11 Year End Tax Savings Tips

11 Year End Tax Savings Tips
This time of year, now through the first quarter of next
year, you will see articles offering year-end tax planning
tips. Tax planning tips can increase income in future
years, so be careful. Many tax tips often involve
accelerating deductions, deferring income, or last-minute
charitable deductions (the first three following tips).

For example you may be compelled to make a large charitable
contribution this year by December 31st. However if you
could be in a higher tax bracket next year because your
income is going up because of a substantial raise or bonus,
you would have been better off to make the contribution
next year. Some may say this is heartless, but I say just
the reverse. If you pay less in taxes because of good
planning, your will be better off financially and able to
give more in the future.

If you have volatile income, before you use the tax savings
tips here and in other articles, you may want to run
projections for this year and next. A good accountant will
run these calculations for you, but understand that tax law
changes from year to year and from one administration to
the next can often make predicting tricky.

1. Defer income
If you are able to defer income, such as commissions and
bonuses until next year, you might be able to pay lower
income taxes this year. However, you must consider what
your income and taxes will be next year to be sure that you
are not actually increasing your taxes.

2. Accelerating deductions
Accelerating major deductions such as state income taxes,
property taxes, and mortgage interest may help anyone,
especially during a high-income year. If you don't think
your personal income tax bracket will be higher next year,
and you're not affected by the alternative minimum tax, you
can make state and/or local tax payments before the end of
this year so you can take a deduction this year.

3. Charitable Contributions
Consider making chartable deductions before the end of the
year to receive a deduction. You must make the contribution
by 12/31/2007.

Donate appreciated property such as real estate or stock
instead of the proceeds of the sale. You may be able to
receive a deduction for the value of the contribution
without paying tax on the growth portion resulting from a
sale, then a gift. If you intend to transfer appreciated
property, begin early since it will take several weeks to
make the change.

4. Alternative minimum tax traps
Many people face large AMT bills compared to previous
years. Be warned if you have larger than usual medical
expenses, non-federal income and real estate taxes, or
miscellaneous itemized deductions; or if you have exercised
large stock options, to name a few.

Year-end tax planning strategies can backfire under AMT. Be
very careful accelerating some deductions and exercising
stock options at year end. See a tax professional for
information on your specific tax situation.

5. Be careful when investing new money in mutual funds at
the end of the year
Call the mutual fund and find out when the distribution
date is. You may want to purchase after the distribution
date to avoid owing taxes on fund shares that you owned
only for a short period of time and had little to no gain.

6. Contribute the maximum to retirement accounts
Contribute the maximum allowable to employer-sponsored
defined contribution retirement plans, such as profit
sharing, 401(k), 403(b) and 457(b) plans. This not only
provides an excellent tax deduction, but it also helps you
to plan for your future retirement.

You may want to contribute to an IRA; up to $2,000 is fully
deductible if you did not participate in a
company-sponsored retirement plan or if your income falls
below certain levels.

If you are self-employed, you can contribute more to a
pension plan than into an IRA. You have until December 31
to set up the plan.

7. Investment Losses
If your investment portfolio has stock that has depreciated
in value and is worth less than when you originally
purchased it, you may want to consider selling it. You may
be able to use that loss to offset capital gains and
ordinary income.

Be careful though; investment decisions should not just be
for tax purposes. Make sure that you do your research
before selling any investment. Some people react too
quickly when investments lose value; others sometimes hold
on too long. If you decide to sell and invest in something
new, make sure that you examine your portfolio to ensure
that you have the right mix of investments to match your
investment profile, risk propensity and asset allocation
model.

8. Save for College
Consider contributing to your child's college savings into
a 529 plan. The contributions are not deductible on your
Federal return, but parents may be able to write off
contributions up to a certain dollar amount on their state
income tax return. Log on to SavingforCollege.com to find
out information about your state.

9. Home Improvements
Here is a great deal. How about saving energy and the
environment, lower utility bills, increase the value of
your home and save on taxes — all at once. Projects
for the home's shell (insulation, windows, sealing) and
heating and cooling may qualify for a one time tax credit
of $500. However you are running out of time, since they
must be in place by the end of 2007. So while crawling
around your attic looking for ornaments, think of adding
insulation. If you made home improvements over the last
couple of years, be sure to dig up your records; you may
already be eligible.

