Category: Uncategorized

As a real estate business, it’s best not to overlook the value of accounting. Whether you’re a small or a large enterprise, real estate accounting services can help your organization get the insights needed to maintain and scale your company while aligning with relevant government requirements.

What Is Accounting for Real Estate?

Accounting for real estate involves tracking and managing real estate financials, which include transactions from buying, selling, and purchasing properties. These services help your team gain a clearer overview of the company’s cash flow, making it easier to gauge where and how you can expand your real estate offerings — or if cutting costs is necessary. 

Real estate accounting also includes preparing and reviewing tax reports, which include information on real estate or property taxes. It also prepares your business for a financial audit, ensuring you’re compliant with legislation.

Benefits of Accounting Services for Real Estate

With accounting for real estate, you get to measure your business’s economic performance and strategize on how to position yourself in the industry. It helps you make data-driven decisions on your future projects or purchases. 

Accounting services also help you learn more about your properties’ revenue and business expenses, catch red flags more easily and avoid potentially catastrophic losses. Businesses can optimize spending for tax deductions, too.

Depending on the state of the economy, your accountants may perform inflation accounting if needed. During seasons of high inflation, basic accounting may provide financial data that is irrelevant due to the fluctuating value of the dollar. Inflation accounting uses index prices to provide a more realistic picture of your business’s financial state.

What Is a Property Accountant?

A property accountant is an accountant who specializes in real estate properties. They can be well-versed in real estate taxes, so you can be more certain of the accuracy of your documents. Similar to other types of accountants, a property accountant manages your business income and expenses and helps you comply with legislation.

Accounting vs. Bookkeeping for Real Estate Agents

Accounting is not the same as bookkeeping. A bookkeeper may be able to perform basic accounting, such as recording financial transactions. However, accountants, especially certified public accountants (CPAs), are capable of larger and more complex accounting tasks. 

For instance, a managerial accountant focuses on using financial data to make business decisions. A cost accountant, on the other hand, focuses on the costs related to production. Tax accountants concentrate their services on taxes.

Even if you’re a small business with relatively simple financials, hiring an accountant can be a highly beneficial move to enhance financial management and make the most out of every dollar you earn.

Real Estate Accounting Best Practices

Accounting and real estate work go hand in hand to ensure business growth. This type of accounting mostly involves tracking financial transactions, conducting monthly reviews and using this information to make business decisions. 

Keeping the following best practices in mind can help your company enhance its accounting and ultimately improve operations. 

Keep Personal and Business Spending Separate

Separating your personal and business spending involves opening a business bank account. There are a few reasons why you’ll want to do this:

• Easier financial management: Since you’ll be using your financial data as a reference for your business decisions, having a clear history of your business expenses can make it easier, especially if you’re a large business. This can make tax season simpler, too.
• Liability protection: If you’re not a sole proprietor, having a separate business account protects you from personal liability. You won’t be personally responsible for any debt or liabilities of your business.
• Professionalism: Even if you’re not thinking of taking a business loan in the near future, when that time comes, having a separate business account with a clear-cut history of your business expenses can make you look good in front of lenders. 

Track the Right Information

It’s essential to track information from bank statements, receipts, invoices, checks and other business transactions. To ensure you’re getting the full overview of your real estate business, your accountant should take note of the following costs:

• Property acquisitions
• Property maintenance expenses
• Rental income and mortgage payments
• Commissions of your real estate agents
• Association and brokerage fees
• Transportation costs
• Professional development and licensing fees
• Advertising and marketing expenses
• Administrative expenses

Categorize these expenses properly for a smoother taxation process. It can help you identify options for tax deductions. Plus, it will enable you to showcase your reports more accurately to demonstrate your real estate business’s true performance.

Keep Local Requirements in Mind

Your business must prioritize certain financial rules and regulations, especially those regarding taxes. 

Your tax accountant should be familiar with relevant legislation at the federal, state and local levels. For instance, the Internal Revenue Service (IRS) states that all rental income should be shown on your tax return. Keeping a record of your rental expenses is important, and your business should be able to showcase documentation if the IRS audits your company.

By learning these regulations, you can also benefit from tax deductions and other benefits. 

Ensure Accuracy in Your Reports

Your financial data should be accurate, which is why monthly reviews are necessary. Before you create financial reports from this data, you’ll need to watch out for discrepancies and correct the numbers accordingly.

Once you’re certain of their accuracy, you can then create reports, such as:

• Balance sheets.
• Income statements.
• Cash flow statements.

Ensuring your financial reports are accurate will help you make better and well-informed business decisions.

Use Effective Accounting Software

In relation to accuracy, using accounting software can reduce the chances of human error from manually tracking your business transactions. 

Accounting software will also simplify the work and increase your accountant’s efficiency. For instance, the software may automate expense tracking, invoicing and financial reporting. These programs are typically cloud-based, enabling you to review the information from anywhere with any device.

You can find accounting software programs tailored to the unique needs of the real estate industry. 

Let Marshall Jones Do the Work for You

Marshall Jones has been working with Atlanta businesses for over 30 years through our certified public accountants and advisors.

Count on our experts to deliver the real estate accounting services your business needs so you can sit back, relax and enjoy greater peace of mind. Stop worrying about managing your own business finances, and let our team do the work for you. Let us help you save time, refocus your resources and improve your operations. 

Our accountants are proud to be accessible — you can contact them conveniently by call, video chat, text or email. 

Learn more about our services today!

Nonprofit organizations (often referred to as NPOs) work based on benefiting communities and charitable causes rather than making a profit. NPOs can be organizations such as hospitals, churches, universities or any other philanthropic foundation that serves the public in various ways.

Because they’re not focused on making a profit, NPOs need monetary donations to benefit the community. Donors can donate cash or gifts in kind to NPOs, making proper financial and donation tracking important for these organizations. Nonprofit donation tracking software can help NPOs record and track donations received and money spent.

Different Donation Types

Donations can take on various forms and are grouped into two main categories — cash and in-kind donations.

Cash Donations

Monetary gifts in varying amounts are the most common type of donation most nonprofits receive. They come in two forms:

• Restricted cash donations: These donations are made with a specific end goal in mind. Restricted cash donations must be utilized for a predetermined purpose or project.
• Unrestricted cash donations: Unrestricted cash donations can be allocated at your discretion and serve any area of your organization.

In-kind Donations

In-kind donations or in-kind gifts are nonmonetary contributions and may take the following forms:

• Services or skills: Donors offer services or skills to NPOs to help them support the surrounding communities. These may include consulting, teaching, IT, legal or accounting services.
• Goods: Donors may contribute tangible items to NPOs, such as equipment, school books, stationery, clothes or food.
• Assets: Donors sometimes give or help NPOs and their associated communities acquire assets like housing or other properties.
• Paid bills: Here, the donor settles a bill on behalf of the NPO, such as paying for the organization’s electricity or water usage.

The Importance of Donation Tracking

Any business, big or small, must track its income and spending. This process helps business owners create accurate financial statements and balance sheets to manage their operations well. Financial records will equip you to identify your biggest income streams and remain aware of where you spend or invest most of your resources. 

Similarly, cash and in-kind donation tracking for NPOs is important for several reasons:

• Responsibility and transparency: NPOs must track and make all financial information publicly available, allowing donors to monitor how their contributions are utilized. Donors often place high value on an NPO’s level of transparency and whether donations and resources are managed responsibly. Donation tracking helps build trust between the NPO and its donors, stakeholders and any regulatory bodies involved.
• Tax compliance (NPO): Many NPOs in the United States qualify for tax-exempt status issued by the Internal Revenue Service (IRS). NPOs must request 501(c)(3) status from the IRS to receive tax exemption. To remain 501(c)(3) compliant and qualify as a tax-exempt nonprofit, NPOs must often have a dedicated Chief Investment Officer and Accounting Team and meet filing requirements. 
• Tax compliance (Donor): Donations can usually be subtracted from donors’ adjusted gross income (AGI), which reduces their taxable income and results in owing less income tax. Donors may claim their donations as a tax write-off, provided they have a receipt from the NPO. NPOs are therefore required to track who their donations come from and deliver these donors an accurate receipt.
• Plan and allocate: Donation tracking will help you identify gaps and opportunities. With a clear understanding of your NPO’s available resources, you can plan, make informed decisions and allocate the necessary resources where they would be most impactful.
• Acknowledgment and recognition: A record of the donations received alongside the corresponding donors will tell you who donated what, how many or how much. This record will allow you to give thanks and recognition where it is due, so keeping track of donations is a great way to build long-standing relationships with your donors and encourage continuous support!

Best Practices for Tracking Cash and In-kind Donations

The IRS and the general public may keep tabs on an NPO’s expenditures to ensure that all donations are utilized responsibly. Keeping the following information on file will help you stay organized and prepare you for the required accounting procedures:

1. Requests and applications: Keep track of donor requests and applications. Important information includes names, contact details and a record of all communication and engagements. Having this data available will allow you to establish a contacts database useful for future planning and resource allocation.
2. Monetary and fair market value: Record the value of each cash and in-kind donation received. For cash donations, you will track the monetary value. The value of in-kind contributions can be determined by doing a market-related estimation of costs and recording the retail prices for the goods received or the industry standard fees for services donated.
3. Donor details: Keep the details of each official donor on file. Key information includes the name and contact details of the individual donor or organization.
4. Contribution frequency: Record how often and from who you receive contributions within a specific time frame.
5. Impact value: Track the impact of different projects or contributions. For example, an education-focused nonprofit might note how many kids will have access to schooling for each $1,000 contribution. 
6. Formal receipts: The NPO must issue formal receipts to its respective donors, acknowledging all donation(s) of a value of $250 or more received. Donors require an official receipt to qualify for tax exemption. Additionally, providing this documentation establishes credibility and trustworthiness with your donors.

How to Choose a Donation Tracking Tool

Various donation tracking tools are available to track cash and in-kind gifts for tax purposes. Many organizations use QuickBooks, as this software is widely known and readily available. Whichever tracking tool you’re considering, make sure it allows you to maintain a real-time, accurate contacts database to keep your donors and their contributions organized.

During your selection process, consider your NPO’s unique needs and requirements. The best donation tracking tools include functionalities such as accurate data capturing, reporting and visualization tools, and automatic receipt generation. Above all, be sure the software is user-friendly, reliable and secure, as the safety of donors’ contact details and the associated financial data is paramount.

Marshall Jones Is Ready to Help With All Your Accounting Needs

Marshall Jones is a team of top accountants in Atlanta, GA, serving the industry since 1984. We have extensive industry expertise and are familiar with the unique requirements associated with nonprofit organizations. If you need assistance tracking cash or in-kind donations and managing other financial concerns, we’re here to support you and your NPO by handling all your accounting and taxation needs. We can manage your accounts on- or off-site and let you focus on expanding your organization so you can do more for your community. 

We specialize in business accounting software solutions for NPOs like yours. Our team will provide expert guidance to help you make an informed decision when choosing a donation-tracking tool for your organization. Contact us today — together, we can work toward reaching your goals.

Are you interested in a challenging and rewarding career as a general contractor in Georgia? This license is highly sought-after as it authorizes unlimited residential and commercial projects, opening up a world of possibilities.

How do you get a general contractor license in GA? There are several prerequisites to applying for your license, including age, education, experience and specific financial, tax and insurance requirements. 

Who Needs a Contracting License in Georgia? 

Anyone offering or performing construction work costing more than $2,500, including materials and labor, must have the correct license from the State Licensing Board for Residential and General Contractors, or they will be acting illegally.

Types of Contractor Licenses in Georgia

Before learning how to obtain a general contractor license, it’s important to note that four contracting licenses are available in Georgia. 

Here are Georgia’s four contractor license definitions and their specifications: 

1. Residential-basic contractor license: A residential-basic contractor can legally perform contractor activity or work on specific structures only. The scope of this license extends to one-family townhouses and detached one-family and two-family residences that are not more than three stories tall, as well as their accessory buildings and structures. The requirements for residential contracting licenses differ from those of general contracting licenses.
2. Residential-light commercial contractor license: A residential-light commercial contractor may perform contractor activity or work on multifamily and multi-use light commercial buildings and structures that are less than four stories tall and less than 25,000 square feet of total interior space. If the building they are working on is engineered steel, it can be 50,000 square feet. 
3. General contractor limited tier license: Individuals with limited tier licenses are subject to the same parameters as general contractors, except they are subject to a financial limit of $1,000,000 per contract.
4. General contractor license: The general contractor license allows the holder to perform unlimited construction work. General contractors may take on projects of any size, residential or commercial. 

Georgia General Contractor License Requirements

Before applying for your dream career, you must understand the specifics. Here’s what you need to know about the requirements for a general contractor license in Georgia.

Age

Individuals have to be 21 years of age to apply for a general contractor license. Once you have turned 21, you can begin the application process if you meet the other necessary criteria.

Education and Experience

When submitting your application, you will be required to swear the information you’ve included is correct and submit satisfactory proof. To be considered eligible for a general contractor license in Georgia, you must have education or experience that meets one of these three options:

1. Four-year degree plus a year’s experience: You must have completed an accredited four-year bachelor’s degree in college or university in either engineering, architecture, building construction, construction management or another field acceptable to the General Contractor Division. In addition, you must have at least one proven year of experience working as or employed by a contractor unless you have other background that the General Contractor Division approves as substantially similar.
2. Courses and experience equal to four years: You must have a combination of academic credits from accredited college-level courses and proven practical experience equal to at least four years that the division deems acceptable. 
3. Four years of proven experience: You must have at least four years of experience working in construction or a similar field. Your experience must include at least two years in the employment of a general contractor or other employment found acceptable by the General Contracting Division. Finally, your experience must consist of one year in administration, marketing, engineering, accounting, estimating, drafting, project management, supervision or other division-approved activities.

