Frequently Asked Accounting Questions

To a layman, the financial realm can seem impossibly intricate. It’s for this reason why many opt to work with a CPA when handling their business finances. To shed some light on accounting matters, below are some commonly asked questions that small business accountants have weighed in on.

What’s some accounting jargon I should be familiar with? According to seasoned accountants in Utah, some key terms you should know include inventory, assets, liabilities, revenue, equity, and costs of goods sold. In the accounting world, these words and phrases are a part of daily conversations. Understanding these terms will arm you with a basic understanding of accounting.

Frequently Asked Questions About Small Business Accounting

What’s the best way to record transactions?

Though cost-effective, recording transactions by hand can be extremely time-consuming. What’s more, it leaves considerable room for error. To ensure that you don’t make any mistakes, it’s prudent to employ a small business accountant. If your budget doesn’t allow for such, consider using accounting software.

How can I file my small business taxes?

To submit your small business taxes, all you’ll need is your TIN, financial records, and a tax return form. If you’re unfamiliar with the process, enlisting the help of a Utah CPA may be the most sensible course of action. They’ll help you gather the necessary documents and fill out the form correctly. These affairs can be tricky to navigate at first, so it’s in your best interest to seek counsel from industry experts.

Why would the IRS audit me?

In some cases, the IRS audits businesses at random. However, inconsistencies in your books are more likely to prompt the IRS to look into your business. In other words, suspicious activity is the primary culprit. In the hopes of avoiding this reality, it’s critical to put a premium on accuracy. If you don’t feel confident in your abilities, work with an accountant in Sandy until you find your bearings.

Should I have a separate bank account for my business?

While it’s not necessary to open up a different business account, small business accountants recommend dividing your personal and business funds. In essence, mixing these funds can lead to a fiasco during tax season. The only surefire way to remain organized is by eliminating confusion, which can prove rather challenging when you combine funds.

How can I increase profits?

Increasing revenue is made possible by decreasing expenses. While this tactic may sound exceedingly straightforward, it’s easier said than done. In regards to supplies, inventory, vendors, and equipment, always shop around for the best deals. You can also increase sales by offering discounts and attending networking events.

Is it possible to lower my tax liability?

Fortunately, you can lower your tax liability by claiming tax deductions. Some of these include self-employment tax, business loan interest, and debt deductions. The IRS is no doubt a stickler for accuracy, so be sure that you’re claiming these deductions appropriately.