Before moving forward on one of these projects, make sure
that you get full information about these and other energy
efficient tax incentives from The Tax Incentives Assistance
Project at http://www.energytaxincentives.org/. There you
will find more information about Home Shell and Heating &
Cooling as well as Hybrid Passenger Vehicles and Solar
Energy Systems.

10. If self-employed, buy equipment and supplies
Have you been putting off buying needed business equipment
and supplies, or do you know that you will soon need them?
Now may be the time to invest in your business and save
taxes as well. Business tax can be complex; therefore it
may be wise to first call your accountant prior to large
purchases.

11. Give gifts to children
When you give to friends and family, it is usually not
taxable to the recipient or the giver. Many people do not
realize though if that gift exceeds $12,000 per person it
is taxable to the giver, and at a high rate. Therefore, if
you intend to give anyone more than that amount, you could
give some this year and some next. The second tip is that
you and your spouse can both give $12,000 per person,
doubling the amount not subject to tax. Be sure to consult
your legal and tax advisor prior to making all gifts.

----------------------------------------------------
Kent E. Irwin, ChFC, CLU, CAP, co-founder and CEO of
eFinplan.com. eFinPLAN is the first and only web-based
comprehensive consumer financial planning software designed
for people who are trying to do a lot of their own
financial planning. Find out more about how do-your-self
financial planning and how to reach your goals at: =>
http://www.efinplan.com/

Filling The Self Assessment Tax Return Detailed Profit And Loss Account

Filling The Self Assessment Tax Return Detailed Profit And Loss Account
Businesses whose turnover has exceeded 15,000 pounds are
required to show greater analysis of the income and
expenditure. From a practical point of view even those
businesses who expect the turnover to be less than 15,000
pounds should also maintain financial accounts which show
the increased analysis to both maintain financial control
and be prepared to enter the increase3d analysis should
turnover exceed the 15,000 turnover threshold.

A self employed business enters the income and expenses on
page SE1 of the self assessment tax return form if the
total sales of the business for the financial year were
less than 15,000 pounds. Only the totals of turnover,
expenses and net profit are required.

When turnover exceeds 15,000 pounds totals are required of
the sales and business income and then deducted from that
total the cost of sales which is split into three
categories of expense. Cost of sales is the direct costs of
purchases which are resold, these purchases usually being
physical materials but should also include any services
which are bought for resale.

In particular reference to taxi drivers and haulage
contractors the vehicle costs would be included in this
cost of sales category as the items being resold are
transportation costs. Other types of business who principal
business is not the resale of transport would enter vehicle
running costs in the motor expenses expense category.
Another example would be an IT consultant who purchased and
installed software for clients and would enter his software
costs as a cost of sale as that is the service they are
reselling while other businesses would enter software costs
in general administration charges.

Subcontractors costs is the second category while other
direct costs makes up the third area of the cost of sales.
Other direct costs is a useful category in which to include
all costs of the business not analysed elsewhere which are
basically the costs of operating the business other than
items being purchased for resale. The difference between
the turnover and the sum of the three costs of sales
categories is the gross profit.

Other income and profits is where the business would enter
such items as rental income or for start ups taxable new
deal payments. Bank interest would not go in this box as
nit can be entered elsewhere on the tax return. Also
business start up grants and enterprise allowances would
not be entered in this box as there is a separate box in
which to enter these receipts.

The remaining and main body of the inland revenue self
assessment tax return form concerns an analysis of the
expenses. The majority of the expense categories are self
explanatory in the title. Additional expense analysis other
than the prescribed headings on the self assessment tax
return is unnecessary for the vast majority of self
employed business.

Employee costs include the wages, salary, pension and
employers national insurance contributions for all
employees. Also include in this section any costs
associated with employees such as recruitment fees and
staff benefits. Excluded are the self employed own wages
and taxes as these are not included in the inland revenue
self assessment tax return form at all being a distribution
of net profit after tax not a tax deductible expense.

Premises costs would include rent, rates, gas, electricity,
power costs and items associated with the business premises
such as property insurance. Also included in this section
would be the portion of home costs being claimed as
business expenses. Household expenses can be claimed as
business expenses to the extent that the costs represent
the proportion of the home that is used exclusively for
business purposes.

Repairs include the repair, maintenance and renewal of
plant and machinery. Vehicle repairs would not be entered
in this category but in the motor vehicle category.

General administrative costs telephone, postage, stationery
and general office expenses. Also in this section would be
included all other general operating costs of the business
not entered elsewhere.

