Accounting & report preparation are the systematic and comprehensive processes which involves recording of financial transactions pertaining to a business and it also refers to the process of recording, classifying, summarizing, analyzing and interpreting the transactions to stake holders, tax collection entities and other dependent agencies of the business.
Accounting is the key function almost for any type of business. It may be handled by Book keeper, accountant or a chartered accountant based upon the size and scale of operations of an entity.
Startup costs related to accounting:
Activities relating to the startups are the requirements to organize a new business, launching a new product, legal setup costs, travel costs and employee salary related costs etc. Essentially the accounting for the startup is to expense them as incurred. At the same time the guidelines also simple enough, key issue is not to assume that other costs which are similar to startup costs should be treated in the same way.
So you must review other elements like “Generally accepted accounting principles (GAAP)” to apply proper treatment for the costs like Customer acquisition costs, loan origination costs, R&D costs and cost of internally generated assets.
Planning to allot this work to a chartered accountant? What are the inputs that a CA will require?
A monthly process of accounting doesn’t have to be as strict as annual submission of reports. At the same time switching from annual submission of reports and tax returns to monthly process can seems to look difficult at initial stages.So the organization have to provide sufficient amount of information to the CA for effective monthly financial result. The information will be like
- Firms Updated balance sheet
- Daily inventory report
- Vendor payments, cash position and
- Tax payment receipts etc.
But there are real benefits to knowing profitability, cash flows in the organization and financial position for every month. Having up to date financial information allows you to find trends and better plan for future.
Accounting Process of for Monthly reporting:
The process followed for monthly record of transactions by startups is known as “Soft Close Process”. It consists of
- Reconciliation of all bank accounts
- Completing and sending invoices or receipts
- Load bills received for payments
- Quick check of missing transactions
This method of accounting could really helpful and takes lesser time to analyze the financial reports.
Role of a CA in the preparation of monthly reports:
Here is the list of daily accounting tasks that a chartered accountant should follow for reporting the monthly accounting tasks.
- Checking cash position
- Record transactions
- File the receipts and documenting
- Review of unpaid bills from the vendors
- Sign checks and pay vendors
- Preparing and sending invoices
- Review of projected cash flows
- Balance your business check book
- Review Aged receivables
- Analyze status of inventory
- Review of tax payments
- Review of actual profit or loss and monthly Budget
- Review of month-end balance sheet vs. prior period
- Review quarterly tax reports (form-941) and make payments
- Review sales tax and make quarterly payments
- Compute estimated income tax and payments
- Filing IRS forms W-2 & 1099- MISC
If you are looking for other information on business incorporation and its legal formalities, do read more articles on my finance blog.
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