Minimum Net Worth

When applying to become a general contractor, you must provide satisfactory proof that you have a net worth of at least $150,000 to be eligible.

Insurance

In the application, you must show that you have general liability insurance of at least $500,000 per occurrence. In addition, if you have employees, you must provide workers’ compensation insurance in compliance with Georgia law.

Examination

To obtain a general contractors license, you will have to pass an examination approved by the General Contractor Division that tests your knowledge of topics such as:

• Building codes.
• Contracting.
• Construction ethics.
• Estimating costs.
• Practical application of commercial general contracting.
• Reading plans and specifications.
• Responsibilities to the public, owners, subcontractors and suppliers.
• Georgia laws related to general contractors, construction, workers’ compensation, insurance, surety bonding and liens.

Other Requirements

To be considered eligible for a Georgia contractor license, you will also have to:

• Demonstrate good character: Those applying for a general contractor license must prove to the General Contractor Division that they demonstrate competency, integrity, ability and financial responsibility.
• Consent to a background check: You will have to sign a form consenting to a background check, including criminal history, and submit it with your application.
• Verify your tax payments: You must prove you have been paying your taxes for a prescribed period.
• Designate a qualifying agent (if applicable): If a business requires a contracting license, the application must be submitted by a qualifying agent who works for or owns part of the business.
• Establish a joint venture (if applicable): Should two or more individuals or businesses want to operate a joint venture, they must either apply as the joint venture itself or the two or more individuals or qualifying agents acting on behalf of a business must each have a general contracting license. 
• Confirm eligibility as a military spouse or transitioning service member (if applicable): If you are considered an eligible candidate, you may qualify for expedited processing.

How to Apply for a General Contractor License in Georgia

Now that you understand the requirements, how do you get a general contractor license in GA? Firstly, it’s important to remember that when you apply for your license, you’ll need to select either the individual or the qualifying agent application. Once you have made your selection, you will proceed as follows:

• Complete the application
• Gather supporting documents
• Review and double-check
• Submit the application

If you struggle to assemble your supporting financial documents, consider seeking expert assistance from a skilled tax and accounting professional to increase the likelihood of your application’s success.

Financial Requirements for a GA General Contractor License

From demonstrating the required net worth to providing proof of insurance and tax compliance, having your financial documentation in order is essential. You’ll need to fulfill the following financial and insurance requirements to obtain a general contractor license:

• Pay a non-refundable application fee
• Demonstrate financial responsibility 
• Prove your net worth with a certified public accountant (CPA) reference letter
• Verify tax payments
• Provide proof of acceptable insurance

Audit and CPA Reference Letter

Applicants for a general contractor license in Georgia must provide a CPA reference letter or form attesting to a review or an audit. While an audit for your general contractor’s license is not a strict requirement, it is advisable for your success. Having an auditor demonstrate your financial stability helps you present a strong and credible application.

Get Financial Assistance for Your General Contractor License Application 

Navigating the financial requirements for a general contractor license can be complex. Marshall Jones specializes in audits for the construction industry and provides accurate and up-to-date financial analysis and information you can use for your application. General contractors and construction companies face unique accounting challenges, and we help overcome them.

Marshall Jones Certified Public Accountants And Advisors is a full-service accounting firm in Atlanta, GA, serving individuals, corporations, small businesses and nonprofits. Our experienced team provides tax preparation and compliance services, audit and assurance assistance and client accounting services. Let us help you save time and support your success.

Learn more about Marshall Jones, or contact us with any questions.

If you want to buy out a business partner, you must purchase their ownership interest at fair market value. This process requires implementing an effective strategy that includes communicating honestly and acquiring enough funds to complete the transaction. Buyout reasons can include a desire for full control, differing views on the business’s direction, retirement or even death.

Understanding Buyouts

A buyout refers to a transaction where one party acquires another party’s ownership share in a business. Depending on who the buying party is, ownership changes are classified into various types, such as:

• Partner buyout.
• Management team buyout.  
• Employee buyout of a small business.
• Private investor acquisition.
• Company acquisition.

What to Do Before Buying Out a Business Partner

Because a partner buyout will change the company’s ownership structure and its future direction, it’s critical to perform the tasks below to ensure a smooth transition. 

• Consider the company’s future: Evaluate the buyout’s impact on business operations and how you plan to address it. If your partner is hands-on, determine if you’re ready to take on their responsibilities or hire someone to handle these tasks. Examining a future without your business partner will help you prepare for the possible effects.
• Think about partner buyout financing: Buying out a business partner is often a significant expense that requires careful planning. If you can’t pay the full amount out of pocket, consider the funding options you can explore.

How to Buy Out a Business Partner

When buying out a partner in a limited company or other type of business partnership, the process will begin with preparation. Review the business’s buy-sell agreement to confirm the formula for setting a buy-out price, the payment terms and other protocols that will guide the process. 

Next, undertake the steps below.

1. Kick-Start a Positive Conversation

Open a conversation with your business partner in a positive tone to determine a buyout plan that works for both of you. Clearly communicate and document the expectations and goals of each party to simplify the legal process. Regardless of the reason for the buyout, maintain a friendly, easy-going tone during the discussion.

2. Seek Legal Counsel

Both parties should get independent lawyers to guide the transaction. Your attorney will help you with the negotiations and advise you on your obligations as the buyer. 

3. Determine the Business’s Value

You and your partner should schedule an independent valuation to provide a starting point for negotiations. The valuation should determine the company’s accurate, fair market value.

4. Negotiate a Price

Based on the business value, discuss the offer price with your attorney and then present it to your business partner with justifications. Be open to compromise within reasonable limits, regardless of their initial response.

If the buyout reason is retirement, negotiate a lower buyout price by agreeing to take responsibility for their retirement benefits. 

5. Create the Buy-Out Agreement

Once you and your partner agree on a price, your lawyer will draft an agreement detailing all relevant terms, including the buy-out deadline, a non-compete clause, and how you’ll finance the purchase. Agreements must meet state buyout laws.

Business partners can agree to proceed with one of these buyout structures:

• Installment
• Lump sum
• Seller financing
• Lender financing

6. Finance the Buyout

After signing the agreement, send payment within the agreed-upon timeline. If you need to secure financing for the purchase, submit a loan application early to an institution with favorable interest rates to enable timely payment. 

It’s essential to consult with a professional tax advisor to understand the tax implications of the buyout. Your tax obligation depends on the presence of a goodwill payment and whether the Internal Revenue Service (IRS) considers the buyout a capital gain/loss, ordinary income or if the payment is deductible by the remaining partner.

7. Ownership Transfer

Your business partner’s lawyer will file the necessary legal documents with the authorities to complete the ownership transfer.

8. Inform the Relevant Parties

Send official notifications about the change in ownership to employees, customers and other stakeholders.

9. Update Business Documents

Update the partnership agreement, bank accounts, insurance policies and other records to reflect the changes in business ownership.

10. Implement Post-Buyout Tasks

Collaborate with the departing business partner to hand over responsibilities to you or an employee. 

11. Focus on the Future

Now that the business has a new ownership structure, you can implement strategies to guide it into the future.

How to Finance a Partner Buyout

Financing is a vital aspect of a buyout as it determines how you’ll purchase your partner’s share in the business. With so many options available, it’s advisable to consult with a reputable financial advisor to help you choose low-risk options. 

Examples of funding options include:

Personal Financing

If you have a considerable amount of saved funds, you can use them to complete the entire transaction. Other options include selling your assets or borrowing funds from friends and family.

Business Profits 

If your business can spare its retained earnings, you could use them to complete the buyout. Talk to your tax advisor to determine if this option is tax-efficient.

Equity Financing

This option involves selling stocks to individuals, venture capitalists or angel investors to raise capital. Alternatively, you can sell stocks publicly through an initial public offering (IPO).  

Debt Financing 

Debt financing involves selling debt instruments like bonds and bills to institutions or individuals in exchange for funds. You can also borrow money through small business, non-bank cash flow and recurring revenue loans. 

Merchant Cash Advance 

This arrangement is a lump sum payment that you’ll repay, plus a fixed fee, using a percentage of the business’s revenue. Consider this option if your business generates consumer sales. 

Seller Financing 

Your business partner can lend you the funds to buy them out in exchange for installment payments. This is a win-win financing option since it saves you from the financial implications of a lump sum payment and gives your partner a steady income source.

Mezzanine Financing 

This option combines equity and debt financing and adapts repayment to the business’s cash flow. The lender can convert the loan to equity interest if you’re experiencing repayment challenges. 

Deferred Compensation 

The selling and buying partners can agree to a buyout that spreads out payments over a defined period. This option is ideal if you don’t have the funds to pay in a lump sum.

Insurance Policies 

If the buyout is a result of your partner’s death, you can purchase their share with life insurance as long as you had one set up beforehand. A disability insurance policy can also provide financing if your business partner can no longer work. 

Contact Marshall Jones for Help Buying Out a Business Partner

Marshall Jones Certified Public Accountants And Advisors is here to offer financial and tax advice to simplify your buyout. We have over 30 years of experience in the industry and a reputation for meeting client needs. We’ll tailor our solutions to your unique situation to streamline the process.

Reach out to us online and let us help you save time, re-focus your resources and improve your operations.

Requesting a nonprofit audit is a critical step in ensuring regulatory compliance and demonstrating trust to current and potential donors. Audits display a leadership’s willingness to run an open and accountable organization. 

What Is Nonprofit Auditing?

Nonprofit auditing involves examining an organization’s statements to determine overall financial health and compliance with state and federal laws. An independent third-party auditing firm assesses internal controls, accounts, transactions and accounting practices against the generally accepted accounting principles (GAAP).

The audit requirements for nonprofit organizations include:

• Fulfilling by-law procedures.
• Expensing over $750,000 in federal funding per year.
• Recording a gross annual revenue of more than $500,000 in most states.
• Completing a grant application.

How to Request an Independent Nonprofit Audit 

An independent audit establishes credibility, ensures compliance and reveals areas for financial improvement. Use the steps below to request this evaluation.

1. Determine if an Audit Is Necessary

Check the state, federal and organizational requirements to determine if your nonprofit needs an audit.

2. Assign Audit Responsibility

Board members can oversee the auditing duties themselves or give the responsibility to a subcommittee or task force. Also, they must determine which roles to delegate to employees and identify a liaison between the audit overseer and the auditing firm.

3. Establish Goals and Reporting Procedures

Identify the goal and expectations for the audit and determine how the auditing firm will present its findings.

4. Address Conflicts of Interest

Determine how to address conflicts of interest arising from allowing those involved in internal controls and financial matters to gather audit documents. This step ensures accurate and objective audit results.

5. Search for an Audit Firm

Search online for reputable and qualified auditing firms with experience evaluating the financial health of nonprofits. You can also ask other organizations for recommendations.

6. Create a List of Your Top Firms

Narrow down your list to the firms that attract your interest.

7. Submit a Request for Proposals (RFP)

Request proposals from your top firms and compare their fees, timelines, case studies and references.

8. Choose an Auditing Firm

After assessing the proposals, pick the most qualified firm.

Pre-Audit Questions to Ask Auditors

To ensure seamless auditing and to understand the process, ask your auditing firm the questions below: 

• What is your transition process? Determine how the new auditing firm will work with your previous auditor to ensure a smooth transition.
• What major accounting changes could affect the audit this year? Ask your auditor to explain recent regulatory updates and how they’ll affect the nonprofit audit.
• What is the scope of the audit? Determine all the documents the auditors intend to examine and how they’ll impact the audit’s goal.
• How can our team help to make the process smooth? Ask how your employees can help the auditor streamline and accelerate the entire process.
• What does your control assessment involve? Because the auditing firm will examine multiple transactions, ask them to describe their control assessment and its effects on their process.
• How do you determine materiality? An omission or misstatement is material if it impacts the decision of financial statement users. Find out how the auditing firm determines what is material or immaterial and its effect on the results.
• Do you anticipate independence issues? Ask if the auditing firm has any circumstances that could affect the independence of the audit. For instance, an independence issue can arise if the child of an auditor attends a nonprofit school.
• How do you define independence? Find out what methods the auditing company uses to define its independence. 

What to Expect During a Nonprofit Audit

After receiving satisfactory answers to your questions, here’s what you can expect to happen:

Document Requests

The auditor will ask for various financial records, such as:

• Bank statements.
• Unpaid invoices.
• Investment statements.
• Recent form 990s, 1099s, W-2s and other tax documents.
• Handbook of fiscal procedures and policies.
• Board meeting minutes.
• Records of grants received.
• Payroll information.
• Gift details.

To simplify audit preparation, you must organize several financial matters, such as:

• Reconciling bank accounts.
• Reviewing your vendors.
• Sending undeposited funds.
• Assessing accounts payable and receivable.
• Addressing uncleared transactions.
• Identifying coding errors.

The auditing firm may also require access to the organization’s accounting system to audit your financial records. Ensure to set up the right permissions when providing this access. 