Motor expenses include the running costs of the vehicles
being fuel and oil, repairs and maintenance, tax and
insurance, parking charges and membership of breakdown
services. Parking fines should not be included as these are
legal fines and not deductible expenses.

Travel and subsistence includes all travel costs excluding
those included in motor expenses. Typically these items
would be air and train fares, toll fees, hotel costs and
subsistence costs incurred on business journeys. Receipts
should be presented for all subsistence costs claimed where
possible.

Advertising, promotion and entertainment expenses include
all types of expenditure related to the promotion of the
businesses products. Entertainment of clients to obtain
business is allowed while the entertainment of staff is not
and is a disallowed expense on the self assessment tax
return.

Legal and professional costs include all professional fees
and bills. These would include accountants, solicitors,
surveyors, architects and other professional bodies. Also
included in this section would be indemnity insurance.

Bad debts are sales made and included in turnover where a
decision has been taken that the outstanding unpaid sales
invoice will not be paid. A general percentage of sales is
not acceptable and if included in the accounts is
disallowed on the inland revenue self assessment tax
return. The items entered being specific debts. Normally
any debt that is 6 months overdue would reasonably be
considered as a bad debt.

Interest and finance payments includes bank interest paid
on loans and overdrafts, credit card interest and any
payments made to raise finance to fund the business
operations.

Other finance charges are entered in a separate category.
Other finance charges would include bank and credit card
charges, hire purchase and lease charges other than
property leases.

Depreciation charges include the cost of writing down the
value of the asset in the business accounts. As
depreciation of fixed assets is a management decision and
has no foundation in tax law then the value of depreciation
charged against profits is disallowed for tax purposes and
replaced in the calculation of tax payable by capital
allowances.

The final expense category is other expenses. Enter in this
category any other business expenses not entered in the
other categories. As the other categories are reasonably
comprehensive and sufficiently general for the vast
majority of expenditure to be entered it would be regarded
as unusual if any significant sums of money were to be
shown in this category. A significant level of expenditure
unusual for that category may give rise to an inland
revenue enquiry into the self assessment tax return and
this is particularly the case of significant expenditure
being shown as other expense items.

Tax adjustments to the net profit and loss are where
disallowed expenses are entered. Disallowed expenses being
items such as the business expenses already entered of
which there was personal use, and generally all expenses
which have been included that were not wholly business
expenses. These would include for example meals paid by the
business not classified as client entertainment except
where incurred on overnight trips.

Also disallowed is the depreciation charge on fixed assets
which as stated is replaced in the tax calculation by
capital allowances. Balancing charges being capital
allowances on assets sold where the price obtained exceeded
the written down value of the asset and entered in the
capital allowance section of the self assessment tax return.

Added back to net profit are capital allowances that are
claimed by the business. The capital allowances in effect
being the tax allowance that replaces the depreciation
charge.

A number of potential adjustments can also be entered in
the next section which is the adjustments to arrive at the
net taxable profit or loss. These adjustments are variable
in nature and very much dependent on the adjustments
required when the basis year has been changed or past
losses are claimed to offset the net taxable profit.

The final section of the self assessment tax return is a
list of the business assets and liabilities at the end of
the financial year. Completion of this section is optional
and should only be completed by those businesses that have
produced a balance sheet as part of the accounts. In effect
this section is the totals of assets and liabilities taken
from the balance sheet and should represent the increase or
decrease indicated by the net profit being declared by the
business.

----------------------------------------------------
Terry Cartwright, qualified accountant and CEO at DIY
Accounting, designs accounting software that automates the
Self Assessment Tax Return
http://www.diyaccounting.co.uk/selfemployed.htm producing
an excel copy of the Tax Return at
http://www.diyaccounting.co.uk/Selfemployed/selfassessment.h
tm

Attention! Find out how commercial banks will view your property before you apply for a loan!

Attention! Find out how commercial banks will view your property before you apply for a loan!
What is the difference between business owners who own
their building and business owners who rent their building?
The ones who own their building have two sources of wealth
generation: their business and their commercial property.

The simple economics of land ownership - finite supply and
increasing demand - often means the commercial real estate
holdings have a significant positive impact on the ultimate
return of the business.

But it's not just cashing out where real estate can make a
difference. The combination of declining loan balances and
(hopefully) advancing property values means that
entrepreneurs can build equity. This equity represents a
valuable resource in their small business tool kit. Unlike
their competitors without real estate holdings, they can
borrow against the equity in their property to fund new
initiatives, expansion and the acquisition of additional
properties or businesses. And they can do this without
diluting the ownership in their own company.

