR

THEM:  Well, it doesn’t seem that hard so I think I could do it.  I pay all my own bills and stuff.

At this point, my inner monologue takes over and progresses more or less in the same way:

Oh no you didn’t!

But it brings up a common impression that while widespread, is grossly inaccurate.  And that is that just about anybody is qualified to be a bookkeeper.  Now I’m not saying it’s an elite club inhabited only by superhero types (or is it?) but it’s a little more complicated than “I took a college class umpteen years ago, ergo, I’m ready to go!”

The thing about being a bookkeeper these days is there is no uniform credential or test to distinguish a professional from a hack.  And that’s bad news because just because someone calls themselves a bookkeeper doesn’t mean you should let them anywhere near your books.  So how can you tell the difference?  Is it just a crapshoot?  Or is there a way to be sure your bookkeeper is a professional?

Being a professional doesn’t mean they wear a business suit and carry a briefcase although sporting a natty blazer and leather carryall never hurts.  It’s much much more.  Professional bookkeepers are committed to their craft.  They have education, experience, and a strong code of ethics.  Professional bookkeepers stay up to date on the changes within the industry, are in tune with the way technological advances can benefit small businesses and are constantly looking for ways to improve their value to the clients they serve.  Does that sound like someone you want in your corner?

Professional bookkeepers constantly have to fight against the stereotype of a bookkeeper being a secretary, an admin assistant or a data entry clerk.  There’s nothing wrong with being any one of those things, it’s just that that’s not what a bookkeeper is.  Ideally, a bookkeeper is one leg of a three legged stool with the other two being the business owner (obviously) and the CPA.  Why does the bookkeeper deserve equal standing?  Because the bookkeeper is the one in the trenches, the one consistently working with the finances of the business and providing the information that allows the business owner to make solid decisions.  Besides the day to day tasks they do, they provide financial statements and help the owner see the historical trends that their business has taken.  They provide insight on what those trends mean and how to either build on them or change them so that future profitability is increased.  Does that sound like something that has value?

It all boils down to building the best possible team to support your business.  So if you’re in the market for a bookkeeper, make sure they’re a professional.