Data Tests 

After gathering the necessary information, the auditor will proceed to test:

• Internal controls: They’ll review your organization’s policies and processes to ensure accurate and compliant financial reporting.
• Transactions: The firm will compare sample transactions from bank statements and supplier invoices to your financial records to confirm the data matches.

Inquiries

The auditor may have questions for your team during auditing to better test and analyze the data. So, ensure open communication with your employees to streamline the process.

Audit Reports

The auditor will document their objective view of the nonprofit’s financial health and compliance with financial reporting laws. They’ll also present their findings to the board, subcommittee or task force.

Here are some questions to ask the auditing company during this meeting.

• Did you encounter any hindrances that made you change the auditing approach?
• Were there any significant material deficiencies in the control system?
• Were there any disagreements between our teams during auditing?
• Did our team fail to make any proposed adjustments?
• What is your perception of our leadership’s attitude toward financial controls?
• What can we do to streamline the auditing process for you and us next year?
• Do you have any other matters you’d like to address?

Why Nonprofits Should Consider Conducting an Audit

Regardless of whether the law requires an audit, evaluating your financial and compliance status is significant because it:

• Demonstrates your commitment to financial transparency and accountability. 
• Builds trust with donors and other stakeholders.
• Enhances the nonprofit’s eligibility for grants.
• Identifies areas to improve financial strategies, management and internal processes.

Request a Nonprofit Audit From Marshall Jones

Leveraging over 30 years of experience, Marshall Jones offers expert nonprofit audits to help you understand your compliance and financial status. Our team is ready to answer all your questions and customize an auditing strategy that fits your specific goals.

When auditing a nonprofit organization, we observe accounting best practices to deliver accurate and objective results. Contact us online today to request an independent audit. We’ll help you save time, re-focus your resources and improve your operations.

Hiring and retaining talented candidates can be difficult in today’s marketplace. If the candidate you’ve offered the position to is juggling multiple offers, their selection might boil down to one thing — the company’s benefits packages. Your ideal candidate is most likely to choose the company with the most competitive benefits package. Does an Employer Benefit From a 401(k) Matching Plan?

What Are the Benefits of Having a 401(k) Package for Your Employees?

401(k) plans are unique investment accounts helping workers prepare for their future retirement. They allow employees to automatically input a percentage of their weekly, biweekly or monthly paycheck into a specific account designed to grow over time.

Offering a 401(k) benefits package isn’t mandatory as an employer, but there are several incentives to provide one:

• Qualified talent: Set yourself apart from the competition by offering talented candidates a comprehensive benefits package.
• High retention: Show your employees they’re valued by matching their investments in their future with a 401(k).
• Long-term company success: Your company’s success is directly tied to the talents, qualifications and capabilities of your workforce. 

To ensure you offer the best packages your company can, we recommend you annually review your benefits packages for new and existing employees. It’s also wise to allow new hires to transfer their previous 401(k) funds into their new account with your organization. Rolling over funds into a new employer’s 401(k) plan offers employees certain benefits to continue growing their retirement savings. 

How Do Employer 401(k) Matches Work? 

A 401(k) employer match means the employer has chosen to match a percentage of the employee’s contribution to their retirement account. This matching usually comes at specific rates, which tend to be between 3% and 6% of the employee’s salary. So, if 6% of their salary comes out to a 10% annual contribution, you will also make a contribution of $10. As of 2024, however, the maximum contribution amount for combined employee and employer contributions is 100% of an employee’s salary or $69,000 — whichever comes first. 

There are a few different ways you can match a 401(k) contribution, such as: 

• Dollar-for-dollar: This program means an employer will match employee contributions to the dollar, based on the percentage offered from the plan. So, if an employee contributes 3% each year and that amount comes out to $5,500, you will provide the same.
• Percentage-based: Also known as partial matching, this option ensures an employer will match 50% up to a certain percentage of the employee’s salary. When an employee contributes 5% of their annual salary, you will contribute 2.5%. 
• Tiered match: Some employers offer matches at different rate structures. Typical structures may take shape as matching 100% on the first 5% of an employee’s salary contributed before decreasing to 50% on the next 2%. 
• Non-matching: Some companies supply employees with 401(k) contributions regardless of the employees’ contribution to the account. 

These 401(k) employer match plans generally become available upon employment, and sometimes through automatic enrollment. However, employer contributions can occasionally be delayed until after one year of employment. 

How Do Employers Benefit From 401(k) Matches?

Employers offering competitive benefits packages are much more likely to attract a qualified workforce. This type of benefits package will ensure you stand out from the crowd for recruits who have more than one offer on the table, positioning your organization as one that cares about its staff. This offering will also likely lead to more satisfied employees, which can facilitate low turnover and improved efficiency. 

Offering employer 401(k) matches will also provide your company with beneficial tax savings. The money you and your employees contribute to a 401(k) is tax-deductible and accumulates on a tax-deferred basis. So, these contributions will decrease your taxable income for the year, therefore lowering your tax bracket and reducing your tax liability. Remember to contribute to your own 401(k) because this allows for salary deferral and profit-sharing contributions. 

Contact Our Dedicated Professionals for Your Accounting Services Today! 

At Marshall Jones, we are committed to providing quality tax advisory services for corporations and individuals. Reach out to our certified public accountants and advisors and benefit from our industry expertise. We have over 30 years of experience in tax preparation services. 

Reach out to us online today to get started! 

As a business owner, you may be missing out on potential tax reductions by not claiming the research and development (R&D) tax credit for your Georgia business. But what is this tax credit, and how can you apply for it?

In this guide, we will look at the R&D tax credit and provide details about how to apply for it, eligibility requirements and common documentation pitfalls to avoid. 

How to Apply for R&D Tax Credits

Before we get into how to claim the R&D tax credit, let’s define it. The federal R&D tax credit is a benefit that companies receive for carrying out activities related to the improvement, development or design of software, techniques, processes, formulas and products. Initially, many believed this tax credit only applied to larger businesses with research and development departments. However, it also applies to smaller businesses in various industries. It allows them to access dollar-for-dollar reductions in their domestic expense liabilities. 

Businesses can claim the R&D tax credit by filling out IRS Form 6765. Some industries that qualify for it include metal, chemical, manufacturing, architecture, pharmaceuticals, engineering, software development and aerospace and defense. A small business must either be a sole proprietorship, partnership or corporation not publicly trading its stock to be eligible.  

Common Documentation Mistakes

It is important to be aware of best practices when claiming the credit, especially in areas where issues commonly arise. The following mistakes in documenting qualified research can result in missed opportunities and create problems if your company is selected for an IRS audit:

Lack of Supporting Documentation

R&D tax credit studies are at their weakest when they lack contemporaneous supporting documentation. Studies are often performed after the tax year is closed out. Some studies simply comprise a report that summarizes the findings and a brief description, if any, of the qualifying business component. 

One of the objectives of an R&D tax credit study should be to answer a common question under audit: Why does this business component qualify? In order to properly address this question, it’s important to take a fluid approach to documentation. No two taxpayers are the same. No two projects are the same. As such, taxpayers may need to be creative in the identification of documents that show how projects meet the qualification criteria with specific emphasis on the presence of uncertainty and experimentation. 

Information such as project records, lab notes, design drawings, photos of the design/build and testing trials, prototypes and patent applications are needed to corroborate customary R&D expenses. Having access to this information is especially helpful in the event of an IRS audit.

Informal Documentation Process

If a company is considering claiming the R&D tax credit for a project, it would be useful to implement a formal documentation process before beginning. Because many companies don’t understand who should be documenting, what they should be documenting and when the process should be occurring, it’s often left as a task to complete at year-end. 

When this happens, a single person is often assigned the task of poring over hundreds of documents to find proof of qualifying expenses. The result is that expenses are often missed, and the potential credit value is diminished. To overcome this, a best practice would be to implement a process that collects relevant information on an ongoing basis, while the R&D activities are occurring. The more thorough the process, the greater the likelihood that qualifying expenses will be captured and used appropriately when claiming the credit.

Lack of Clarity

A common issue in the documentation process is that it’s unclear how the various expenses, personnel or other items relate to the R&D project. Remember that an IRS agent will not be familiar with your business, product or research process. Because they will be the primary judge of whether an expense qualifies toward the R&D credit, it’s essential to ensure the relationship between the expense and qualifying activity is clear. 

Avoid incomplete or inadequate descriptions, general statements that sound canned, and documentation that is not clearly related to the project. The more you rely on an IRS auditor to figure out how your documentation supports expenses, the greater the risk of exposure.

Work With Marshall Jones to Keep Your R&D Tax Credits

At Marshall Jones, we provide a unique combination of personalized service and expertise, making us the ideal choice for R&D tax credit services. We understand how complex navigating the R&D tax credit can be, which is why we tailor our services to meet your specific needs.

We have a proven track record of successful claims across various industries, which sets us apart from our competitors. We take a comprehensive approach to capture all potential qualifying expenses and maximize the credit value. Furthermore, we employ proactive documentation strategies to help you avoid common pitfalls and prepare for potential IRS audits. Contact us today for a consultation. 

Virtual currency — often referred to as “bitcoin” — is a mystery for many people but an everyday currency for others. As virtual currency grows in popularity, questions arise about its taxation. The IRS treats virtual currency as property and not as currency. This means that general tax principles that apply to property transactions apply to transactions using virtual currency.

What Is Virtual Currency?

Virtual currency is a type of digital currency that operates as a store of value, exchange medium or unit of account. Most virtual currency types have been created to replace government-issued currency in buying services and goods in the real economy. Bitcoin is one example.

A 2015 federal government report described how virtual currency is generally obtained. An individual can exchange conventional money for virtual currency, obtain virtual currency in exchange for the sale of goods or services or acquire virtual currency by serving as a “miner.” This approach requires significant computer processing power. While virtual currency may operate like “real” money, it does not have legal tender status in the U.S.

IRS Guidance

In Notice 2014-21, the IRS announced that it will treat virtual currency, officially referred to as digital assets, as property. The IRS explained that transactions using virtual currency must be reported in U.S. dollars for U.S. tax purposes. Taxpayers must determine the fair market value of virtual currency in U.S. dollars as of the date of payment or receipt. 

If a virtual currency is listed on an exchange and the exchange rate is established by demand and supply in the market, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency, which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied, the IRS explained.

In regard to paying taxes on crypto gains, taxpayers must report any income related to transacting in digital assets. If an investor transfers, sells or exchanges a digital asset, they must figure out their gains and account for them when making IRS returns. The same applies to writing off crypto losses, where the capital loss on a digital asset transaction must be reported as a capital loss. To calculate a loss or gain on your digital asset, you will require this information:

• The digital asset type
• Time and date of the transaction
• Basis of the sale or disposal of the digital asset
• Total number of units
• Fair market value in U.S. dollars when the transaction was done

Which Virtual Currency Transactions Are Taxable?

The IRS sets clear guidelines on how taxpayers should handle virtual currency. You are not expected to pay taxes for:

• Only holding your virtual currency in an account or wallet without making any transaction.
• Buying digital assets and not selling them.
• Transferring digital assets from one account or wallet you own to another that you also own.

However, you must pay taxes for making digital asset transactions, such as:

• Using virtual currency to pay a transfer fee.
• Transferring financial interest or ownership of a digital asset.
• Exchanging one digital asset for another. 
• Buying goods, services or property for virtual currency.
• Exchanging digital assets for U.S. dollars or other currency.
• Receiving virtual currency as an award or reward, an airdrop, staking and mining, or a payment for providing goods, services or property. 

If an employee or digital contractor is paid using virtual currency, they should report the value of the payment as wages. 

More Changes Possibly Coming

In November 2016, the Treasury Inspector General for Tax Administration (TIGTA) asked the IRS to review its approach to virtual currency. The IRS has established a virtual currency task force, but TIGTA reported that the IRS could better coordinate some of its intra-agency activities. TIGTA also found that while businesses and employers must report taxable virtual currency transactions, third-party information reporting documents did not provide the IRS with any means to verify whether the reported amounts were particularly related to digital assets.

TIGTA suggested that the IRS provide updated virtual currency guidance and revise reporting documents related to third-party information to determine the amounts of virtual currencies used in transactions that count as taxable. The IRS accepted the recommendations. Since then, the IRS has made several developments, and more guidance will be issued.

Connect With Us for Assistance With Virtual Currency Taxation

At Marshall Jones, we provide professional tax and accounting services to clients in Atlanta, GA. We will help you navigate the complexities of understanding taxes on digital assets, like reporting gains from Coinbase transactions and IRS guidelines on this process, to ensure you are compliant. Contact us today if you require personalized assistance with your virtual currency taxation needs.

Knowing which of the four 990 forms apply to your organization is important when you’re filing taxes. In this guide, we will break down which organizations file each 990 form to help you determine which option best suits your needs.

Types of 990 Forms

Almost all tax-exempt organizations will need to file an annual return, but the form you use depends on your financial activity. In total, there are four types of 990 forms:

• 990-N
• 990-EZ
• 990
• 990-PF

To determine which form you need to file, you must understand the basics of each one and the types of organizations that file them.

Form 990-N 

If your organization has less than or equal to $50,000 in gross receipts, you will file the form 990-N. Your gross receipts are the total amounts of income you received from all sources throughout your accounting period. You will not subtract any costs or expenses from this number. 