But this flexibility comes with a price. Lenders who lend
against real estate must protect themselves against the
risk that the loan - despite the best intentions and
efforts of the principals - may run into trouble and not
pay off through cash flow from the business, but rather
through the outright sale of the property. What this means
is that while you may have $300,000 of equity in a
property, lenders cannot lend against the full value of the
equity. In fact, they can only lend against a portion of
the equity.

Because the lender must take into account a worst case
scenario - either because they are a fiduciary lending
funds from another investor, or because they must preserve
their own capital against loss - the question becomes, how
does a real estate lender view your commercial building?

Knowing the lender's perspective in property valuation will
help you understand some of the thinking behind your
lender's terms, and perhaps provides some purchase points
for negotiation on the loan-to-value ratio (LTV). This LTV
represents the amount of equity you can borrow against, and
as such is the single most important determinant of the
funds that you can access through the equity in your
commercial property.

Elements of Comparison Typically, commercial lenders which
use real estate as collateral look at comparable sales, and
adjust their findings with so called elements of comparison
and an assessment of the property's marketability.

First, let's look at comparable sales and elements of
comparison. Just like any buyer, the lender will look at
sales of comparable properties in the surrounding area.
Then the question becomes, does the would-be borrower's
property seem to be worth more or less?

You've heard the old real estate saw: Location, Location,
Location. When lenders look at a commercial building as
collateral, this is perhaps their first consideration.
There are elements of location that add value and there are
elements that subtract value.

A central business district location is better than one in
a remote area. A corner location is often more desirable
because it generally gets twice the traffic than a locale
adjacent to two other buildings. A building on a one way
street will see less traffic than one that is not. At the
same time, a building that has no street frontage would be
viewed by a real estate lender as less valuable than one
that did.

Another important element of comparison is land area in
relation to the building and the enterprise. For instance,
a building that covers most of it's land area with little
or no parking would not compare as favorably to a building
that had more parking, or a loading dock, or room to expand
the building. While some businesses would not need these
amenities - such as a small manufacturer, or a repair shop
- in the lender's eye, diminished land area limits the
number of would be buyers in a liquidation scenario, and as
a result, reduces value.

A third important element of comparison is the overall size
of the building. Again, this is a relative comparison to
the property type. If your building houses your auto repair
shop with three bays, while most other independent repair
shops have between four and six bays, your property would
be considered small, which would have an impact on it's
value in the eyes of the lender. By the same token,
buildings that are large by comparison pose challenges too.
A building used for dry cleaning that is three times the
size of a typical dry cleaner would be viewed by a lender
as less desirable than one that was typically-sized.

Marketability The elements of comparison hold little
intrinsic value. Their real meaning comes from how they
influence the marketability of a property.

Remember, if a lender ends up as the owner of a building,
it's not by choice, but literally by default. This means
the lender will seek to sell the building in a reasonable
period of time. While many lenders want to avoid the losses
that can come with a very quick sale, they do not want to
own a building over a prolonged period of time, where
taxes, maintenance, and unforeseen events can have a
material impact on their ability to recover the principal
balance of the loan. Generally speaking the maximum time
period which a lender will want to own a building is
between six and 12 months.

The correlation between marketability and the loan-to-value
ratios runs inversely. That is, the longer it appears it
will take to sell a building, the smaller the amount the
lender will advance against a building owner's equity.
Thus, the commercial lender's focus on elements of
comparison and marketability are closely intertwined.
Specifically, buildings with unfavorable elements of
comparison take the longest to sell, and as a result pose
more risk for the lender. The lender mitigates this risk
with a lower loan-to-value ratio.

Who Loves Ya? For borrowers that have single purpose
commercial properties, the lenders' approaches toward
property valuation can prove frustrating. From a lender's
point of view, the dedicated purpose of the building does
not add value, but rather shrinks it, because there is a
smaller pool of buyers, which in turn increases the time
that may be required to market the property. Some lenders
will not even consider such a property as collateral.

Small business borrowers seeking loans backed by
owner-occupied commercial real estate may find
nontraditional lenders more willing to strike a deal, or
seek creative solutions to get a deal done.

There are two reasons for this.

