Bookkeeping & Write-up

The consistency criterion states that the accounting procedures used at a given time should conform to the procedures previously used for that activity. Such consistency allows data of different periods to be compared. This is important for comparative financial statements such as the income sheet, balance sheet and cash flow statement. If there is a change in the consistency or accounting methods, the financial statements have to be restated for consistency purposes.

The matching principle states that income is calculated by matching a period's revenues with the expenses incurred in order to bring about that revenue. The accrual concept is used to accomplish the matching principal. The bookkeeper will set up accruals of income earned but not received and expenses incurred but not paid to get a better matching of the company's income and expenses for a period.

The historical cost principle requires that economic resources be recorded in terms of the amounts of money exchanged at that moment in time. When a transaction occurs, the exchange price is by its nature a measure of the value of the economic resources that are exchanged. This is in contrast to the fair market value which is the estimated value of the asset if sold on a specific moment in time.

The realization concept states that a accounting transaction takes place only for those economic events to which the entity is a party. This principle rules out recognizing a gain based on the appreciated market value of a still owned asset. A gain or loss on a marketable security occurs only when sold, not on the daily fluctuation of the share price.

An employer must pay its employees at least the minimum wage for all hours worked, and time and one-half overtime pay based on an employee's regular rate of pay for all hours worked in excess of 40 in a workweek unless the employee is exempt for some reason. The minimum wage and overtime pay are based on the hours worked each workweek and not by the number of hours worked each day or the number of days worked. Each workweek stands on its own regardless of the length of the pay periods. For purposes of overtime pay, employers of tipped employees must calculate the time and one-half overtime pay based on the employee’s regular rate of pay, which includes both the cash wage paid to the employee and the tip credit counted as wages for the employee at least equal to the minimum wage, which becomes the regular rate of pay for a tipped employee. Employers must apply tipped employees' hourly wage rate when determining overtime compensation. That rate can never be less than the minimum wage even if the employer is actually paying less by taking a tip credit. Take the example of a waiter who receives $2.13 an hour and enough in tips to make at least the minimum wage per hour. The employee's overtime wage would be 150 percent of $7.25 --- the standard minimum wage --- rather than $2.13. If the waiter receives a base wage higher than $7.25, in addition to tips, 150 percent of that higher amount would be his overtime wage.

W-2 forms should be furnished to your employees by January 31. It is your responsibility as an employer to file Forms W-2 with the Social Security Administration (SSA) for your employees which will show the wages paid and taxes withheld for the year. You must send Copy A to the SSA with Form W-3 by February 28. Form W-3 is a summary form that shows the total of all W-2's being sent. Go to the IRS website http://www.irs.ustreas.gov/prod/forms_pubs/forms.html or get Publication 15, Circular E, Employer's Tax Guide or Forms and publications can be requested by calling 1-800-829-3676.

You can elect to expense part or all of the cost of section 179 property (defined earlier) that you placed in service during the tax year and used predominantly (more than 50%) in your trade or business. Generally, the maximum section 179 expense deduction is $500,000 for section 179 property placed in service in 2010 during the tax year beginning in 2010. Qualified real property that is elected to be treated as section 179 property is limited to $250,000 of the maximum section 179 deduction of $500,000 for 2010. If you elect to expense section 179 property, you must reduce the amount on which you figure your depreciation or amortization deduction (including any special depreciation allowance) by the section 179 expense deduction.

The term executor means the executor, personal representative, or administrator of the decedent’s estate. If none of these is appointed, qualified, and acting in the United States, every person in actual or constructive possession of any property of the decedent is considered an executor and must file a tax return. IRS Form 706 is the form that must be filed. Speak to your local CPA about the filing requirements.

The basic three questions a lender will ask you is, how much do you want to borrow?, how will you use the loan?, and how will you repay the loan?. You must be prepared to answer these questions. When you apply for the loan, you must be able to provide prior, current and projected financial statements and a business plan which includes the name of the business, location, production facilities, business goals and legal structure. A description of your business experiences and management capabilities as well as the expertise of your key personnel will also be needed.