For your gross receipts to be considered within the $50,000 or less category, your organization should satisfy one of the following requirements:

• It has existed for at most one year and has received an exact amount of pledges from donors amounting to $75,000 during the organization’s first tax year.
• It has existed between the past one and three years and earned an average gross receipt of not more than $60,000 recorded during each of its first two tax years.
• It is three years old or younger and has gross receipts averaging at most $50,000 for the immediate former three tax years, including the current tax year.

It’s important to check if your organization is permitted to file form 990-N even if it records gross receipts of $50,000 or less. Several organizations in this income bracket are not permitted to file the 990-N form.

Form 990-N is entirely electronic, with no paper counterparts. It’s also the shortest of the five Form 990s and is mostly required to be filled by smaller nonprofits. 

Form 990-EZ

Form 990-EZ is filled by organizations exempted from income tax, and you’re welcome to file it if:

• Your organization has less than $200,000 in gross receipts.
• Your business’ total assets are less than $500,000.
• Your organization is recognized by the IRS under section 501(a) as exempt from income tax.

Tax-exempt organizations, section 527 political organizations and nonexempt charitable trusts often file 990-EZ.

You may also be able to file a standard 990 form in this instance, so it is beneficial to check all requirements for 990-EZ.

Form 990

Like Form 990-EZ, tax-exempt organizations can file Form 990. Most organizations, including educational, charity, section 527 political and scientific organizations, qualify here. If your organization has gross receipts equal to or greater than $200,000 and total assets equal to or greater than $500,000, you’re eligible to file Form 990.

Certain organizations are exempt from filing Form 990, even if they meet these requirements. These include:

• Churches.
• Religious organizations.
• Political organizations are not covered in section 527.

Your Form 990 will disclose your organization’s revenue, expenses, liabilities, and assets. It will also describe your organization’s mission and activities.

Form 990-PF

Form 990-PF is a private foundation’s annual information return that private organizations must file regardless of their financial statuses. A closer breakdown of organizations required to file Form 990-PF includes:

• Taxable private foundations under section 6033(d).
• Exempt private foundations under sections 6033 (a, b and c).
• Private organizations making a termination under section 507(b).
• Organizations that answer to private organization status whose private organization status applications are still pending by the time of filing Form 990-PF.
• Organizations claiming private foundation status who haven’t applied for exempt status and whose application isn’t yet registered under section 508(a) for legal recognition for exemption.

This form will include information about your private foundation’s:

• Financial activities
• Assets
• Rewarded grants
• Trustees and officers

Filling Form 990-PF is a little more complicated than most of the other forms. It requires careful scrutiny and understanding of the instructions for accurate filling.

Contact Marshall Jones for Tax Planning and Preparation Services

While you may understand the basics of 990 forms, it’s crucial to understand each form’s instructions and exceptions. Consulting with a certified public accountant (CPA) at Marshall Jones will help you ensure that your organization meets annual reporting requirements.

We’ve served Atlanta organizations with integrity and professionalism for over 30 years and boast remarkable experience and expertise. Our tax planning and preparation services will help you save time and money, and our certified public accountants and advisors are dedicated to serving you.

If you’re looking for exceptional tax planning and preparation services in Atlanta, please contact the Marshall Jones team today to schedule your first appointment.

Most of us are aware that certain income tax issues are more likely to result in an IRS audit than others, so what are they? It’s not common knowledge that the IRS can audit you for any reason, but there are commonalities that we typically see.

Common Groups That Typically Get Audited by the IRS

An IRS audit is much more probable with certain groups of businesses than others. You’re most likely to get an audit if you or your business falls into one of these categories:

• High-income earners who also have Schedule C: When you start earning higher business income, the IRS is mostly likely to visit you for an audit, especially if you have a Schedule C. Schedule C is a supplemental schedule to your Form 1040 that reports income and expenses from sole proprietorships and single-member Limited Liability Companies. 
• People who do freelance service work: If you do freelance work, including through the sharing community (think of Uber, Rover and Grubhub), you’re likely to be audited. If the numbers are outside of what is considered normal, the computers will pick them up.
• High-income non-filers: This group comprises high-income earners who don’t file required tax returns. A 2024 initiative focused on over 125,000 cases of unfiled returns between 2017 and 2021.
• Individuals who fail to report all taxable income: When IRS computers cross-check 1099s and W-2s and find underlying income reports, they’re likely to visit you for an audit. 

What Will Get Me Targeted by the IRS?

All accounting information included or excluded on your tax report could be a trigger for a visit by the IRS. The most common business actions that would quickly send them your way include the following.

Inconsistent Averages

Everything on returns is compared to averages, and any outliers will be targeted. Large losses on both individual and business returns will be flagged. If you’re a going concern and have enormous losses, they want to know how you support yourself or how you plan to stay in business.

Disproportionately Large Charity Donations

Speaking of averages, the IRS knows the average charitable donation for folks at your income level. So, if your charitable deductions are disproportionately large compared with your income, it raises a red flag. Don’t forget to get an appraisal for donations of valuable property, or if you fail to file Form 8283 for noncash donations over $500, you become an even bigger target. 

And if you’ve donated a conservation or façade easement to a charity, chances are good that you’ll hear from the IRS. Be sure to keep all your supporting documents, including receipts for cash and property contributions made during the year.

Missing Information

Missing information is another high-trigger item. The IRS matches every third-party reporting item to your return. This includes:

• Interest income
• Dividend income
• Gambling winnings
• Independent contractor income
• W-2 income

These are all issued to the IRS, so if you fail to include those figures on your return, you will be recognized.

Worker Misclassification

The IRS also targets independent contractors to determine whether they’re really contractors or employees. Worker misclassification is an important issue for the IRS and various state taxing authorities because many employers are perceived as not properly classifying their workers. By avoiding labeling their workers as employees, employers can avoid paying payroll taxes, minimum wages, overtime, health and retirement benefits and paid leave.

The IRS wants to ensure that traditional IRA owners and participants in 401(k)s and other workplace retirement plans are properly reporting and paying tax on distributions. Special attention is being given to payouts before age 59½, which, unless an exception applies, are subject to a 10% penalty on top of the regular income tax. 

The IRS knows that a significant number of filers make errors on their income tax returns regarding retirement payouts. Most of the mistakes come from taxpayers who didn’t qualify for an exception to the 10% additional tax on early distributions. So, the IRS will be looking at this issue closely. 

The IRS has a chart listing withdrawals taken before the age of 59½ that escape the 10% penalty, such as payouts made to cover very high medical costs, total and permanent disability of the account owner, or a series of substantially equal payments that run for five years or until age 59½, whichever is later

Filing Claim on an Amended Return

Filing a large claim for a refund on an amended return will almost always cause an audit. If the original return failed to include an item of income, you will want to correct it on an amended return. However, filing an amended return that claims credits that you didn’t claim on the first return will open up the whole return to scrutiny, so you end up being audited on other things not originally at issue.

This is particularly true where the amended return raises new issues. For example, a return might be amended to claim R&D credits that weren’t on the original return. The IRS will likely audit for that particular issue but will open up the entire return for questioning.

Taking Steps Forward

So, what do you do if you’ve been flagged for an audit? We always recommend discussing this with a CPA. Some audits are extremely minor, where they may just ask you to pay tax on that 1099 you forgot, and some are more serious. 

Always know that this is not a personal attack on you and may require some extra explanation. This is why it’s always important to keep your tax return supporting records for at least 3 years from the date you filed your original return or 2 years from the date you paid the tax (whichever is later).

Get Professional Help from Marshall Jones for Accurate Accounting

The IRS targets individuals with inaccurate accounting procedures, which may range from issues with claims on amended returns to a lack of knowledge to report appropriate taxable income. With full-service accounting, you can streamline your books and resolve most of the questionable reports that could put you on the ladder of an IRS audit.

At Marshall Jones, we can help you get back on track with your accounting and avoid audits. Whether you’re in the nonprofit space or the construction and real estate industry, we can help you with a wide range of full-time accounting services, including bookkeeping and 401(k) audits. Contact Marshall Jones today to get started.

Blockchain is the underlying technology behind the exchange of cryptocurrencies like Bitcoin. However, blockchain’s applications go beyond crypto. As this technology continues to expand, it’s important to understand what blockchain technology is, how it works and why it’s important for businesses and nonprofit organizations.

What Is Blockchain?

Blockchain is a method of recording data or information that makes it difficult or impossible for the system to be altered, manipulated or hacked. This is achieved by creating an immutable ledger that enables secure transactions across peer-to-peer networks. The data cannot be modified or deleted without consensus from the network.

Blockchains can make information or data in any industry immutable, not just cryptocurrency. The use of blockchain has exploded since the introduction of Bitcoin in 2009.

A blockchain is made up of blocks, each comprising several transactions. Each ledger receives a copy of transactions on the blockchain network, and once each block is confirmed to be true, it’s added to the end of all preceding blocks — making it a blockchain. This system or sequence is known as distributed ledger technology (DLT). In addition, the blockchain is decentralized because several users govern the entire database.

Features of Blockchain Technology

Blockchain technology has the following features:

• Decentralization: Blockchain is not controlled by a single individual, group of people or organization, making it different from banks and traditional financial institutions.
• Immutability: No participants can alter or modify recorded transactions in the blockchain. If you enter a transaction with an error, you must add a new transaction to correct or reverse the mistake. Both transactions are visible to the network.
• Consensus: Participants in the network must grant you consent before you can record a transaction.

How Blockchain Works

Understanding blockchain technology means dissecting its intricacies and how it operates. In some ways, a blockchain is similar to databases or spreadsheets that store information you enter. The main difference between a blockchain and a spreadsheet is how the data is organized and accessed.

A blockchain has scripts that perform the typical tasks in a database, such as entering, accessing and storing data. A blockchain is also distributed, which means several copies are stored on many machines. All the copies must match for the data to be valid.

A blockchain collects information about a transaction and enters it in a block, the same way you’d enter information in a spreadsheet cell. Once the block is full, the information is run through an encryption algorithm, which creates the hash. The hash is a cryptographically generated code — hexadecimal number. The hash is entered into the next block header and is also encrypted. This process creates a series of blocks chained together.

Types of Blockchains

There are four main variations of blockchains:

• Public blockchains: These are permissionless blockchains, and anyone can join them. Members of the blockchain have equal rights to read, edit and validate the blockchain. Examples of public blockchains are cryptocurrencies like Bitcoin, Litecoin and Ethereum.
• Private blockchains: Private blockchains, also called managed blockchains, are partially decentralized permissioned networks controlled by a single organization. The organization decides who can be a member and what specific rights they have in the network. The digital currency exchange network Ripple is an example of a private blockchain.
• Hybrid blockchains: These blockchains combine elements of both private and public blockchain networks. A company can set up permission-based private systems alongside a public system. This arrangement enables the organization to control access to specific data in the blockchain while keeping the rest of the data public.
• Consortium blockchains: These are blockchains controlled by multiple organizations. The organizations decide who can access the data or submit transactions. This is the ideal type of blockchain for businesses when all participants have a shared responsibility for the blockchain and need permission. 

Benefits of Blockchain 

The main benefits of blockchain technology include:

• Increased accuracy and transparency: Blockchain provides a single source-of-truth ledger, making transactions on the platform transparent. Immutable transactions are recorded chronologically, and there is no human involvement in verification, reducing the potential for error. 
• More security: Digital signatures or hashing algorithms make it possible to conduct fraud-free transactions. Only authorized users can unlock data meant for them, and the data stored on blockchains cannot be changed.
• Higher efficiency: Blockchain technology streamlines operations by reducing bottlenecks and eliminating intermediaries. It also enables reliable cross-team communication. Automatic verification processes in smart contracts reduce transaction costs, optimize data integrity and enable timely processing times.

Challenges of Blockchain

These are the main drawbacks of blockchains:

• Concerns about regulation: Blockchain regulation varies by jurisdiction and is still uncertain in many countries. For example, blockchain technology allowed overseas voters to vote in the November 2018 midterm elections in West Virginia. 
• Transaction limitations: The number of transactions for each node is limited.
• High energy costs: The computational power needed to perform certain functions consumes large amounts of electricity, leading to high operational costs and environmental concerns. 

Why Blockchain Is Important 

Blockchain is a reliable technology for delivering accurate information more quickly. The data is stored on an immutable ledger that can only be accessed by permissioned network members. A blockchain network can track payments, orders, production and accounts. Because of its capabilities, several industries apply blockchain technology in their operations.

Banking and Finance

Check processing in banks can take up to three days. Integrating blockchain technology into banks allows consumers to enjoy faster transaction processing in minutes or seconds. The blockchain transaction timeframe is the time it takes to add a block to the blockchain, regardless of the time of day, whether it’s a weekend or not, and even on holidays. Banks can also share transactions with other institutions securely and quickly. 

Cryptocurrency

Cryptocurrency is the most widely known application of blockchain technology. People can buy, exchange or spend cryptocurrencies through blockchain technology, which operate without a central authority. In contrast, the Federal Reserve controls the U.S. dollar. 

Smart Contracts

Smart contracts are self-executing contracts that enact automatically once conditions are met. For example, a product is automatically released to the buyer once the seller and buyer have met all specific parameters for a transaction or deal. 

Health Care

Health care providers can use blockchain technology to store patient data securely. In addition, the patient records stored on blockchains cannot be changed and can only be accessed by authorized individuals. 