First, traditional lenders have dramatically increased
minimum loan amounts. Many want to make loans no less than
$1 million. This is a difficult proposition for a business
owner with $300,000 to $400,000 in equity looking for a
$250,000 loan. Second, most bank lenders avoid loans where
the underlying property to be used as collateral has a
single use, or which may have one or two unfavorable points
of comparison. The rigidity of their underwriting process
and the size of their existing franchise often precludes
them from taking risks they don't have to. Rightly or not,
their attitude is often something akin to, 'Why should we?'

Nontraditional lenders, by comparison are more niche
oriented. Whereas banks see the market for small businesses
loans of less than $1 million as, well, small, and rife
with irregularities, non bank lenders may see more
opportunity. Accordingly, they are more willing to consider
unique properties and willing take more time to structure a
deal which fits the needs of the borrower, yet still
mitigates their risk.

While the best lender for you is the one that can put
together a loan package that suits your needs, borrowers
should carefully consider the points mentioned above. They
will help narrow the search and reduce the time it may take
to get to the closing table. And remember, it's not just
getting one deal done. Firms that are anxious for your
business, and which are built to take it on, represent the
kind of lender that can help you not just once, but time
and again as you continue to build your business and your
own personal wealth.

----------------------------------------------------
Paul Kelly has introduced the "SNAP COMMERCIAL" Loan System
that focuses on small balance commercial loans that require
a minimum of paperwork from evaluation to funding. He can
be reached at (323) 353-8655,via email at
paul@snapcommercial.com or at his website
http://snapcommercial.com .

Real Estate Investing Or Landlording?

Real Estate Investing Or Landlording?
Real estate investing is the classic wealth vehicle that
has taken people from living hand to mouth to the pinnacle
of wealth.

It's the vehicle of choice because it's accessible to all
of us. Everone has a least rented a house or apartment, and
most of us have bought a house. So knowing what it's like
to be renter or homeowner we have first hand knowledge of
our customers when we set out to be real estate investors.

The classic real estate investing model is buy a bunch of
houses, rent them out and in 30 years the mortgages will be
paid off, the properties will have at least doubled in
value, the rents will be twice what they were when you
started ... with no loan payment.

The goal sounds inspiring. Imagine having 10 properties you
bought 30 years ago, each for $80,000, now be worth
$350,000 apiece as a result of a average annual
appreciation rate of 5%. You would have a portfolio worth
about $3,500,000. Monthly rents, on the low side, of $1,200
per house would give you gross monthly rents of $12,000.
After T&I you probably put $9,000 in your pocket.

I think you would agree this is an extremely modest goal,
but what a payoff!!

What a payoff indeed ... for those who actually stick with
it. You see there's a problem with the above scenario, and
that is the early years are really tough.

Cashflow is slim, expenses are high, and most investors who
take this on don't make it through.

They run out of cash.

The short-term solution is to change your focus from buying
and holding to quick-turning houses for cash. Quick-turning
houses, getting them under contract super cheap and
flipping them to another investor for $5-20,000 or more
will take care of your cashflow needs today while you hold
your rental properties for long term growth. This is great
... money, cash!

But you are not out of the woods yet.

Your new short-term problem is management. If you are
buying houses to hold for the long term you must be
prepared for the fact that you will be managing them
yourself, whether you take on that job as an individual or
create a management company to do it. The fact remains that
at some point your occupation will change from real estate
investor to landlord.

And I'm afraid gentle reader, landlording is dirty, smelly
business. One you do not want to be in.

There are worse things in life than being a landlord, most
definitely, but that's not why you got into real estate.
You got into real estate because you want the big dollars.
The really big ones. The 'buy your own island' big dollars,
the 'house on each continent' kind of dollars. The nine
figure net worth.

Didn't you?

That net worth is available, in fact it's waiting for you
to claim it, but you won't achieve the growth necessary to
get there buying single family homes. As a growth vehicle
they are very inefficient.

From a real estate investing standpoint the purpose of a
single family home is to give you experience doing deals,
and to take care of your immediate cash needs.

After you've paid off all your debts, have 12 months living
expenses in the bank, and have a kitty of say, $100,000 to
$200,000 there isn't much further use for single family
homes.

Unless, of course, you want to be a landlord.

As soon as you are debt free and have some starting capital
you should move straight into buying apartments.

There is all kinds of leverage to be achieved by changing
your wealth vehicle from single family houses to apartment
buildings.

- from a value standpoint when buying apartments you are
dealing with much bigger dollars, so as the years go by,
you make more through appreciation.

