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The cost of hiring a accountant can vary depending on the size of the business and the Bookkeeper’s experience. However, on average, a bookkeeper will charge anywhere between $40 – $85 per hour, depending on the size of the business.

Bookkeeping is the recording of financial transactions and is part of accounting in business and other organizations. It involves preparing source documents for all transactions, operations, and other business events.

Transactions include purchases, sales, receipts, and payments by a person or an organization/corporation. There are several standard bookkeeping methods, including the single-entry and double-entry bookkeeping systems. While these may be viewed as “real” bookkeeping, any process for recording financial transactions is a bookkeeping process.

Above all, efficient accounting and operating procedures ensure that the business runs smoothly. Clearly, future growth is possible, only if the books are in good and accurate order.

Moreover, El Cid Bookkeeping, Inc. has been providing accounting services to small, medium, and large size businesses. Apart from this, El Cid can perform functions as general ledger accounting, payroll, financial analysis, bank reconciliations, and financial statement reports.

Bookkeeping or data entry is something that you either have to learn or outsource when you’re running a business. This will give you financial health and a better understanding of the cash flow statement.

  • Open a bank account
  • Track your expenses
  • Develop a bookkeeping system with El Cid
  • Set up a payroll system
  • Investigate import tax
  • Determine how you’ll get paid
  • Establish sales tax procedures
  • Determine your tax obligations
  • Calculate gross margin
  • Apply for funding
  • Find high-quality accounting partners
  • Periodically reevaluate your methods

OPEN A BANK ACCOUNT

After you’ve legally registered your business, you’ll need somewhere to stash your business income. Having a separate bank account keeps records distinct and will make life easier come tax time.

It also protects your personal assets in the unfortunate case of bankruptcy, lawsuits, or audits. And if you want funding down the line, from creditors or investors, strong business financial records can increase the likelihood of approvals.

Note that LLCs, partnerships, and corporations are legally required to have a separate bank account for business. Sole proprietors don’t legally need a separate account, but it’s definitely recommended.

Start by opening up a business checking account, followed by any savings accounts that will help you organize funds and plan for taxes. For instance, set up a savings account and squirrel away a percentage of each payment as your self-employed tax withholding. A good rule of thumb is to put 25% of your income aside, though more conservative estimates for high earners might be closer to one-third.

Next, you’ll want to consider a business credit card to start building credit. Credit is important for securing funding in the future. Corporations and LLCs are required to use separate credit cards to avoid commingling personal and business assets.

Before you talk to a bank about opening an account, do your homework. Shop around for business accounts and compare fee structures. Most business checking accounts have higher fees than personal banking, so pay close attention to what you’ll owe.

To open a business bank account, you’ll need a business name, and you might have to be registered with your state or province. Check with the individual bank for which documents to bring to the appointment.

TRACK YOUR EXPENSES

The foundation of solid business bookkeeping is effective and accurate income and expense tracking by recording transactions. It’s a crucial step that lets you monitor the growth of your business, build financial statements, keep track of deductible expenses, prepare tax returns, and legitimize your filings.

From the start, establish an accounting system for organizing receipts and other important records. This process can be simple and old school like Shoe boxed. For US store owners, the IRS doesn’t require you to keep receipts for expenses under $75, but it’s a good habit nonetheless.

There are five types of receipts to pay special attention to:

  1. Meals and entertainment. Conducting a business meeting in a café or restaurant is a great option, just be sure to document it well. On the back of the receipt, record who attended and the purpose of the meal or outing.
  2. Out-of-town business travel. The IRS and CRA are wary of people claiming personal activities as business expenses. Thankfully, your receipts also provide a paper trail of your business activities while away.
  3. Vehicle-related expenses. Record where, when, and why you used the vehicle for business, and then apply the percentage of use to vehicle-related expenses.
  4. Receipts for gifts. For gifts like tickets to a concert, it matters whether the gift giver goes to the event with the recipient. If they do, then the expense would be categorized as entertainment rather than a gift. Note these details on the receipt.
  5. Home office receipts. Similar to vehicle expenses, you need to calculate what percentage of your home is used for business and then apply that percentage to home-related expenses.

DEVELOP A BOOKKEEPING SYSTEM WITH EL CID


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Before we jump into establishing a bookkeeping system, it’s helpful to understand exactly what bookkeeping is and how it differs from accounting. Bookkeeping is the day-to-day accounting process of recording business transactions, categorizing them, and reconciling bank statements.

Accounting is a high-level process that looks at business progress and makes sense of the data compiled by the bookkeeper by building financial statements. As a new entrepreneur, you’ll need to determine how you want to manage your books:

  1. You can choose software like QuickBooks.
  2. You have the option of using an outsourced or part-time bookkeeper that’s either local or cloud-based.
  3. When your business is big enough you can hire an in-house bookkeeper and/or accountant.

With so many options out there, you’re sure to find a bookkeeping solution that will suit your business needs.

Canadian and US business owners need to determine whether they’ll use the cash or accrual accounting methods. Let’s take a look at the difference between the two.

  • Cash method. Revenues and expenses are recognized at the time they are actually received or paid.
  • Accrual method. Revenues and expenses are recognized when the transaction occurs (even if the cash isn’t in or out of the bank yet) and requires tracking receivables and payables.

Technically, Canadians are required to use the accrual method. To simplify things, you can use the cash method throughout the year and then make a single adjusting entry at year-end to account for outstanding receivables and payables for tax purposes.

US business owners can use cash-based accounting if revenues are less than $5 million, otherwise, they must use the accrual method.

HAVE EL CID – SET UP A PAYROLL SYSTEM

Many online stores start out as a one-person show. When you’ve reached the point where it makes sense to El Cid Bookkeeping Services.

For employees, you’ll have to set up a payroll schedule and ensure you’re withholding the correct taxes. There are lots of services that can help with this, and many accounting software options offer payroll as a feature.

For independent contractors, be sure to track how much you’re paying each person. American business owners may be required to file 1099s for each contractor at year-end (you’ll also need to keep their name and address on file for this).

DETERMINE YOUR TAX OBLIGATIONS

Tax obligations vary depending on the legal structure of the business. If you’re self-employed (sole proprietorship, LLC, partnership), you’ll claim business income on your personal tax return. Corporations, on the other hand, are separate tax entities and are taxed independently from owners. Your income from the corporation is taxed as an employee.

Self-employed people need to withhold taxes from their income and remit them to the government in lieu of the withholding that an employer would normally conduct. For American store owners, you’ll need to pay estimated quarterly taxes if you’ll owe more than $1,000 in taxes this year.

CALCULATE GROSS MARIN

Improving your store’s gross margin is the first step toward earning more income overall. In order to calculate gross margin, you need to know the costs incurred to produce your product. To understand this better, let’s quickly define both cost of goods sold (COGS) and gross margin, by using your income statement and balance sheets.

  • COGS. These are the direct costs incurred in producing products sold by a company. This includes both materials and direct labor costs.
  • Gross margin. This number represents the total sales revenue that’s kept after the business incurs all direct costs to produce the product or service.

SMALL BUSINESS BOOKKEEPING

Above all, El Cid’s staff have years of experience in all accounting and bookkeeping services. Most importantly, we service all types of industries. We service small or large businesses. Without a doubt, our bookkeeping services include.

  • Bookkeeping Clean-up
  • Month-end bookkeeping
  • Yearly 1099(s) and W-2(s)
  • Tax preparation & e-filing
  • Expense classifications
  • Invoicing & payments
  • Account reconciliations
  • Payroll
  • Accounts payable
  • Accounts receivable