Get Blockchain Technology Advice

As a business owner, you’re always looking for ways to serve your customers better. Faster and more secure transactions or record-keeping through blockchain technology could be one way of improving your business operations. You can also use smart contracts for efficient transactions. Contact Marshall Jones for advice on blockchain. We are certified public accountants and financial advisors serving Atlanta businesses and nonprofits.

As your business grows, you may need to hire more employees, acquire investors or optimize your financial planning for the future. The accrual accounting method enables you to prepare for these tax and financial changes more efficiently.

Whether you handle your accounting in-house or outsource it to professionals, it’s a good idea to clearly understand this accounting type. Our guide provides more insight into the accrual method of accounting so you can decide if it’s right for your entity.

What’s the Difference Between Cash and Accrual Accounting?

There are two primary accounting methods for nonprofit organizations and small businesses — accrual and cash accounting. Both methods are similar in that they track transactions so entities can manage their finances. However, they differ in the following ways:

Accrual vs. Cash Accounting

• Accrual accounting: Businesses that use the accrual method track income and expenses when they provide or receive a product or service. For example, a real estate company will record property management services in the books even though it will receive payment at the end of a month. If you follow the accrual method, post debited journal entries in the expense account and credited entries in the accrued expense liability account.
• Cash accounting: With this method, businesses recognize income and expenses only when they receive or pay them. In this case, the real estate company would only record the transaction for the property management services when it receives the money from the property owner.

The Internal Revenue Service (IRS) indicates that tax shelters, partnerships with a corporation, and corporations other than S-corporations must generally use the accrual method. Other business structures can use the cash accounting method but may need to transition to the accrual method as their operations become more complex.

Pros and Cons of Cash Accounting

Pros: The key advantage of the cash method is simplicity. You can simply look at your checkbook and sales receipts to add up your profits and losses. You also know exactly how much cash you have at any given time.

Cons: The downside is that when you receive or send cash may not accurately reflect when you earned or incurred an expense.

Pros and Cons of Accrual Accounting

Pros: The key advantage to the accrual method is smoothing out your profits and losses. When you make or receive a large payment for something that happened over a period of several months, accrual accounting divides the transaction over those months.

Cons: The downside to the accrual method is that it takes extra work to figure out how all your transactions should be recorded in your books. You also need to keep separate cash flow statements to know how much cash you have on-hand at any given time.

Top Benefits of Accrual Accounting

Many nonprofit organizations and start-ups choose the cash accounting method because of its simplicity. However, there are several advantages to opting for accrual accounting from the beginning. Here’s an overview of the benefits:

• More accurate snapshot of finances: Choosing this method offers you a real-time view of how much money is coming into the business. An accurate snapshot of your business finances will help investors and grant-makers make more informed decisions.
• Better insights into items sold on credit: The amount of time customers have to pay off credit varies. Adopting an accrual-based accounting method helps you keep track of sales in the month they occur.
• Improved financial forecasting: Since you record transactions as they happen, you have a better idea as to which months offer high or low turnover. These trends help you prepare for fluctuations in sales.
• Transparency ahead of financial audits: A more accurate dataset allows you to compile relevant budgets and put strategies in place for growth. Financial reports like these help you prepare for long-term success.
• Potential to defer tax payments: You are liable to pay taxes once you receive the income. If you receive money after the tax year, you will only need to make these payments in the following tax period.

When Should You Consider Using Accrual Accounting?

Keeping a consistent accounting method is important for the IRS — but which method should you choose? Here are some questions to consider if you’re contemplating the accrual method:

• Do you handle many transactions?
• Are you planning a long-term project?
• Is your main goal to improve financial strategies?
• Do you intend to apply for any grants?
• Do you have an upcoming financial audit?

If you answered yes to these questions, it may be in your best interest to adopt an accrual accounting system. Choosing this method from the start will equip you for future growth.

Steps to Transition to Accrual Accounting

Some businesses choose a cash accounting system at the start and transition to an accrual accounting method when the need and resources arise. Learn more about the steps you need to take for a seamless process.

1. Initiate a Financial Audit

A financial audit helps organizations ensure compliance and financial accuracy. Audits will also reveal any inefficiencies in your current accounting system.

If you use cash accounting yet discover obvious gaps during the audit, you will have more reason to transition to an accrual-based method.

2. Compile Relevant Documents

You will need to prepare several financial documents when you adopt the accrual system. Some of the documents you will need include:

• Balance sheets detailing your assets and liabilities
• Income statements reflecting your income and expenditures
• A breakdown of your inventory
• Cash flow statements to highlight money going in and out of the organization
• Records for accounts receivable and payable
• Any information detailing loans or other long-term debt plans

3. Update Financial Policies

Your accounting system will impact several details about your tax return, such as the transactions you include and when you submit. Update your financial policies and procedures to ensure you remain up-to-date with your compliance.

Taking this necessary step will help ensure all team members are on the same page and limit the likelihood of costly penalties.

4. Choose How You Will Manage Your Accounting

If you plan to handle your accounting yourself, you’ll need software that supports the accrual method. In addition, you will need to note these changes with the IRS by completing the relevant form.

If an approved change results in an adjustment to your taxable income, you will receive credit for the difference/payment in the tax year in which the change is approved. The company can also elect to recognize one-fourth of the adjustment in the four succeeding years starting with the year of the adjustment.

For example:

Company Z, a calendar-year corporation, has a net positive section 481(a) adjustment of $320,000 at the end of year 20X1. If Company Z initiates a change in its accounting method under revenue procedure 97-27 for the 20X2 tax year, the company will recognize one-fourth of the 481(a) adjustment in the four succeeding years, start with 20X2. However, if Company Z is under examination for 20X1 and the IRS makes an accounting change adjustment, the entire section 481(a) adjustment will be taxable in the year of examination.

5. Establish a Timeline

Business transitions — especially adopting a new accounting system — are not an overnight endeavor. Create a realistic timeline detailing when you plan to integrate the accrual system formally.

Appointing relevant people to carry out these goals will ensure greater accountability while helping your organization stay on track.

Marshall Jones Makes Transitioning to the Accrual System Easy

Successful businesses and nonprofits are ever-evolving. If you started your organization with the cash accounting method and now realize it’s time to migrate to the accrual system, we can help!

Marshall Jones offers an array of accounting services, helping nonprofit organizations, construction companies and real estate businesses manage their books with ease. With our expert team at the helm, you can focus on what you do best while we track and manage your finances. Learn more about our services or get in touch with our team for more information on accrual accounting.

Reviewing financial statements to board of directors is a critical task board members may undertake to evaluate an organization’s compliance and budgetary status. To best identify potential risks and promote optimal financial management, it’s wise to pay attention to some key considerations. Follow these best practices for thoughtful, accurate evaluations of organizations’ financial situations.

Red Flags in Financial Statement Analysis

When an organization’s financial report to board of directors are under review, analysts should watch for a few markers of concern. Noticing potential areas for improvement can help you proactively address potential issues and manage the proper solutions promptly.

Throughout your organization’s evaluation, look out for red flag warning signs such as:

• No liquidity reserve policy: While 33% of nonprofits don’t have a strategy to navigate recession, ensuring your organization develops the resources and plans necessary to recover is critical.
• Negative cash flows from operations: Watch for negative cash flows — 50% of nonprofits have operating reserves for less than a month, and it’s vital to build up those resources.
• Internal borrowing of donor-restricted funds: Organizations should maintain sufficient financial resources to support net assets with donor restrictions.
• Negative or insufficient working capital: Among nonprofits, 7-8% have more liabilities than assets and are technically insolvent. They need to build up sufficient working capital to improve financial stability.
• Extended line of credit: Having an extended line of credit can increase financial risk, so it’s wise to address this concern strategically.
• Debt covenant violations: Organizations need to comply with debt covenant terms and avoid issues from increased collateral, interest rates or penalty payments.

What to Look for When Reviewing Financial Statements

While watching for red flags to investigate further, you’ll also want to evaluate metrics in the financial report to the board of directors that indicate the institution’s overall financial health. Knowing which issues to prioritize for examination can help you conduct a more thorough and valuable review for the organization. 

As you review the financial report for the board of directors, ask these essential questions to ensure a thorough assessment.

• Has the organization’s endowment or investments recently suffered significant losses due to COVID-19 fears?
• Do the footnotes properly tell the company’s story, accurately representing financial transactions and decisions?
• Has management properly read, reviewed and taken ownership of the financials?
• Are new accounting pronouncements that apply to your company being adopted on a timely basis?

 Keep in mind that newer pronouncements for nonprofits include the financial reporting standard and two standards for revenue recognition (ASC 606 and ASU 2018-08). The new lease standard will also be applicable in a couple of years.

Contact Marshall Jones for Trust Compliance and Accounting Services

Marshall Jones Certified Public Accountants And Advisors has been serving the Atlanta area for over 30 years, and we are committed to providing exceptional client support and expert services. We offer a range of tax and accounting services to help businesses and individuals manage their finances more successfully and accurately. With a highly accessible team, rapid response times and extensive industry expertise, we pride ourselves on meeting your requirements with quality solutions and support.

Whatever your financial management needs, our team is here to help you move forward. For more information on how to prepare a comprehensive financial report for a board of directors, speak with one of our representatives today.

You’ve likely put aside money toward retirement to supplement social security and help ensure financial stability when you leave the workforce. Yet, have you thought about how your tax situation can impact your funds? To make the most of your retirement income stream, you’ll need a solid understanding of how all your assets work together and the tax implications of each.

How to Plan for Taxes in Retirement

Develop successful retirement tax planning strategies by starting with the fundamentals:

1. Know Your Tax Bracket

Retirement savings generally fall into two categories — tax-deferred and after-tax. Under a tax-deferred account, such as a traditional IRA or employer-sponsored plan, you’ll pay taxes at your current bracket once you begin withdrawals. After-tax accounts, like Roth IRAs and regular savings, represent dollars you’ve already paid taxes on.

Younger workers may find themselves in lower brackets, like 10 or 12%, before transitioning into the 22 or 24% brackets as their earnings increase. High-wage earners can pay as much as 32 to 37% in taxes. 

Each of these scenarios calls for different retirement tax planning strategies, so it’s best to seek expert advice for your unique situation.

2. Diversify Your Account Types

For many, future tax brackets may differ from current ones, calling for diversifying among different account types for maximum withdrawal flexibility.

With a mix of pre- and post-tax assets, you and your tax advisor can create retirement tax planning strategies with more control over your taxable income in retirement.

3. Know the Social Security Rules

While social security can provide an income stream as early as age 62, that may not be the best time for you to start collecting it. Opting for an earlier election can permanently reduce your expected monthly benefit. 

Social security benefits may be subject to taxation for those with significant income or plans to work after reaching full retirement age.

Marital status, such as divorce and widowhood, can also affect the ideal timing, so it’s best to consult with a financial professional for advice specific to your situation for retirement tax planning strategies.

4. Use Your Retirement Assets Wisely

Under the current IRS rules, you must begin withdrawing traditional tax-deferred assets once you reach age 72. The amount you take — called your required minimum distribution (RMD) — changes each year and is a portion of the overall value of your IRA. 

Roth IRAs and Roth-based employer-sponsored plans have no RMDs, and withdrawals are tax-free once you meet the eligibility criteria.

Work with a retirement tax professional to develop a withdrawal strategy combining assets from both account types to help keep your income in the lower tax brackets.

5. Consider a Roth Conversion

With their tax-free withdrawals and no RMDs, Roth IRAs can be a powerful way to maximize savings and add diversity to a mostly pre-tax retirement portfolio. Many traditional IRA owners can convert all or a portion of their tax-deferred savings into a Roth account and pay taxes on the value at the same rate as ordinary income.

Consult with a tax-planning specialist to ensure a conversion doesn’t unexpectedly push you into a higher tax bracket.

Get Retirement Tax Advice You Can Trust

Marshall Jones has served tax planning and preparation needs in Atlanta for over 30 years, operating with a dedication to service, quality and integrity. We offer a full suite of services for individuals and companies across numerous industries.

Contact us online for more information or to request an appointment to develop your unique retirement tax planning strategies.

Many people use auditing and assurance interchangeably. Accounting firms often group these services together, as assurance typically comes directly after auditing.

Although the processes are largely interrelated, there are apparent differences. The distinctions lie in their nature, purpose, use and scope. Additionally, the people who perform audit and assurance services may differ in some ways.

Because both services are integral to business operations, it’s essential to compare them and answer some commonly asked questions. Learn about their similarities and differences and why both are important for your small business or nonprofit organization.

What Is an Audit?

An audit examines an organization’s financial records, transactions and internal controls by a qualified professional, such as a certified public accountant (CPA). There are different types of audits, each serving different purposes. However, they all help stakeholders validate that the subject matter complies with established rules and best practices. 

The most common types of audits include:

• Financial audits: External auditors conduct financial audits to assess the company’s financial statements and reports. These include income statements, cash flow statements and balance sheets. Financial audits are usually annual, so ensure you close out the fiscal year before proceeding to get accurate reports.
• Tax audits: The Internal Revenue Service (IRS) conducts tax audits to ensure compliance with tax laws. When preparing for tax audits, it’s crucial to understand the scope and purpose. This allows you to gather the relevant documents and answer the questions appropriately.
• Reviews of financial statements: Financial statement reviews focus on the business’s financial information for legality, accuracy and accountability. They have a limited scope and are usually less expensive than full audits.
• Compliance audits: These audits ensure a business adheres to established standards or regulations. Compliance audits also help identify gaps and develop policies to safeguard stakeholders’ interests.
• Internal audits: Companies conduct in-house audits to check compliance with internal policies and procedures. The primary goal is to identify improvement areas within the organization. Internal audits cover different areas, such as financial reporting, risk management, regulatory compliance and operational processes. 
• External audits: External auditors with no company affiliation examine the processes and provide unbiased reports. Since these auditors have no association with the organization, their conclusions are generally credible. External audits may cover areas such as financial and tax compliance.