- apartments have a much higher rent per square foot
compared to houses, so property management can be brought
in take management out of your hands in a cost effective
manner.

- apartment buildings make sense from a business standpoint
so it is no difficult to attract partner capital. - there
is an abundance of apartment financing available from
lenders up to 80% loan to value.

- there are many profit centers, like repairing units and
increasing rents, filling vancancies, that can be
capitalized on to capture upside value.

Also, because apartments are not reliant on your personal
attention and can be effectively managed by property
management companies you are not restricted to buying in
your own local market.

By becoming aware of market cycles and tracking them
closely, you can buy quality properties in any market in
the US at the bottom of a cycle, and ride the appreciation
to the top of the market, where you sell (or exchange out)
and take huge profits.

Of course, providing you live in a market (like CA) that
appreciates rapidly in an up cycle, you can achieve this
with single familiy houses too. But which property would
you rather have appreciating at 15% a year, a $300,000
house, or a $10,000,000 apartment building.

After 10 years a $300,000 house will turn into $1.33M.
Nothing to sneeze at. But during the same 10 years in the
same market a $10M apartment building will turn into $44.4M.

Which would you rather have?

It's an easy choice, and one you simply need to make.

----------------------------------------------------
Ben Innes-Ker is a real estate investing warrior and author
of the SMART Guide To Apartment Investing. He is constantly
refining his systems to make his investing more profitable
with less effort. He shares how to create a huge passive
income buying large apartment buildings with none of your
own money with his subscribers. To receive your Free SMART
Guide To Apartment Investing, go to
http://www.apartmenthouseprofitmachine.com .

Financing Options for Your Business

Financing Options for Your Business
One of the challenges of getting started in any type of
business structure be it corporation, partnership, or sole
proprietorship is getting financing to start or to maintain
daily operations. Typically you will have determined what
you need for starting up and maintaining operations in your
business plan and will go seek a loan from commercial
lenders. And the lenders are all different too. They all
have different requirements and some have perks to offer
for your business. But before you shop for a lender you
should know what is available in the way of corporate
business financing.

When shopping around for commercial loans and trying to
figure out this corporate financing game, the topic of cash
flow will no doubt be referred to. Cash flow is the one
aspect of a business that can make it work and lack of it
can destroy it. If you have any experience with business at
all, you know that there will be a delay from the time a
business first starts to when the invoices start getting
paid. Yet during this time, the corporation still has bills
and salaries to pay. Expenses also include paying suppliers
just so that they can fill their own purchase orders. Try
explaining cash flow to your employees when they have not
been paid—not a good scenario. Or, try explaining to
your supplier why you have not paid its invoices. This is
why you need corporate financing.

One corporate financing option you might be offered has to
do with loaning you money based upon the number of
outstanding purchase orders you have. They way it works is
the suppliers you use to fill your purchase orders are paid
directly by the lender. This type of commercial lending
program gives you cash flow because your suppliers are
taken care of and you can use money for other things. Plus,
you can take advantage of any supplier early payment
discounts.

Another popular form of corporate financing is known as
receivables factoring. How this works is a receivables
factoring company will loan your corporation money based
upon the value of receivables still open. Your invoices are
an asset and are basically collateral for the loan.
Factoring is great if a corporation does not want to incur
further debt but needs a portion of the money it is owed in
order to conduct day-to-day business operations. The
factoring company will verify the invoices you want to
factor and then loan you a significant portion of the money
and hold back a small percentage. The end customer you have
invoiced will actually pay the factoring company (even
though the check is still made out to your company). When
the invoice is paid, the amount held back is returned to
your company and the factoring company takes its fees from
it.

And of course there are commercial loans for your
corporation that is based upon your fixed assets. These
loans are secured by equipment or commercial real estate
your corporation holds so you will probably get longer
payment terms and lower interest.

And commercial lenders may have other programs to help you
keep your cash flow at a state that is good for the health
of your business without incurring a lot of burdensome
debt. Shop around and get all the details before making
your decision and prepare a good business plan.

----------------------------------------------------
My name is Tom Husnik. I live in Minnesota. My web site is
at http://www.husnikfinancialonline.com/

Single Entry Is Simple While Double Entry Bookkeeping May Be The Only Option

Single Entry Is Simple While Double Entry Bookkeeping May Be The Only Option
The difference between bookkeeping services and accounting
may be unclear to the uninitiated while both are of vital
importance to financial success. Bookkeeping is an
important part of the accounting function and is
essentially the record keeping of the financial
transactions. Accounting is while incorporating the record
keeping also includes the presentation, interpretation and
financial control functions including interpretation of the
numbers for the financial health of a business of which
taxation can play a major part.

Bookkeeping stems from the recording of financial
transactions and the accounting term for a business
accounts as books. In effect the accounting function
prepares a record of the monetary affairs of a business and
stores the information in files called books. Hence the
term bookkeeping often misspelled as book keeping which is
the function of a librarian not that of a bookkeeper.

The financial affairs of a business involve many aspects
and start with the recording of what is termed the prime
documents. The task of a bookkeeping service which some
businesses outsource is to record the prime documents,
those prime documents being the sales, purchases and
cash/bank transactions. All small businesses do bookkeeping
and the most successful use the bookkeeping records as a
basis for an accounting function to generate a more
efficient financial service.

All business involves buying or selling something and the
consequent function of receiving or paying money to the
value of those transactions. Recording these transactions
in larger business organisations is done by accounts clerks
who work under the supervision of the accountant.

Invariably medium and larger businesses use a double entry
system for recording transactions. Double entry accounting
evolves from the fact that every transaction as a double
effect on the business of which these are prime examples.

A sale is made. That creates a record of income for the
business which is taxed on that income the other side of
the financial transaction, the double entry, is the fact
that the organisation who was sold the goods now owes the
value of that sales invoice to the business. That is the
double entry, record the sales income and also record the
debt due from the customer who is now called a debtor.

Someone who owes the business a debt is called a debtor.

A purchase is made. That creates a record of expense for
the business which can be deducted from income and lowers
taxes and the other side of the financial transaction, the
double entry, is the fact that the organisation who
supplied the purchase on credit is now owed the money. That
is the double entry, record the sales income and also
record the credit due to the supplier who is now called the
creditor.

Someone who has supplied goods on credit is called a
creditor.

The third type of prime transaction is the transfer of
money between the debtors and creditors and the business.

When a debtor pays his sales invoice the double entry is to
add that amount of money to the business financial records
and the opposite double entry goes to the debtor account to
reduce the amount owed to the business since it has now
received the cash.

When a creditor is paid the amount owed the money is
recorded as reducing the cash resources of the business by
for example deducting the money from the bank balance and
the double entry reduces the amount the business now owes
to the creditor account since it has reduced the credit
received.

The bookkeeping function is to record these prime
transactions. Since every financial transaction has an
equal and opposite entry in the books there has to be a
mathematical check that both sides of the transactions add
up to zero. This check process is called a trial balance
where both sides of the entries should be in agreement and
normally the point at which the bookkeeping service is
deemed to be complete.

Double entry bookkeeping is required for all businesses
that require to produce a statement of its assets and
liabilities. This statement of assets and liabilities is
the total of all the balances from the trial balance and is
called a balance sheet.

Many small businesses do not require a balance sheet. In
the UK the production of a balance sheet is optional for
every self employed business as it is not an obligatory
requirement of the self assessment tax return form. A self
employed bookkeeping system is not required to produce a
balance sheet because the business effectively belongs to
the owner and is that owners personal business.

Limited companies must produce a balance sheet under
various financial acts and submit the balance sheet to both
Companies House and the tax authority each year. The
different rules applying to a limited company is because
the accounts including the balance sheet are public records
available to the members of that company and not
necessarily the property of a single individual or
partnership.

The self employed bookkeeping system can be simpler being
produced from a single entry style of bookkeeping rather
than double entry. Single entry bookkeeping makes a single
entry for each financial transaction which is sufficient to
produce an income and expenditure account, a profit and
loss account, but does not make the reciprocal entry that
establishes the value of the assets and liabilities.

Single entry can be as simple as making a list of the sales
income and the purchase expenses. Such a bookkeeping system
is valuable to the smaller business as it requires little
or no bookkeeping or accounting knowledge. A smaller
business can produce its own accounts without the need for
a bookkeeper or accountant particularly if it has access to
bookkeeping templates through bookkeeping software to
produce the accounts in the accounting format required.

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Terry Cartwright,qualified accountant and CEO at DIY
Accounting in the UK designs accounting software
http://www.diyaccounting.co.uk/smallbusinessaccounting.htm
on excel spreadsheets providing complete single and double
entry bookkeeping systems
http://www.diyaccounting.co.uk/bookkeeping.htm