What Is Assurance?

Assurance is an independent process that allows professionals to assess the accuracy of audits. It usually comes after audits to enhance the reliability and quality of information for decision-making purposes.

Assurance services can extend to various areas, including finance, tax and legal. In terms of finance, assurance services may verify the accuracy of income statements, cash flows and balance sheets. In a broader sense, assurance may reexamine internal policies and procedures to ensure compliance with regulations, established standards and industry best practices. 

Assurance primarily aims to enhance confidence among stakeholders, including business owners, investors and managers. Having a professional review reports, processes and controls provides added credibility. Organizations may also voluntarily seek assurance services for accountability and transparency purposes.

Audits are the highest form of assurance, giving an in-depth view of the organization. CPAs and advisors examine transaction irregularities and risks and provide recommendations to improve operations. A comprehensive assurance service may include financial projections, payroll reports and tracking.

Assurance engagements usually require three participants— the company, beneficiaries and independent auditors. Beneficiaries include third parties such as investors, lenders or insurers. The auditor works with established criteria, such as the International Financial Reporting Standards (IFRS) or other relevant auditing standards. Then, they report the findings to the intended audience.

What Are the Differences Between Audits and Assurance?

While audits and assurance are largely connected, these services differ in the following areas:

1. Nature

The audit process reviews an organization’s financial records and internal controls to ensure accuracy and compliance with regulations and standards. Assurance services are usually broader in scope and include the audit process itself. Assurance covers various engagements where an independent professional evaluates information and processes for reliability.

2. Purpose

An audit ensures reports or processes adhere to the laws, industry standards or internal policies. On the other hand, assurance enhances the credibility and reliability of information for decision-making purposes. It provides a second independent assessment of various organizational aspects.

3. Uses

Audits have different use cases, from financial to legal and internal efficiencies. Assurance is generally used to establish a company’s performance or risk level. Audits’ target audience includes internal and external stakeholders. Assurance is often required when a third party is involved.

4. Agent 

Internal or external auditors may perform audit services, depending on the type of audit. External or independent auditors usually perform assurance. The independent auditors conduct detailed assessments and provide unbiased reports. They also make recommendations on how the company can mitigate risks.

5. Scope

Audits are subsets of assurance services and usually have a narrower scope. Assurance is comprehensive but can target a specific aspect of the company’s operations. By default, assurance has a broader scope.

What Are the Similarities Between Audits and Assurance?

Audit and assurance services overlap in the following ways:

1. Professionals

Both audits and assurance services involve trained auditors, some of whom are certified professionals. A classic example is a CPA, who writes and passes an examination administered by a recognized accounting board. The accounting board regulates the industry and requires the CPA to comply with specific standards. While professional evaluations may serve different purposes, they typically seek to provide assurance on the reliability and credibility of information within the organization.

2. Objective

An audit is an aspect of assurance with a similar objective — enhancing confidence in the information provided. Audits and assurance ensure reports are accurate, reliable and compliant with relevant standards or regulations. 

3. Reporting

The outcome of audits and assurance processes is the issuance of reports. The reports communicate the findings, conclusions and recommendations of the professional. Auditors create reports after collecting and reviewing documents, such as financial reports. Finally, the auditor submits the reports to the relevant stakeholders, who rely on the assessments to make informed decisions.

Contact Marshall Jones for Audit and Assurance Services 

Audit and assurance are related services, but they differ in their nature, purpose, use and scope. Assurance requires external professionals, while companies can conduct audits internally. Regardless of the situation, seeking expert guidance for accuracy and reliability is best. 

Marshall Jones is a full-service accounting firm that provides auditing and assurance services for businesses and nonprofits. Our professionals have decades of industry expertise. Contact our team today to learn more about how we can help your small business or nonprofit!

Professional accounting services for faith-based organizations’ finances are unique. These services require a specialized understanding of the distinct financial needs and regulatory considerations within this sector. Faith-based organizations, such as churches, mosques, synagogues, and other religious institutions, operate in a different context compared to traditional businesses. They rely heavily on donations, grants, and contributions from their communities, and must adhere to specific reporting and compliance requirements. 

At Marshall Jones, we recognize the unique challenges faced by faith-based organizations. Our team offers tailored accounting services that address their specific needs. With our expertise and deep understanding of the intricacies of faith-based accounting, we are committed to supporting these organizations in maintaining financial integrity, fostering transparency, and fulfilling their mission-driven objectives. Explore why faith-based organizations require professional accounting services. Additionally, learn how Marshall Jones can assist you in fulfilling your mission.

Why Outsource Your Faith-Based Organization’s Accounting? 

1. Ensure Financial Stewardship

As a faith-based organization, you have a responsibility to steward your financial resources wisely. Professional accounting services can help you maintain accurate financial records, track donations and expenses, and ensure transparency in your financial operations. 

2. Donor Trust and Transparency

Donors play a vital role in supporting the mission and activities of faith-based organizations. They want assurance that their contributions are being used responsibly and in alignment with the organization’s mission. Professional accounting services can help you maintain accurate and transparent financial records, providing donors with the confidence and trust they seek. By demonstrating financial transparency, you can foster stronger relationships with supporters and donors.

3. Budgeting and Financial Planning

Effective budgeting and financial planning are essential for the long-term sustainability of faith-based organizations. With our expertise in financial analysis and strategic guidance, we can help you develop comprehensive budgets, analyze financial data, and create a roadmap for achieving your organization’s goals. 

4. Skilled in Fund Accounting

Many faith-based organizations manage multiple funds, including general operating funds, restricted funds, and special project funds. This can complicate financial management and reporting. Our experienced accountants specialize in fund accounting and can assist you in accurately tracking and reporting funds.

5. Expertise in Accounting Software 

We understand that many faith-based entities often grapple with outdated or incompatible software systems. This obstacle can hinder efficient financial management. Our professionals are adept at bridging the gap between these technological challenges and your organization’s needs. We specialize in revamping outdated systems, integrating diverse software platforms. Therefore, ensuring seamless communication between different software elements. We empower your faith-based organization to streamline financial processes, enhance accuracy, and achieve higher levels of transparency.

How Marshall Jones Can Help Your Organization

Marshall Jones can assist faith-based organizations through outsourced accounting services, providing them with reliable and efficient financial management solutions. With our expertise and commitment to the unique needs of faith-based organizations, we offer the following benefits:

• Streamlined Financial Processes: We streamline financial processes by handling various accounting tasks, including bookkeeping, accounts payable/receivable, payroll processing, and financial statement preparation. This allows faith-based organizations to focus on their core mission and activities.

• Compliance with Regulatory Requirements: Our team stays up-to-date with the latest regulatory requirements and tax laws applicable to faith-based organizations. We ensure compliance with reporting obligations, tax filings, and other financial regulatory standards.

• Transparency and Accountability: We help maintain transparency and accountability by implementing robust financial controls and practices. Our outsourced accounting services provide accurate and timely financial reports, ensuring transparency in the use of funds and facilitating donor trust.

• Strategic Financial Planning: We work closely with faith-based organizations to develop strategic financial plans, budgets, and forecasts. Our team provides valuable insights and guidance to help optimize financial resources, make informed decisions, and support long-term sustainability.

• Cost Savings and Efficiency: Outsourcing accounting services to Marshall Jones eliminates the need for in-house accounting staff, reducing staffing costs, employee benefits, and training expenses. This allows faith-based organizations to allocate resources more effectively toward their mission.

• Expertise and Experience: Our team of skilled accountants and advisors brings extensive experience in working with faith-based organizations. We understand the unique financial and operational challenges they face and provide tailored solutions to address their specific needs.

Hire a Professional Accounting Firm

By partnering with Marshall Jones for outsourced accounting services, faith-based organizations can enhance their finances, and focus on their mission of serving their communities and fulfilling their religious objectives.

Book A Consultation Today

With our offices in Atlanta and Alpharetta, GA, we are well-positioned to provide tailored accounting services to faith-based organizations in the area. Let us handle your accounting needs, so you can focus on what matters most – serving your community and fulfilling your organization’s mission. Contact us today to schedule a consultation and discover how our faith-based accounting services can support your organization’s financial success.

Managing debt can be difficult, especially when you are a business owner with multiple loans, to keep up with. Keeping a handle on your finances can be stressful, and it’s important to seek out professional help to make sure that you’re on the right track. Several business owners near Atlanta, turn to accounting services to keep their finances in order. We at Marshall Jones, one of the top Certified Public Accountants in the area, want to share tips on effective debt management.

1. Keep Track of All Your Debts

The first step to effective debt management is to keep a record of all your debts in one place. Debt organization will help you to avoid forgetting about any loans or credit lines you have taken out. It will also make it easier to prioritize which debts need to be paid first. You can use a spreadsheet or a free online tool like Mint to help you keep track of your debts.

2. Create a Budget

A budget is essential for debt management. Make a list of your debts, and make a budget with monthly expenses and the amount left for debt payments. By doing this, you can make sure that you’re putting a significant amount of your income toward your debts each month.

3. Don’t Be Afraid to Negotiate

If you’re struggling to keep up with your debt payments, don’t be afraid to reach out to your creditors and negotiate a better deal. Many creditors are willing to lower interest rates or renegotiate payment terms to help their customers stay on top of their debts. It’s always better to communicate with your creditors than to simply ignore your debts and hope they will go away.

4. Focus on Paying Off High-Interest Debts First

If you have multiple debts with varying interest rates, it’s essential to focus on paying off the highest interest debts first. Prioritizing high interest debts will help you to minimize the amount of interest you’re paying each month. Additionally, it will help you to get out of debt faster. Once you’ve paid off the highest-interest debt, move on to the next highest, and so on.

5. Seek Professional Help If Needed

If you’re overwhelmed with debt and struggling to manage your finances, seek professional help from a Certified Public Accountant. A CPA can provide valuable advice and support regarding debt management. They can help you create a plan that works for your specific situation. Many business owners in Atlanta or Alpharetta turn to Marshall Jones for our expertise in this area.

How We Can Help 

Marshall Jones understands the challenges that small business owners face when it comes to managing debt. With our comprehensive range of services, we can provide valuable assistance in effectively managing debt and improving financial stability. 

Our team of experts can analyze your current financial situation, develop customized debt management strategies, and help negotiate with creditors to find favorable repayment terms. Additionally, we can offer guidance on cash flow management, budgeting, and expense control to prevent future debt accumulation. 

Customizable Accounting Services 

By partnering with Marshall Jones, small business owners can gain the necessary tools and expertise to navigate the complexities of debt management, allowing them to focus on growing their business with confidence.

Maximize your business’s financial stability with customizable client accounting services from Marshall Jones Certified Public Accountants And Advisors. As a leading provider of outsourced accounting services in Alpharetta, GA, we understand the importance of efficient debt management for small business owners. ‌If you receive our services, you can enjoy numerous benefits. 

• Reduce Costs: First, outsourcing removes the need for an in-house accountant, saving you costs associated with recruitment, salaries, benefits, and insurance. Our professional-grade accounting services provide you with the expertise you need without the hefty commitment. 

• Save Time: Additionally, outsourcing saves you time, as the lengthy process of recruiting and training an in-house accountant is eliminated. With Marshall Jones, you can have a dedicated team of experts in place quickly, allowing you to focus on growing your business. 

• Get Flexibility: Our outsourced accounting services are flexible, catering to the unique needs of your business. Whether you require full-time support, occasional bookkeeping assistance, or services that adapt to seasonal fluctuations, we can provide the right-sized accounting solutions.

Rest assured that our professionals are certified in all major accounting platforms and stay up-to-date with regulatory and tax changes, ensuring your compliance and peace of mind. Experience the advantages of outsourced accounting in the Greater Atlanta area with Marshall Jones CPA, and take control of your business’s debt management with confidence. We specialize in debt management for business owners!

Qualified CPAs and Advisors

Managing debt can be a daunting task, but it’s essential for the financial health of your business. By tracking your debts and creating a budget, negotiating with creditors, focusing on high-interest debts first, and seeking professional help when needed, you can manage your debts and succeed in your business. Remember to always prioritize your debts and don’t be afraid to seek out help from professionals like Marshall Jones when needed. Contact us on our website today!

For small to midsize businesses in the Greater Atlanta area, outsourcing accounting services can provide significant benefits. Managing the accounting function of a company is a critical task. It requires specialized expertise and can be time-consuming, costly, and complex. Hiring a full-time accountant or managing accounting in-house may not be the most efficient or cost-effective option, especially for small businesses with limited resources.

Outsourcing your accounting to an experienced and reliable accounting firm can save businesses time, money, and resources while providing access to expert accounting services. Small businesses in the Greater Atlanta area should outsource their accounting services. Marshall Jones can help you today! Learn more about our small to midsize business accounting solutions. 

Small to Midsize Business Accounting

Outsourced accounting services are the process of hiring a third-party accounting firm to handle all or some of the business’s accounting functions. Outsourced accounting services can be beneficial for businesses that do not have the resources or expertise to handle their own accounting needs. It provides businesses with access to experienced accounting professionals.  Those professionals have specialized knowledge and expertise in accounting and can help them manage their financial operations efficiently and effectively. By outsourcing accounting services, businesses can focus on core operations, reduce costs, and improve their financial performance.

Why Outsource Accounting?  

Saves You Money: Outsourcing your business accounting to a specialized company in Atlanta can save you money. You won’t have to spend resources on hiring an accountant, which can be costly. Moreover, as your business grows, you may have to hire more accountants, which can strain your resources. However, outsourcing accounting services to an Atlanta accounting firm allows you to easily adjust the services you need.

Saves You Time: Consulting an Atlanta accounting firm for your small business, saves you time. Hiring an accountant yourself involves the time-consuming process of creating job listings, screening, interviewing, and onboarding applicants. Trusting an Atlanta accounting firm gives you more time to focus on other parts of your business.

Accounting Expertise: A qualified Atlanta CPA provides you with the accounting expertise that you may lack as a small business owner. Our accounting firm can help you manage all of your business accounts effectively. The accounting firm only provides excellent accounting services, so you can get better services than if you did it yourself.

Avoid Turnover Problems: Employee turnover can be challenging for small businesses, particularly if your company’s accountant leaves. It can prove difficult and time-consuming to replace them, involving going through the hiring process and training the new accountant. Outsourcing your company’s accounting to an Atlanta CPA means that you don’t have to worry about any of these turnover issues.

Creates Business Flexibility: Additionally, outsourcing accounting services can also make your business more flexible. When running a small business, you may need to divert people to different tasks as your business grows. Outsourcing your company’s accounting means that your business has more flexibility, allowing you to adjust your plans and pivot as necessary. Additionally, the accounting firm can assign more people to provide accounting services for your business as your business grows, making the accounting services scalable.

Improve Your Business Processes: Outsourcing accounting services can save you money, which you can use to improve your business processes and invest in better tools. For instance, you could spend more on better security software to protect your business and its data.

Marshall Jones Is The Top Atlanta CPA 

For accounting services in the Greater Atlanta area, Marshall Jones is the top accounting firm to choose from. With a great deal of accounting experience and customized services, we can help you run your small business. We serve our clients with honesty and transparency, providing excellent accounting services. Contact us on our website today! Discover how we can handle your business accounting needs with excellence.

Bookkeeping is an essential business function that contributes directly to your organization’s sustainability by providing insights into its financial health. Accurate records help a business budget effectively, invest wisely and plan successfully to meet its needs.

For the small business professional, in-house bookkeeping can present a challenge. Small organizations often work on tight budgets and with fewer team members than larger companies. The risk of errors can increase when someone without bookkeeping experience or knowledge handles the responsibilities. Fortunately, you can take a few steps to help mitigate these risks, such as brushing up on the basics so you can avoid common mistakes.

Fundamental Bookkeeping Tips

You can take multiple steps to simplify the bookkeeping process while implementing solid internal controls.

First, establish a business account and credit card for your organization. Separate accounts are a must if your business structure is anything but a sole proprietorship, and they can be beneficial in many other situations as well. Having a distinction between personal information and company data makes tracking expenses and preparing for tax time much simpler. In an IRS audit, commingling this information can add layers of complexity and extra time to the process.

Keeping business information separate also allows you to take better advantage of digital tracking tools. Software solutions offering online management and funding for expenses can eliminate lost or damaged receipts by allowing employees to upload photos of them to electronic filing cabinets. These platforms help ensure accountability and accurate allocation. You can fund an employee’s account with the precise amount of a known expense to limit spending. 

Accounts payable and receivable software solutions can also help speed up your payment cycles and integrate with existing accounting systems for convenience. Use them for fast online bill payments to vendors or to generate and send customer invoices with a few clicks. The information automatically populates to programs like QuickBooks to eliminate manual data entry.

Familiarize yourself with the reporting tools your software offers, too. Analyzing profit and loss statements offers actionable insights into spending and costs between comparison periods. Plus, these reports deliver crucial information on other key aspects of your business’s financial health, such as return on investment, debt-to-equity ratios and average receivable age. This data is valuable for informing budgeting and planning tasks.

How to Avoid Common Bookkeeping Mistakes Small Business Owners Make

You can also improve your bookkeeping by recognizing and avoiding some common pitfalls. Keep these tips in mind.

1. Have a Data Backup Plan

Fires and natural disasters pose risks to paper-based and digital records, and the likelihood of wholly and accurately recalling and reconstructing lost data is low. Establish a robust process to ensure access to synchronized duplicate records and enforce your policy without exception.

2. Plan for Taxes

The IRS and state revenue agencies can levy penalties and interest for companies that don’t pay their taxes by the required due date. Consider setting aside funds in a separate business account to have them available when you need them. Mark your calendar the first of each year for one to two weeks before the due date to ensure you’re paying on time.

3. Pay Careful Attention to Payables and Receivables

When you’re focused on your business’s core mission, it can be easy to forget who hasn’t paid an invoice on time and who needs to get paid when. Choose an accounting program to help manage payables and receivables more effectively with features like automated payment reminders for you and your customers.

4. Track Every Expense

Tracking every expense, no matter how minor, helps offset the income your business generates for a lower tax bill. Categorize each outlay with a description that works for you so you can account for them accurately come tax time.

5. Trust the Right People With Bookkeeping Responsibilities

Not every small business owner or employee has the specialized knowledge good bookkeeping requires, resulting in the potential for costly errors at best. At worst, handing the responsibilities off to a single individual opens the door to unnecessary risks from bad actors and fraudulent activity. Regain peace of mind and extra time by partnering with highly qualified professionals.

Outsource Your Bookkeeping With Marshall Jones

Marshall Jones has served businesses in the greater Atlanta area with accounting solutions for over three decades. Our certified public accountants and advisors have in-depth expertise across numerous industries to deliver high-quality bookkeeping services to organizations of all sizes.

Contact a team member online to request a custom quote or get more information.

Business bookkeeping basics are essential to a small business’s success in maintaining compliance and monitoring milestones. The tax professionals at Marshall Jones have put together this quick-start guide for small business bookkeeping to help you begin.

5 Bookkeeping Tips for Small Business Owners 

Five key bookkeeping tips recommended by senior tax professionals can help your small business stay on track this year. 

1. Open a Business Bank Account

It’s vital to have a distinct bank account and credit card for your business so that you have clear records when filing your taxes. Unless you’re a sole proprietor, you’ll need separate tax reports for home and business. Also, if the Internal Revenue Service (IRS) decides to audit your business, having mixed personal and business accounts can complicate the process further.

2. Expedite Your Accounts Payable Process

Bill.com is a legitimate and secure accounts payable and accounts receivable software that integrates with QuickBooks. It helps businesses integrate automated digital tools into their bill and invoice processes. It simplifies the process by making it easy to record bills and pay vendors via the Automated Clearing House (ACH), credit card, check and even international wire transfer. 

3. Digitally Track Expenses

Managing multiple employees with company credit cards can become complex if receipts become lost, faded or damaged. Divvy is an online expense management and business budgeting software ideal for allotting spending money to your team. For example, an employee booking a hotel room for a business trip can receive the exact amount of cash they need with no more and no less. The employee simply snaps a photo of their receipt for digital recordkeeping. 

4. Use Your Financials to Make Strategic Business Decisions 

It’s key to take advantage of your financial records beyond tax time. Business owners should be familiar with a profit and loss statement to analyze their spending and costs, whether that’s year over year, month to month or even biweekly. It’s also helpful to learn financial analysis ratios like the receivable turnover, current, return on assets and debt to equity ratios — and much more. 

5. Be Proactive About Your 1099 Tax Documents

A 1099 form is a tax document business owners use to report payments over $600 in a given year to independent contractors. The best policy is to take a proactive approach to prepare for 1099 forms by issuing a W9 to each vendor at the time of the transaction. Then, you’ll have their tax identification number and address on file to report on the 1099 form during tax season. 

Get Professional Help With Small Business Bookkeeping Basics

Marshall Jones has been helping small businesses like yours with accounting and bookkeeping services in Atlanta for decades. To find out more about how we can help you with small business bookkeeping, contact us online and schedule an appointment today. 

Every small business should know when to hire an accountant. In general, it’s advisable to meet and build a relationship with a certified public accountant (CPA) at least once to cover the basics of your business. There are also specific reasons why you should hire an accountant, such as when you need to make critical business decisions and handle key tax documents that will face government scrutiny. The experts here at Marshall Jones have created this guide to help you learn the ins and outs of when you should hire an accountant.

Commonly Outsourced Business Functions

The goal of partnering with a CPA is to have a professional in your corner who cares about your business and is sensitive to your needs. The accountant should understand how to meet you where you are currently and help you achieve your future goals.

A CPA can help you with many practical business and tax tasks, including: 

• Advisory services: If you need to make a significant accounting or business decision, you can hire a CPA to review your strategy with you and consult on potential advantages and pitfalls. 
• Audit and assurance: An accountant can help you audit your books and ensure you’re meeting regulatory compliance requirements for the Internal Revenue Service (IRS), your state, lending agencies and more. Accountants can also properly prepare income tax returns, financial statements and sales tax returns. 
• Entity and tax structure: If you need to discuss your tax structure to maximize value for your entity, a CPA can help. 
• Mergers and acquisitions: Mergers and acquisitions have complex regulations to manage when considering debts and taxes you will acquire in the process. An accounting professional can help you anticipate these expenses. 
• Outsourced accounting: Outsourced accounting allows you to farm out your internal bookkeeping, recordkeeping and accounting tasks to a CPA firm. Teams can perform your functions on-site with your employees or off-site to meet all your accounting needs. 
• Accounting information systems: Many firms use accounting information systems to redesign your accounting processes for optimal performance. They can even handle all the accounting functions for your business on your behalf. 

Hire an Accountant for Your Small Business Today

For more than three decades, Marshall Jones has served the Atlanta business community with integrity and excellence through CPA accounting and audit services. Our capabilities include outsourced professional accounting solutions, audit and assurance, tax planning and preparation and professional bookkeeping and consulting. 

Ready to find out more? Reach out to our team online and schedule your appointment today to get started. 

An audit report is the written opinion of a qualified auditor regarding your business’s financial statements. The report is presented in a standardized format and is mandatory according to the generally accepted auditing standards (GAAS). GAAS enables some variations in audit reports depending on the circumstances under which the audit is conducted.

An audit report of a company is simply an examination of your financial reports by someone independent of your organization. The accounting audit report includes an income sheet, a balance sheet, a cash flow statement, changes in equity statement and a notes summary. 

The purpose of auditing reports is to evaluate whether the information about your organization matches your financial statements at a given date.

Why Do Businesses Get Audit Reports?

A business typically gets audited to ensure their entity is not avoiding FICA or federal taxes. Some companies get audited because they over-report expenses, hide or under-report income, misclassify employees, or redeem ineligible deductions. Some other reasons why your business may get audited include:

1. Your Reported Revenue Is Outside the Industry Norm

Revenue is a key focal point when evaluating your business’s financial statements and deciding whether to audit you. If your business diverges from the industry standard income, it is a red flag that may result in an audit.

2. You Are in the Process of Being Acquired

If a company acquires your business, they will do a deep dive into your financials to ensure you handled your taxes correctly.

3. You Have Previously Been Audited

After you have been audited once, auditors will check your business books to see if you have missed any taxation items. The process will continue until you organize your books. You can leverage an auditing service to help break the cycle. 

4. You Are Sharing Articles of Unprecedented Growth

Press releases and articles about accelerated growth, acquisitions and additional investments can trigger audits. Auditors may investigate your financial statements to ensure you paid the necessary taxes.

5. You Made Inaccurate Statements Regarding Your Registration

Your business must register for a tax license timely, and you must acquire sales tax licenses before your revenue exceeds your state’s parameters. Claiming your business started after the date that it did can result in an audit.

Understanding Audit Reports

Reading through an auditor’s report may seem daunting, but you can take the stress out of the process by familiarizing yourself with how these reports are structured and the purpose of each section. Once you know how to read an audit report, you can accept the document handed to you at the end of your next audit and read it with confidence.

The Scope of the Audit

The first section of an audit report summarizes the audit’s scope — in other words, what the auditors did and how they did it. This section will state that the auditor examined the company’s financial statements in accordance with generally accepted auditing standards (GAAS). These standards include well-trained, careful and independent auditors conducting audits. 

The section on the scope of the audit will confirm that the auditors assessed:

• The company’s documentation of its finances: These documents include, for example, the company’s balance sheets and statements detailing its earnings and cash flows.
• The company’s underlying financial situation: Auditors will conduct tests to confirm that the information in the company’s documents is consistent with its actual performance.
• The internal controls the company uses: These internal controls describe the measures the company takes to ensure the accuracy and integrity of its financial information.

The scope of the audit section should give you confidence that the auditors have conducted a careful and thorough investigation. That credibility means you can rely upon the second section of the report — the auditor’s opinion.

The Auditor’s Opinion

The second section of the audit report is the auditor’s opinion, which summarizes their findings based on their examination of the company and its records. There are three generally accepted opinions:

• An unqualified opinion: An auditor will issue an unqualified — or “clean” — opinion when the company’s management provides all the relevant documents and information and the audit reveals that the company’s financial statements are accurate. An unqualified opinion will not contain any adverse comments or disclaimers about the limits of the audit.
• A qualified opinion: An auditor will issue a qualified opinion when they are unable to gather necessary evidence or support for one or two areas of the audit. For example, if a company has significant inventory and the auditors are unable to perform an observation to confirm that the actual physical inventory matches the company’s documentation, they would issue a qualified opinion.
• An adverse opinion: An auditor will issue an adverse opinion when a company’s financial statements are not presented in accordance with generally accepted accounting principles (GAAPs). GAAPs are the accounting standards that companies use to measure and present their financial results. An adverse opinion means that the company’s financial documentation is incomplete or inaccurate. This result doesn’t mean the company is deliberately doing something wrong — in many cases, the auditor can work with the company to correct these problems.

Contact Us Today for Audit Services

An accounting audit report can intimidate any business owner, and evidence shows that the audit frequency of small and medium-sized businesses increases with each year. The good news is that you can take proactive steps to prepare and appropriately respond to your next IRS audit.

Marshall Jones has provided audit and assurance services to companies in the Atlanta area since 1984. Our certified public accountants and advisors will help you achieve the technical competencies to simplify audit season. To learn more about how we can help your business with its next audit, contact us online.

Every organization must ensure that its financial statements are correct and comply with all applicable federal and state regulations. Auditing is the process of reviewing these records and information to verify their accuracy. An audit can also serve as an internal control mechanism for detecting red flags that may indicate the existence of fraudulent financial activities.

A major part of audits is following auditing principles, which are a set of rules that guide companies and individual accountants as they work with complex financial data. These principles provide accountants with a strong foundation and help them deliver accurate results to their clients. Proficient accountants follow these principles during each audit they work on to help their clients maintain their compliance.

Understanding Basic Audit Principles

The American Institute of Certified Public Accountants (AICPA) is a national professional organization that establishes the auditing and ethical standards in the United States. The AICPA has developed a set of audit principles to guide auditors as they perform their duties:

• Training: All auditors must have the appropriate training to plan and execute the various audit types across all industries.
• Independence: Auditors must have no financial, relational or operational ties to whatever institution they’re auditing to avoid potential conflicts of interest, bias and approval without evidence.
• Due care: An auditor should possess the same level of skills and competence as their peers within the same industry and employment.
• Planning and supervision: Auditors must be involved in planning and supervising their work to provide an accurate, informed opinion of their findings.
• Understanding: Auditors must possess or gain a comprehensive understanding of the industry, the organization and its internal control processes to plan audit procedures for appropriate risks properly.
• Evidence: An auditor typically should ask for appropriate proof or documentation that supports the line item entries listed in the financial statements.
• Generally accepted accounting principles (GAAP) compliance: The auditor must verify that the organization is presenting its financial statements in accordance with the industry’s generally accepted accounting principles.
• GAAP exceptions: The audit report must identify instances where GAAP compliance does not exist.
• Disclosures: Auditors must verify that any information disclosed about the financial statement line items is adequate.
• Opinion: Auditors must provide an opinion based on their findings during the audit process. If they choose not to state an opinion, they must give their reasons for doing so.
• Confidentiality: Auditors must maintain confidentiality, as their client entrusts highly sensitive financial information to them. An auditor must seek the client’s permission before disclosing information to uninvolved parties.

Auditing Principles in Context

Some real-world examples of these auditing principles include:

Honesty

It is essential for auditors to be transparent about their actions and discoveries. For example, auditors should not withhold vital information from their clients or issue their clients false information. An institution trusts its auditor to provide a true opinion of its financial data and relies on the auditor to disclose any valuable insights.

Unbiased Opinions 

Auditors cannot allow their personal feelings and opinions to influence their decisions as they conduct audits. Maintaining an unbiased opinion may be challenging if the auditor has a personal or professional relationship with their client, as this is a conflict of interest. That’s why it’s crucial not to have any ties to the institution they are auditing. Remaining unbiased will enable an auditor to demonstrate their expert auditing skills and provide their client with an accurate opinion on their financial information.

Evidence-Based Results

An auditor must be able to back up every line item with supporting documents, such as payroll reports, receipts and invoices. A thorough track record ensures that auditing results are accurate and allows the auditor to provide a true representation of the client’s financial information.

Why Do the Principles of Auditing Matter?

Whether you are selling your company, trying to win an investor or simply looking for financial growth opportunities, audits can benefit your business. However, you’ll only receive these benefits with a trusted auditor. You can have confidence in your auditor when they provide evidence that they follow the principles of auditing.

When you’re preparing for an audit, be sure to hire reputable auditors. Look for a provider with sufficient industry experience and evaluate their history by checking their licenses and other credentials. This information can help you select an auditor who implements the principles of auditing in their work.

Learn More About the Audit Principles

At Marshall Jones, our team of experienced Certified Public Accountants and Advisors has followed our audit principles for more than 30 years. We assist businesses, nonprofit organizations and individuals throughout the Atlanta area to ensure the accuracy of their financial statements and help them avoid potentially costly mistakes. 

Contact us for more information and learn more about how Marshall Jones demonstrates trustworthy accounting principles and procedures for audits.

You know you need an audit — but do you know how to prepare for it? From determining which type of audit you need to choosing the right firm, you need to follow specific steps to ensure you reach your goals.

What Is an Audit?

An audit is an in-depth examination and objective evaluation of an organization’s financial records to determine whether they reflect fair, accurate information. Audits can be internal or external.

In-house employees carry out internal audits, while certified public accounting (CPA) firms often handle external audits and document their findings in detailed audit reports. IRS audits also represent external examinations conducted by the organization’s revenue agents.

How to Prepare For An Audit

Preparing for an audit involves several key steps to ensure a smooth process. First, get acquainted with the auditor to establish a good rapport and understand their expectations. Next, clean up your financial records by organizing receipts, tax statements, bank statements, and other pertinent documents. Stay informed about internal changes within your organization, such as shifts in management or new financial policies, and keep abreast of external changes like regulatory updates. Thoughtful preparation for the actual audit is crucial; gather all necessary documents and evidence to support your financial reporting. Lastly, open a line of communication with your auditor well before the audit start date to convey important information and deadlines, ensuring a more efficient and effective audit process.

Keep the following steps in mind as you plan for an audit:

1. Determine the Audit You Need 

You will first need to decide what type of audit is necessary for your business. For example, a construction company would likely need a bonding or licensing audit.

Consider whether you need a balance sheet audit or a full audit. 

Balance sheet audits examine your business’s assets, liabilities and equity in detail and compare them to previous periods. Auditors will investigate the reasons behind changes and verify the information’s accuracy and compliance with generally accepted accounting principles.

Full audits go a step beyond the balance sheet. During a full audit, your CPA will thoroughly dig into your financial picture. They will confirm income and its sources and verify operating expenses, sometimes in line-item detail. For example, an auditor may match accounts payable claims with the actual invoices your business received. After conducting a full audit, the CPA will issue an audit report stating their opinion on the information’s accuracy. These reports help boost confidence in a company’s financial condition.

Single audits are another option, especially if your organization is a nonprofit receiving government funding. During a single audit, the CPA has a narrower scope — the auditor focuses on accounting for a specific government award. They will investigate broader financial statements as part of their review to determine precisely how your organization managed the money you received from a government program. Its purpose is to confirm you followed any associated rules or restrictions for the money’s use.

2. Choose a Certified Public Account (CPA) Firm

Now that you know what type of audit your company requires, you should research CPA firms. It’s critical to find a reliable and trustworthy option to ensure you are getting the correct service from trusted professionals. Follow these steps to choose the best firm for your business:

• Ask about their specialty: In many cases, you can find a firm specializing in your industry, increasing the CPA’s likelihood of conducting a dependable audit.
• Check their history: CPAs receive licenses from their state, so you can research the accountancy board’s database. Doing so allows you to view essential information, including any disciplinary actions.
• Verify their memberships: Many CPAs belong to industry organizations, like the American Institute of Certified Public Accountants. These organizations promote integrity and ongoing education, so membership is a sign of your CPA’s values.
• Confirm their experience: While all CPAs have passed the required exams, there’s a benefit to working with an audit-experienced firm. Those who’ve served the industry longer generally have more in-depth knowledge of the process to make audits smoother.
• Check their fees: CPA firms may work on different fee structures based on the hours or complexity involved. Ensure you understand payment arrangements so you can compare costs between CPAs accurately.
• Confirm audit representation: If an IRS audit happens, you’ll likely want a skilled CPA in your corner. Reputable firms should offer audit defense to help represent you in dealings with the IRS.
• Ask people you trust: Referrals from friends, family and business advisors can help you identify the ideal CPA for your audit. Sometimes, they can also prevent you from engaging the wrong one.

3. Start Preparing for a Financial Statement Audit

The last step is to prepare for the audit. Communication is crucial, especially for loan covenant or federal spending requirement compliance. Make sure you know the best way to communicate with your CPA firm. That way, you can convey important information, such as when your audit’s deadline is, to ensure the firm conducts it correctly.

It’s also essential to start gathering important documents and plan for the time it takes to work with your auditor. That way, it’s easier and faster for them to complete your audit because you are ready to assist as necessary.

The documents needed for an audit will vary based on the audit type and scope and the structure of your business. Generally, you should expect to provide supporting evidence for your financial reporting.

Preparing for an audit:

• Gather expense evidence: Have receipts, paid tax statements and other evidence of business expenses available for your auditor. The auditor will align these with any allowable deductions to verify their existence and eligibility.
• Present income evidence: Ensure you have bank statements, deposit receipts and customer invoice copies to give your auditor. They’ll be able to confirm revenue claims and reconcile receipts with journal entries faster.
• Provide access to past third-party opinions and confirmations: Allow your auditor to review any previous objective opinions and audit reports. They can use these as supplemental resources to form a more comprehensive audit trail.

For privately held corporations, auditors may request additional documents that speak to financial health. These include:

• Cap tables representing your company’s ownership allocations to confirm value, expenses and the owner’s equity entry on your balance sheet.
• Form 409A to set forth the fair market value of outstanding stock and ensure you’ve valued equity-based compensation accurately.
• Other stock-based compensation reports detailing your valuation calculations.

Contact Marshall Jones Today for Audit and Assurance Services

If you follow these three steps, your audit will run smoothly without requiring extra effort. When you need to choose a reliable firm for an audit at your business, come to Marshall Jones.

Our audit and assurance services help gather financial records and show your management team the next steps. Whether you are trying to maintain or grow your company, our team helps you with audit and assurance services to satisfy government authorities and other entities that require them.

We use a risk-based audit approach, provide valuable recommendations and report our findings to the necessary parties. We have over 30 years of experience, and our services help you save by not requiring you to hire an in-house CPA.

Please contact the Marshall Jones team today for audit and assurance services!

Whether you own a salon or a manufacturing company, running your business will come with operational expenses. If your business exists and operates to make a profit, you are eligible for business tax deductions. 

What Are Fixed and Variable Business Expenses?

Business expenses can be variable or fixed, meaning they can be one-time, occasional or constant. Variable business expenses can include travel or startup costs, while a fixed business expense is constant, like rent or mortgage payments.

Each industry will have specific deduction standards. Generally, you only deduct what’s considered necessary for your business. Qualifications vary depending on your industry and business. 

What Are Ordinary and Necessary Business Expenses? 

The Internal Revenue Service — the IRS — determines ordinary expenses as common to the industry you work in. Necessary expenses are defined as expenses considered appropriate for your trade or industry or a standard cost associated with running a business, no matter the type of business. 

For example, ordinary business expenses for a salon manager could include sinks, hair products and washers and dryers to clean towels. However, a washer and dryer would not be considered essential for an accountant because it’s not required for daily operation and it isn’t integral to providing their services as an accountant. 

What Are Some Ordinary and Necessary Small Business Tax Deductions? 

Small business tax deductions can include: 

• Rent or mortgage payments.
• Office equipment.
• Payroll costs (wages, benefits, and taxes).
• Utilities.
• Taxes.
• Interest payments.
• Business fees (license, permit, subscription). 
• Maintenance and repairs.
• Legal or professional fees.

What Are Some Other Business Expense Deductions to Consider?

There are other tax deductions associated with your business, but there are requirements to meet each qualification:

• Gifts: You can deduct gifts from your taxes if your gift does not exceed $25. If you send a bottle of wine worth $100 to a client, you can only deduct $25 from that gift. You can also deduct promotional gifts like pens and coffee mugs up to $4 per item if it bears your business name. If a client takes home a pen with your business name, you can deduct it! 
• Meals and entertainment: Due to the Tax Cuts and Jobs Act of 2018, you can deduct 50% of your business meals. However, a business representative must be present and you must be conducting business. The IRS should not consider the meal extravagant, which includes any restaurants or meals not typical of any ordinary day.
• Travel expenses: You can deduct automobile travel costs or the standard mileage rate, which is 58.5 cents per mile in 2022 — but you cannot do both. If you do deduct the actual expenses, you can deduct 50% of your depreciation, auto loan interest, fuel, maintenance, insurance and registration. Otherwise, we advise you to track your mileage in case the IRS audits you. 
• Home office expenses: You can choose to deduct $5 of each square foot of your home office, but it must be a dedicated office space. 

Contact Marshall Jones Certified Public Accountants And Advisors Today

We can help you determine what business expenses are ordinary and necessary. Contact us today and our dedicated team of professionals will advise and guide you in your small business tax preparation!